Blue Bell Probate and Estate Administration Law Blog

The role of the beneficiary within estate planning

On behalf of Kaplin Stewart Meloff Reiter & Stein, P.C. posted in Estate Administration on Jun 8, 2015.

Signing off on that last estate planning document is a wonderful thing. Many Pennsylvania residents feel a great sense of relief when the process is complete and are glad to have provided for the division of assets in the event of their death. That said, it is not uncommon for individuals to hold misconceptions about estate planning, one of which involves the power of named beneficiaries. Many types of accounts require the holder to designate an individual who will receive the wealth held within that account upon the holder’s death. Examples include bank accounts, investment accounts and retirement savings vehicles. Employee benefits also ask for a beneficiary designation, such as deferred compensation agreements, stock options and employment contracts. In the event of one’s death, the individuals named as beneficiaries on those accounts will receive the wealth held within. This is true even when a great deal of time has passed, and when the holder has drafted a will that excludes the individual from any other form of inheritance. Beneficiary designations are something of a trump card with estate planning, and they should be given proper consideration. During the estate planning process, Pennsylvania residents should take the time to contact the administrator responsible for each account to determine who is the named beneficiary. Changing that designation is simple, but unless that step is taken, the person named as beneficiary will inherit the value of the account. Checking one’s beneficiary designations should be done at any point where a significant life event […]

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A generation-skipping trust can eliminate estate tax

On behalf of Kaplin Stewart Meloff Reiter & Stein, P.C. posted in Estate Tax on May 29, 2015.

When a Pennsylvania family has concerns over how their wealth will be passed on after their death, a number of solutions are available. One is the creation of a generation-skipping trust, which allows a family to pass wealth down to their grandchildren while also providing value to their adult children. This type of trust also protects the wealth from the estate tax, which is a big draw for many families. When creating a generation-skipping trust, adult children can be granted the ability to withdraw any earnings that the trust makes, while leaving the base of wealth in place for their own children. When the time comes for the grandchildren to inherit, they will do so without incurring the estate tax. It should be pointed out that the earnings from a sizable trust can be significant, giving adult children a valuable stream of income. Creating and funding generation-skipping trusts is also a great way to protect an inheritance from losses that can accompany divorce or legal troubles. Because the base wealth is owned by the trust itself, and not the heirs, that wealth is protected from seizure through divorce or legal judgments. This provides an added layer of security for Pennsylvania families that wish to provide for their grandchildren. Generation-skipping trusts are just one way to ensure that loved ones receive their intended inheritance and avoid the estate tax. There are numerous other options that will also meet that goal. Each Pennsylvania family has a unique set of estate-planning needs and […]

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Helping business owners plan for the future

On behalf of Kaplin Stewart Meloff Reiter & Stein, P.C. posted in Estate Planning on May 18, 2015.

Business owners often put their heart and soul into their business. Thus, for many business owners, their business represents not only a big financial investment, but also a big emotional and personal investment. Consequently, business owners often care very much about what will happen with their business when they retire, become no longer able to run it or pass away.  Thankfully, what will happen to a business in such circumstances is not something a business owner has to simply leave to chance. Advanced preparations can be made to set up what will happen in such an event. The process of making such preparations is called business succession planning.  Businesses are often remarkably complex things with all sorts of different moving parts and things to consider in connection to them. Consequently, business succession planning can also be quite complex and touch on a myriad of issues. How these various different complex issues are addressed in a business succession plan can have the potential to have significant future impacts on a business owner and their business.  Our firm is committed to using our extensive legal experience and business succession planning knowledge to help guide our business succession planning clients through the process of developing a succession plan. We understand how important having a good succession plan in place can be for a business owner and how to go about addressing the various complex issues that can arise in connection to business succession planning, and we strive to help business owners with forming […]

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To sleep, perchance to dream – but where, and for how much? p3

On behalf of Kaplin Stewart Meloff Reiter & Stein, P.C. posted in Long Term Care Planning on May 17, 2015.

