Estate Planning & Administration

Central PA Law Offices

Our attorneys assist clients of all ages in developing and meeting their goals for accumulating, managing and transferring wealth. We utilize traditional tools, such as wills, trusts and durable powers of attorney, as well as more aggressive measures, such as family limited partnerships, charitable trusts, grantor retained income trusts and other sophisticated valuation techniques, in order to reduce taxes and other liabilities. We also are prepared to discuss the family arrangements of second marriages, and provide for the needs of children and disabled family members. We also assist in the administration or probate of decedents’ estates (see “Trust/Estate Administration” practice area.)

Wills

A will is a legal document which is the testator’s (owner’s) final and complete disposition of property. An executor is named to carry out the directives of the documents. Its purpose is to distribute the property of the testator according to their wishes. It may also direct other concerns such as funeral arrangements or perpetual care. The distributions may be made outright or in trust. It does not impact the disposition of jointly held property, life insurance benefits, assets held in trust, or other benefits that direct a beneficiary.

Trusts

A trust is any arrangement through which a person (settlor or grantor) transfers legal title in property to another person or company (trustee) for management or control for the benefit of a third person (beneficiary). Assets must be legally transferred into the name of the trust. Explicit instructions are usually given in a contract (trust agreement) between the settlor and trustee for the management of the property in the trust and income it may generate. The trustee has substantial duty to act under the instructions of the trust and in the best interests of the settlor and beneficiaries. A trust may be designed to range from having very little noticeable effect (i.e. Grantor maintains right of access to income and body of the trust) to very significant changes (i.e. Grantor sets up the trust to provide income to someone else and does not retain the right of access.)

Healthcare Powers of Attorney/Advanced Directives (HCPA/AD)

A HCPA/AD is a document which expresses a person’s desire to die a natural death, that he or she not have their life prolonged by extraordinary or artificial means. It allows a person to state in advance his or her wishes in case of either terminal illness or permanent unconsciousness. The HCPA/AD provides a clear description of your intention for the person with the health care power of attorney and your family at a difficult and emotional time. The HCPA/AD also avoids further emotional strain and prolonged legal and court fees to validate your intentions.

General and Durable Power of Attorney

Power of Attorney or “Attorney-in-Fact” provisions are powers granted through legal documents which allow one person (the maker or “principal”) to delegate duties and assign rights to another (attorney-in-fact or “agent”). The attorney-in-fact is given legal authority to make and carry out certain financial and health care decisions. The range and scope of these powers will depend on how much discretion the principal decides to grant the attorney-in-fact. To make a power of attorney “durable” it must be designed to continue in its effect even if the principal becomes physically disabled or mentally incompetent. Durability in the power of attorney allows for cohesive handling of your affairs without disruption from an expensive and time consuming legal process to have a guardian appointed. A guardian is a court appointed manager of the principal’s affairs and they may not be the same person the principal would have preferred.

Gifting

Transfers of assets can be as simple as writing a check or as complicated as establishing complex trusts for grandchildren with special needs. Any amount gifted that exceeds $14,000 (for 2013) to any one individual must reduce the federal estate exemption of the donor of the gift. The federal and state governments do not assess an income tax on transfers. It is important to note that any gift may have an impact on Medical Assistance eligibility. (See “Elder Law” practice area.)

Federal Estate Tax Exemption

The exemption from federal estate taxes has increased significantly over the past few years while the estate tax rate has decreased. Below is a chart that shows the changes in the estate tax exemption and estate tax rate from 2008 through 2013.

Year

Estate Tax Exemption

Top Estate Tax Rate

2008

$2,000,000

45%

2009

$3,500,000

45%

2010

$5,000,000 or $0

35% or 0%

2011

$5,000,000

35%

2012

$5,120,000

35%

2013

$5,250,000

40%

 

There are a number of other trusts or legal vehicles that can be used for efficient estate planning. If you have questions about them and their usefulness to your situation, you should consult with your financial planner and/or your attorney.