20 Pennsylvania Estate Planning Q&As

None of us know what the future holds; nevertheless, you can and should make a plan to deal with the many turns life has in store for you, both expected and unexpected. Effective estate plans prevent conflicts among your family members and give you peace of mind for the unknown. Most importantly, you should prepare an estate plan because it puts you in control.

A will, also known as a Last Will and Testament, is a legal document in which an individual outlines their wishes regarding distributing their assets, paying debts, caring for any minor children, and handling other issues after they die. A will only controls probate assets, consequently having no control over jointly held assets or assets with beneficiary designations.

A common myth that many believe is that the Commonwealth will get your entire estate if you die without a will. In reality, like every other state and the District of Columbia, Pennsylvania has its own laws that determine who inherits a person’s property when that person dies with no will or trust in place. These intestate succession laws are government-formulated and directed estate plans. This may be just as frightening as the thought of the government getting everything since the law may require the distribution of assets to individuals you would not otherwise desire to have them. The answer to questions can be complicated and ultimately hinges on which family members or relatives survived the decedent.

Wills are not set in stone once you sign them. You can make changes or even revoke your will any time before your death as long as you are legally competent to make the change. That said, it is a bad idea to simply start drawing lines through the part(s) of your will that you don’t like and then write your initials next to the marked text. This will almost certainly cause conflict and the strong possibility that someone may initiate a challenge to the validity of your will. Most changes can be made by either having a codicil (formal amendment to a will) or a new will prepared revoking the old will.

The short answer is yes. You can put instructions regarding your funeral in your will. However, while you can put your plans for your funeral in your will, it is not something we typically recommend to our clients. The fact is that the funeral typically happens within a week of someone passing away. It is the very first thing a family takes care of. Your family will probably not contact a lawyer or even look at your will until after you’ve been laid to rest. It’s better to create what we call a “Letter of Instruction,” which details your desires for the funeral and can be shared with your family to ensure everyone is on the same sheet of music.

Pennsylvania does not allow you to disinherit your spouse entirely without a valid prenuptial or postnuptial agreement. Even if you specifically write your spouse out of the will, Pennsylvania law permits them to inherit and claim their “elective share,” which is no less than one-third of your estate. However, you can disinherit children in Pennsylvania. While there are many reasons to disinherit someone, be careful how you plan to do it. Simply omitting a child from your will is almost always unsuccessful because the courts could deem the omission a mistake or oversight should the disinherited child contest the will. To effectively disinherit your child(ren), you should include a clause in your will that specifically identifies the child(ren) you intend to disinherit, along with a clear statement that you are intentionally disinheriting them.

A Financial Power of Attorney is a vital part of any estate plan that allows you (the “Principal) to designate one or more individuals (your “Agent(s)”) to act on your behalf with regard to financial matters. A Financial Power of Attorney allows you to select the person(s) whom you trust to make financial decisions if you are unable to do so. It is important to note that spouses are NOT automatically each other’s agent under power of attorney. While married couples enjoy certain conveniences, such as being able to access jointly held bank accounts, their authority to act for one another will not extend to real estate matters, life insurance, retirement accounts, or annuities.

A Health Care Power of Attorney allows you (the “Principal) to designate one or more individuals (your “Agent(s)”) to make medical decisions on your behalf when you are unable to make them yourself. Please keep in mind that even if you have prepared a Health Care Power of Attorney, you will have complete control to make any medical decisions for yourself as long as you are capable of doing so. The Health Care Power of Attorneys we prepare for most clients will almost always include an advance directive, otherwise known as a “Living Will,” which states your wishes regarding withdrawing life-sustaining treatments when you are permanently unconscious or in an end-stage medical condition.

The short answer is whoever the local Pennsylvania Orphans’ Court decides to put in charge of your financial and health care decisions should it be deemed necessary, which may not be the person you would have chosen. Failing to create power of attorney can have many unintended consequences. No one likes to think about if or when there comes a point in life where they could become incapacitated, but a Financial Power of Attorney and Health Care Power of Attorney are crucial documents that should be included in every estate plan.

