Estate Plan New Year’s Resolution Guide

attorney-feesIf you’ve made a New Year’s resolution to do (or update) your estate planning, we want to help you maintain your momentum.

Here are links and next-step ideas to help you move your estate planning into the “done” column.


1. If you have never done an estate plan, read:

2. If you’re not sure whether to update your estate plan, read: 7 reasons to update your will or trust

3. If you have young children, read: Two must-have estate plan provisions for parents with minor children

4. If you’re considering the do-it-yourself approach, read: Consumer Reports: “Legal DIY sites no match for a pro”

5. If you want to make sure you have a great estate plan:

6. Make an appointment. If you know you are ready to do your estate planning and want to act now before procrastination sets in, call our office at (412) 531-7123 (but wait until Monday, January 4. We are enjoying New Year’s too.) We make it easy to schedule an appointment to speak with a certified elder law attorney about setting up the best plan for you and your family.

Happy New Year!

Why you should have a will

If you are an adult with some assets and a loved one or two, you should have a will.

At a minimum, your last will and testament expresses your wishes about how your assets will be passed on to your survivors. But it can also serve as the vehicle for other important goals, such as:

  • making your loved ones more secure
  • ensuring your assets actually end up where you want them to go
  • protecting loved ones against the effects of potential misfortunes
  • providing for those who are disabled or unable to manage money
  • leaving a lasting legacy

Who doesn’t need a will

If you have virtually no assets, or it doesn’t matter to you who gets what assets you have or what happens to loved ones once you’re gone, then you may not need a will. State laws (called “intestacy” laws) provide rules for distributing assets of those who die without a will.

All other adults should have a will.

You may also think you need no will because all your assets are owned jointly with others, or will pass by beneficiary designation (like an IRA or life insurance policy). I suggest you have a will anyway because it is still possible that you could die owning assets that would need to be distributed through probate. It doesn’t hurt to have a backup plan but it could end badly for your loved ones if you need a plan and don’t have one.

Basics of a will

A will should appoint someone to serve as your executor, who is the person to carry out the terms of your will and make sure your estate is settled properly. Choose someone whose judgment you trust to carry out this important function, and who is willing to serve. Name a backup as well.

Next, your will should explain who is to get your tangible personal property, such as jewelry, furnishings, collections, automobile, antiques, and so on. These items often have great sentimental value to your heirs. Avoid a family fight by having a distribution plan.

Your will should then provide for distribution of what remains after debts and taxes are paid, and tangible personal property is distributed. This provision is usually the most important part of your will. You, rather than the state intestacy laws, decide who will get the remainder of your estate and in what proportions.

Future planning and security

To go beyond the basics, you have an opportunity with your will to provide future security for family members by establishing trusts; to do tax-saving estate planning; make charitable donations; leave assets to loved ones in creative ways; and establish a legacy in any number of other ways.

To hear more about innovative and asset-protecting estate planning, attend one of our upcoming workshops on How to Have a Great Estate Plan.

Why every adult should have a POA

Having a power of attorney (or POA) is at least as important as having a will.

That’s the opinion I’ve come to after 24 years helping individual clients and families in private practice.

As people’s lifespans have increased, many spend more years than ever with a weakened ability to manage their own affairs. They increasingly rely on the help of a family member or friend to pay bills, manage finances, and deal with issues like taxes, insurance, and medical coverage.

For others, a temporary illness, accident, or absence from the state or country means someone else needs to manage personal affairs for a while, often on short notice.

A POA appoints another person (called your “agent”) to act on your behalf, usually with regard to financial, property, and legal matters. For the following reasons, a POA makes up a vital part of your estate planning arsenal.

Your entire estate could be distributed during your lifetime.

Here is the reason why I believe a POA is at least as important as your will.

What you now own, or major portions of it, could be spent or given away during your lifetime. For example, a person with a net worth of $400,000 could need skilled nursing care for several years, costing in excess of the net worth. Illness or misfortune could also befall another family member, requiring a major contribution from you.

Whatever the circumstances, you should appoint someone whose judgment you trust to make decisions for you, and carefully define your agent’s power. That way, you have more say in what happens to your assets if you can’t make your own decisions.

A POA allows your agent to protect your assets.

An elder law attorney can help you identify ways in which your assets could be at risk during your lifetime, especially in your senior years. Using that knowledge, you and your attorney can craft a POA that would give your agent the right mix of powers to protect those assets for you and other family members.

Suppose you are married and have a disabled son or daughter. If someday you need to apply for Medicaid benefits to pay for nursing home care (as many people do), your agent should have the ability to transfer assets to your spouse or disabled child. Those transfers would protect the assets while still allowing you to qualify for benefits. Without the right powers built into your POA, that opportunity could be lost.

A POA is preferable to guardianship.

If you have no POA, a court could appoint someone to make property or healthcare decisions for you. But guardianship comes with distinct disadvantages:

  • Delay. In most cases, obtaining a guardianship order from a court takes at least 30 to 60 days in Pennsylvania.
  • Cost. Legal costs for obtaining guardianship can easily cost several thousand dollars in legal fees, and much more if any part of the process is contested.
  • Red tape. A court-appointed guardian must take additional steps to comply with court rules that would be unnecessary for someone acting on your behalf under a POA. These include filing an inventory of all your assets; filing annual reports with the court; and asking court permission anytime the guardian needs to spend money out of principal. Many of these steps also require additional legal fees.
  • Lack of choice. When you appoint an agent with your POA, you choose the agent. In a guardianship proceeding, a judge will make the choice for you.

