Estate, Wills and Probate Law

Why Have a Will? 

 

You have worked hard to accumulate your property over your lifetime, a will is a responsible way to plan for what happens with your hard-earned estate upon your passing. A will protects your spouse, children, and assets and memorializes your wishes after you pass on.  

 

A will is a legally binding documents that describes how you would like your property distributed after death. If you happen to die without a will, you have died intestate and there is no guarantee that your intended wishes will be carried out. You can also put other desires in a will such as where you would like your funeral or who would take care of your minor children at your death. 

 

Without a will, the court will take it upon itself to appoint a guardian for minor children so having a will is a good way to appoint the person you want to raise your children if you cannot and make sure someone you do not want raising your child does not have the opportunity to do so.  

 

A will is also a helpful tool in diminishing the chance that your family will fight over your assets after your death. You can disinherit someone in a will who would otherwise inherit. A will outlines how you want your assets to be distributed, therefore if someone is not named in the will, they are unlikely to inherit. You can also change a will at any time before your death, as long as you are of sound mind, so if it happens you reconcile with someone originally left out of your will, you always have the option of putting them back in. 

 

Overall, a will is a responsible way to protect your family and assets in the event of your death. If you are interested in getting a will please reach out to legal counsel for assistance.

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What are the common elements of a Will? 

 

The Testator can make a will as simple or as complex as they wish, as long as the will meets the basic state requirements for a valid will. In Pennsylvania the basic requirements for a valid will are the testator must be age 18 or over, the testator must be of sound mind, the will must be signed, and the will must be in writing. The will must be signed in one of three ways. The will can be signed either by the testator themselves, signed by the mark of the testator in front of two witnesses who must also sign the will, or by someone other than the testator in the presence of the testator and testator must declare the document their will in front of two witnesses who then must also sign the will. The only witnesses needed in Pennsylvania are the witnesses needed if the testator does not sign the will themselves. If a testator signs their own will with their name, no witnesses are required. 

 

Some basic questions to ask yourself when drafting a will are as follows: 

 

• The name of the person you wish to make your executor (typically this is your spouse)?

• The name of the person you wish to make your alternate executor (this is optional, but if something should happen to your spouse, who would you want to handle your estate)? 

• Bequests and any special bequests should be listed.  

• The name of the person you would like to have custody of your children in case something happens to you and your spouse (this is only for children under 18, it is not needed for adult children).

 

These are the basic ideas you should consider when drafting your will. You can also include other instructions such as how and where you wish to be buried or specific funeral arrangements.

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Estate Plan vs. Will? 

 

Everyone has an estate. Your estate is made up of everything you own and can range in size from modest to grand. No matter the size of your estate, there is one issue everyone has in common, what to do with your estate when you die. It is an uncomfortable notion to some and can be stressful to think about life after you are gone but having an estate plan can save your loved ones a great deal of hassle and ensure your estate goes to someone you have chosen. While a will is a great tool in protecting your assets after death, an estate plan is much more in depth than a will and can accomplish much more. 

 

Not only does an Estate Plan deal with distribution of your assets it also helps you and your heirs pay less in taxes, fees, and/or court costs. It can also involve what happens with your assets while you are living. Estate planning is the process of arranging the distribution of assets creating the maximum benefit to the recipients. An estate plan will typically include a will, trusts, power of attorney, living will, and any other documents outlining your wishes for your estate. An estate plan can include as little or as much instruction as you wish and can be tailored to you and your estate’s specific needs. Having an estate plan not only gives you peace of mind during your lifetime but also ensures your loved ones are secure once you pass on. 

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What is Probate? 

 

Probate is the legal process by which your estate is distributed to your heirs or beneficiaries and any debt is paid off. Probate property is distributed according to the instructions contained in the decedent’s last will and testament or according to state law if no will exists. There are several steps in the probate process. First, if there is no will, the Court will appoint an individual of its choice to administer of the estate, however, if there is a will, an individual is usually named the executor of the estate within the will. The will then must be presented to the Court and proven valid. It is important to follow state rules regarding valid wills when drafting your will, if state law is not followed the Court will deem the will invalid during the probate process. Once the will is deemed valid by the Court, your property is inventoried and appraised. Any taxes or debts you owe will then be paid off with your assets and the remaining assets are then distributed according to your will or according to state law if you do not have a will. Usually this process can take anywhere between six to nine months, however, probate can take substantially longer if disputes regarding the estate arise.

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What is the difference between probate property and non-probate property? 

 

Only certain assets will go into probate, it is no surprise these assets are designated probate property while the remaining assets are called non-probate property. Probate property is usually comprised of assets owned solely by the decedent and contain no beneficiary designation. For example, probate property includes assets such as bank accounts in the decedent’s name alone, real estate owned solely by the decedent, and personal property. These assets are subject to the state’s intestacy laws if there is no will. If the decedent has a valid will, these assets will be distributed through the probate process. 

 

Non-probate property is generally any property that automatically becomes the property of the beneficiary upon the decedent’s death. Some examples of non-probate property include assets such as life insurance policies that designates a beneficiary or bank accounts with a “payable upon death” beneficiary specified in the contract. Real estate held by multiple people with rights of survivorship can also avoid the probate process. You can also avoid the probate process by having an estate plan and using a living trust. 

 

For instance, Amy has $4,000 in her personal bank account, she has a $100,000 life insurance policy which names her husband Harry as her beneficiary, Amy and Harry also own a home as tenants by the entirety. Along with all those assets, Amy also individually owns a lake house and has an extensive jewelry collection. Unfortunately, Amy passes away. Her life insurance policy and the home she owns with Harry are considered non-probate property and automatically go to Harry when she dies. The rest of Amy’s assets, the bank account, jewelry, and lake house, are considered probate property and must be distributed according to Amy’s will, if she has one and it is valid. If not, then the property is distributed according to Pennsylvania intestacy laws.

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What is Estate Tax? 

 

Estate tax is a tax on the estate of a recently deceased person. The tax is usually taken after the individual dies but before their assets are distributed to their heirs or beneficiaries. This is sometimes called the “death tax.” Not all states have an estate tax. Pennsylvania is one of 38 states that does not have an estate tax. However, there still may be a federal estate tax that may apply, and Pennsylvania does have an inheritance tax. The percentage paid for the inheritance tax is dependent on the relationship between the heir and the decedent. There is no tax applied to transfers to a surviving spouse or to a parent from a child under 21 years old. There is a 4.5% tax applied to transfers to direct descendants and other lineal heirs such as grandchildren. There is a 12% tax on transfers to siblings and a 15% tax on transfers to any other heir. Charitable organizations, exempt institutions, and government entities do not have to pay inheritance taxes. Out-of-state heirs or beneficiaries may have to pay an estate tax on real and tangible property they inherit which located within the state. 

 

There is still a federal estate tax that will apply to your estate when you pass away. The federal estate tax exemption is currently $11.58 million. This is a portable exemption, meaning that a married couple can protect up to $23.16 million in assets after both have died if they utilize the right legal maneuvering during their lifetime usually through an estate plan. The federal estate tax is broken down into brackets according to the amount of your taxable estate. Each bracket is assigned a base tax payment that is anywhere between $0-$345,800 and a marginal rate that is anywhere between 18% and 40%. The marginal rate is applied to any amount exceeding the rate threshold of each bracket. These rates are also subject to change with each new election.