A trust is a legal entity created when someone (the “Settlor”) enters into an agreement with another (the “Trustee”) to hold and manage title to property or assets on behalf of their beneficiaries. There are many different kinds of trust agreements (e.g., revocable trusts, irrevocable trusts, special needs trusts, etc.) and whether or not you need a trust as part of your estate plan depends on your unique background, financial position, and goals.

A revocable living trust may be a good idea for some, but it is not for everyone and does not reduce the time and expense of estate administration in Pennsylvania. However, a revocable living trust can be a good option if you own out-of-state real estate, so you can avoid probate in multiple states, and because many other states have a more complicated probate process. Revocable living trusts can be useful in certain circumstances, but they are not for everyone.

Nope. A revocable living trust will not reduce the Pennsylvania inheritance tax or federal estate tax, nor will it reduce your legal fees. The claim that living trusts reduce taxes is one of the most common myths out there. This is important; a living trust does nothing to protect your assets from taxes, creditors, or lawsuits.

Everyone really should have these three fundamental estate planning documents: a Last Will and Testament, a Financial Power of Attorney, and Health Care Power of Attorney with an Advance Directive. Planning ahead will make sure that your wishes are followed after death, your family is spared unnecessary expense and delay, and someone you trust will be in charge if you ever become unable to manage your own affairs. Additional documents, such as trusts, could be necessary depending on your specific goals and family circumstances.

This is the point when things get a little technical and legalistic. Really, how often does someone use the terms “probate assets” or “non-probate assets?” When a person dies in Pennsylvania, all of their property is divided into two categories. Probate assets are those assets that the decedent owned in their name alone and in some circumstances jointly with someone else but without rights of survivorship (also known as Tenants in Common). Non-probate assets pass directly to another person by operation of law (e.g., jointly owned bank accounts, life insurance, IRAs, 401(k)s, real estate owned as joint tenants with rights of survivorship, and many more). When planning your estate, it is important to know and understand the difference between probate and non-probate assets. The distribution of non-probate assets is not controlled by your will or Pennsylvania’s intestacy laws.

If you have a retirement plan (e.g., IRA, 401(k), 403(b), etc.) or own a life insurance policy, you are probably familiar with the concept of a beneficiary designation. Assets that pass by beneficiary designations will pass directly to your named beneficiary, overriding any contrary provisions that may exist in your will. Failing to review beneficiary designations could wreck other parts of your overall estate plan because they typically override other estate planning documents such as a will. A complete estate plan includes making sure any accounts you have with a beneficiary designation(s) work effectively and efficiently to achieve your overall estate planning goals.

Every parent with young children should make estate planning a priority. Estate planning deals with much more than dispersing assets after someone dies. If you have minor children, there are several crucial estate planning options you should consider; for example, parents, with or without significant assets, should have an estate plan in place setting forth their wishes for their children, including nominating a guardian in the event both parents die while their children are still minors. Furthermore, for any property left to a minor, the will should include a testamentary trust that provides instructions for how the trust should be used (e.g., health, education, maintenance, and support) and should set forth the age at which the child can receive their inheritance outright. A proper estate plan can ensure your minor children are taken care of by ensuring that your children will be placed, if necessary, with a guardian you trust and that your estate is administered according to your wishes.

“In this world nothing can be said to be certain, except death and taxes,” Benjamin Franklin, 1789. The Pennsylvania Inheritance Tax is a tax imposed on the privilege of inheriting property when someone dies. The inheritance tax rate is based on the relationship between the decedent and the beneficiary. Unlike an estate tax, there is no threshold below which the tax is not imposed. By default, it is the beneficiaries, not the estate, that are ultimately liable for paying this tax; however, a will often provides that the estate should pick up this tab as well.

First, congratulations on taking the pivotal step of creating and executing estate planning documents. For most clients, signing their estate planning documents brings a sense of relief and satisfaction. Now you need to know what to do with them. Once your estate planning documents are signed, the originals should be kept in a safe place (such as a fire-resistant safe at your home). We also recommend that you show your executor the exact location of your original will during your lifetime. Your original will needs to be found in the event of your death. If the original will cannot be located, Pennsylvania law presumes that you revoked it. While there are ways for a lawyer to try to probate a photocopy of a will, doing so can be expensive with an uncertain outcome.