As we have said — and as most everyone knows — part of an estate plan is preparing for retirement and the health issues that come with age. It’s hard to plan for the next generation if you haven’t already planned for this one, so understanding some of the issues that are facing retirees now should help as we deal with aging loved ones or face our own later years. We have more options these days when it comes to caring for the elderly. Nursing homes are still around — and more expensive than ever — but there are also assisted living facilities and home care programs, too. One deciding factor is certainly the level of care necessary. Another, unfortunately, is the cost of care. To develop an effective plan for those years, you have to understand what the payment options are. Perhaps the least attractive is paying out of our own pockets. Some of us will rely on long-term care insurance when the time comes. What we may not realize is that the policy may not cover less expensive care, like home care. It is easy to assume that Medicare will pay for everything, but there is no such guarantee. Medicare is just as complicated as every other type of health insurance, laden with conditions and exceptions. For example, Medicare covers home health care only if the patient’s medical team also requires visits from a “higher ranking” health care worker like a registered nurse or physical therapist. Custodial care […]

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To sleep, perchance to dream – but where, and for how much? p2

On behalf of Kaplin Stewart Meloff Reiter & Stein, P.C. posted in Long Term Care Planning on May 2, 2015.

We are picking up the discussion about nursing home and home care expenses started in our April 17 post. It almost goes without saying that none of this care is getting any cheaper. The question for older individuals and families — or, for that matter, younger people putting together an estate plan — is how much will those costs increase between now and when they’re needed? Genworth Financial Inc., an insurance company that sells, among other things, long-term care coverage, recently released a study comparing the costs of nursing home care, adult day care, assisted living facility care and home care. According to Genworth’s analysis, the cost of nursing home care has increased by 4 percent every year over the past five years, landing at a nationwide median of more than $91,000 a year for a private room. Pennsylvania outpaces the national median. Nursing home care here increased 5 percent year-over-year. A private room now costs $113,150 (again, median) per year. In Philadelphia, it’s even higher: $127,750 annually. Other care arrangements are less expensive, and the difference offers a good deal of food for thought. If your care will cost more than $125,000 a year in a nursing home, for example, you may want to talk with family and your health care team to determine if that level of care is really necessary. An assisted living facility in Philly would cost $58,626 annually; home-based care would cost a little less, and adult day care would run to about one-third the […]

In Pennsylvania, will my divorce affect my estate plan?

On behalf of Kaplin Stewart Meloff Reiter & Stein, P.C. posted in Estate Planning on Apr 24, 2015.

If you’re like a small portion of people here in Pennsylvania, you’re probably meticulous about your estate plan. Not only did you likely get it in order while you were still young, you have probably also been careful to update it when a major life event has occurred. You might even be like some of our more frequent readers who have tapped into the experience of an attorney as well. But as you know, life can throw you curve balls that can affect your estate plan. Take for example divorce. Most people don’t plan for this major life event and may even be blindsided when they are faced with it. But because most people only have a general understanding of the law, they might have questions about how a divorce affects an estate plan. You might be wondering the same thing right now. In Pennsylvania, will my divorce affect my estate plan? To answer this question, we’ll need to look at Title 20, Section 6111.1 of our state’s Consolidated Statutes. In this section, Pennsylvania residents are told, in so many words, that any provision in a conveyance that would otherwise be revocable because of death is also revocable by divorce. For all intents and purposes, a divorced spouse is treated as if they had predeceased the conveyer of the provision. It’s important to note though that this aspect of the law may not trigger automatically in all cases. If a decree of divorce has not been entered or divorce proceedings […]

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To sleep, perchance to dream – but where, and for how much?

On behalf of Kaplin Stewart Meloff Reiter & Stein, P.C. posted in Long Term Care Planning on Apr 17, 2015.