Even a POA carefully tailored by an experienced attorney costs less than a typical guardianship. You can choose your own agent. The agent you pick can act on your behalf immediately, or on short notice, and without unnecessary red tape.

Get professional help.

For these and many other reasons, every adult should have a POA. Given its importance in the management of your estate, I recommend using a well qualified attorney to help you plan and design a POA that will suit your individual needs and put you in good stead if the need arises.

7 reasons to update your will or trust

EP1Estate planning documents don’t expire with time like a gallon of milk, but they do become obsolete when circumstances change.

Having up-to-date documents is essential, but how do you know when it’s time to make a change?

Here are some of the top reasons to update the will or trust that determines what happens to your assets when you die.

  1. You got married, remarried, or divorced.

A change in marital status almost always affects what a person wants to do with assets upon death. If you recently married, you will want to define your spouse’s share of your assets in the event you die. State law gives your spouse rights to your estate if you die intestate (without a will) but the state’s scheme may differ from your plans.

If this is your second or subsequent marriage, and you have children from a previous marriage, you certainly could benefit from the advice of an estate planning professional about how to provide for all your loved ones while avoiding the pitfalls that come when a member of a blended family dies.

Divorce automatically removes your spouse as a beneficiary under your will. But you may need to address other issues. If your will names your ex-spouse as executor, who do you now want to serve in that role? Divorce may also change the person you would nominate to serve as guardian of your children. You may even wish to leave some portion of your estate to your ex-spouse, in which case you need to state that in writing affirmatively.

  1. You had a child.

You just got much busier. Sorry to add to your to-do list, but you really must provide for your child.

As I write this blog post, I am administering the estate of someone who died unexpectedly at age 37, leaving two small children and a sizeable estate. Because she had no will, approximately half of her estate will pass to her children when they turn 18 – probably not the estate plan she would have wanted.

You need to make sure you have a plan in place in case something happens to you. To read about the two provisions your will should contain if you have young children, click here.

  1. Your kids have grown up.

On the other hand, you may have an old will written when your kids were young that places all the assets you leave them into a trust. That’s a good plan for young children. But if they’re now grown, possibly with kids of their own, you need a new plan.

Chances are that other circumstances have changed. Your assets have probably grown and you are closer to retirement, or to needing long term care. It’s probably time to rethink your entire estate plan.

  1. Tax laws have changed since your estate plan was written.

Federal estate tax laws have changed significantly in the past few years, and even more dramatically in the past 15 years. If your will contains provisions to address estate tax issues, and it’s more than five years old, you may need an estate plan tune-up.

Many wills have become obsolete because they establish unnecessary trusts meant to avoid estate taxes. While that approach made sense when the exclusion from tax stood at $600,000, it could tie up assets unnecessarily now that the exclusion for an individual exceeds $5 million (unless your assets have also grown dramatically).

  1. Your choice of executor, guardian, trustee, or beneficiaries has changed.

A will prepared 20 years ago may need no updates if you would still name the same people as beneficiaries, executor, trustee, and so on. On the other hand, a two-year-old will could have outlived its usefulness if your choices have changed in the meantime.

I advise clients to review their estate planning document once a year to make sure they would still make the same choices today. If you have changed your mind, it’s time for a revision.

If the change is minor, you may not need to redo the entire document. An amendment (called a “codicil”) can do the trick.

  1. Your assets have changed significantly.

Substantial changes in assets often trigger the need for estate plan updates.

If you have inherited or earned significant enough funds to exceed the estate tax exclusion amount (over $5 million per person), you certainly need to have a plan to minimize estate tax. If the growth is not that large, you still may have tax issues such as capital gains that could be addressed with the right estate plan. Or your plan for distribution may have changed in light of your good fortunes.

Significant decreases in assets may also mean it’s time to re-examine how your assets are distributed. For example, you may want to re-think your plan to leave $50,000 to each of your seven grandchildren, and the rest to your three children, if your assets have shrunk from $1 million to $400,000.

  1. Your spouse qualified for Medicaid.

Qualifying for Medicaid to pay for nursing home care significantly affects a couple’s assets and signals an urgent need for estate plan changes.

In my experience, a married person’s will almost always leaves the entire estate to the surviving spouse. If your husband or wife is now in a nursing home on Medicaid, you almost certainly have placed most of the marital assets into your name alone during the qualification process. If you die first and it all passes to your spouse, he or she will need to spend down significant sums before qualifying again.

You can limit spend-down, in the event you die first, by changing your will or trust. See an experienced elder law or estate planning attorney for advice on how to do that properly.

Get good advice

These are not the only reasons to update your estate plan, but they are some that I see most often in my practice.

No matter what the reason, I recommend seeking out a qualified professional for assistance with your estate plan update.

One good way to learn about estate planning and asset protection is to attend our frequently held workshop “How to Have a Great Estate Plan.” Click here for upcoming dates and times.