Survey after survey has told us that the majority of Americans want to grow old in their own homes. Healthy or infirm, seniors want to be in a familiar environment, surrounded by their belongings and their loved ones. There are cases, too, when the loved ones drive the decision: Living independently has become difficult, impractical, or dangerous. For many, taking care of your parents in their old age is just what you do; keeping a sister stricken with ALS at home because it is easier for friends and family to be with her. Finances may also drive the decision. Nursing homes and assisted living facilities are expensive, and the rules for Medicare are complicated, even, at times, outright punitive. For a long time, though, moving into a place like that was the only way to make sure a nurse checked on the senior on a regular basis. The increasing availability of qualified in-home health workers has taken some anxiety out of the equation. Having someone come to a person’s home means the patient need not leave the house for a care visit — it’s a twofer: convenience and reduced costs of care. And, of course, the patient and family can avoid the costs of an in-patient care facility — it’s really a threefer.  Healthcare costs are often described in terms of Medicaid reimbursements. The reimbursement is uniform and, in theory at least, reflects best practices. According to the Pennsylvania Department of Health, home care is dramatically less expensive, in Medicaid […]

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5 ways a trust can be used to control distributions to children

On behalf of Kaplin Stewart Meloff Reiter & Stein, P.C. posted in Estate Planning on Apr 15, 2015.

Parents want to make sure that their children will be taken care of financially should anything happen to them. It is one of the reasons that children are probably the most common beneficiaries of money or property in estate plans. Of course, parents know that just handing over a lump sum of money is not always the best option. Trusts are a great solution to this problem. Parents have a lot of flexibility when it comes to setting limitations, restrictions or conditions for the distribution of money. What are some situations in which a trust would be beneficial? Listed below are only five examples of situations in which a trust may be helpful. Do you have minor children? A trust provides an avenue for the controlled use of money for children while they are minors. Parents can set a certain age for final distribution or stagger distributions, like every five or ten years, and even increase the distribution amount over time. The answer to number three is also helpful here. Do you have a child with substance abuse problems? Parents can condition distributions on drug testing, requiring a negative test result or preventing distribution if the child fails a drug test. Do you have a child who is not very good at managing money? The terms of a trust can restrict use of the money to the “health, education, maintenance and support” of the beneficiary, granting the trustee with discretion over distributions. Do you want to encourage certain life choices? […]

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Putting your financial affairs in order

On behalf of Kaplin Stewart Meloff Reiter & Stein, P.C. posted in Estate Planning on Apr 15, 2015.

Approximately half of Americans who have children do not have a properly prepared will in place. While many parents are young and may not be thinking about having to leave assets to their children, even older individuals have not prepared a will either. As many as 41 percent of individuals between the age of 55 to 64 have not yet had this document prepared. The importance of a will is that it tells everyone how you want your assets distributed after you pass away. However, it’s important to have the will executed properly so that battles do not ensue concerning your property. Will contests are common. These arise when there are unclear provisions in the will or when the will was not prepared according to the laws of the state in which you reside. Estate planning and probate involve many different considerations. Therefore, there are other documents besides will what may wish to consider having prepared. These include powers of attorney and living trusts prepared for when you are unable to make your own determinations on medical care or finances. It’s important to keep in mind that legislation regarding estate taxes periodically change. When laws take effect favorable to one’s situation, it’s a good idea to take advantage of the legislation while these laws are still in the books. In some instances, using certain strategies minimizes the taxes paid if paying taxes is unavoidable. Knowing the tax consequences of gifting certain assets allows you to distribute the gifts in a […]

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Avoiding estate planning mistakes

On behalf of Kaplin Stewart Meloff Reiter & Stein, P.C. posted in Estate Planning on Apr 14, 2015.

Estate planning is essential in making certain we preserve our property and pass it along correctly to the people we care for. The law in this area is complicated, however. Mistakes in drafting a will or not having assets properly sheltered leads to complications, expenses and possibly not even having our wishes carried out. Estate planning serves dual purposes. It allows for preservation of property and assets passed onto our loved ones. It also allows for us to have money during our retirement years or during a period of time when we are unable to work or care for ourselves. Sadly, many of us never put enough money away for retirement and are unable to hold onto our homes. Also, many of us do not get around to estate planning considerations until it’s too late. There are some things it’s always good to keep in mind: Having someone else look over your plans is always important. No matter how well we think we have our affairs planned out, there’s always the chance we could miss something. For this reason, estate planning’ attorneys provide an invaluable service in making certain expensive mistakes are avoided. There are many documents any adult with property and heirs need to have prepared. Besides a will, this includes preparing a health care proxy, living will, and power of attorney. These documents make certain someone we trust takes care of our affairs when we are unable to do it ourselves. It’s important keeping the people you care […]

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