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Is Your Estate Plan Up-to-Date?


Is your Estate Plan up to date? Take this simple test to determine if it is.

1. Have You Executed a Will or a Trust?
Without proactive planning, you are relying on the Pennsylvania legislature to determine to whom and how your assets will be distributed in the event of your death. In addition to having potentially very undesirable results, intestacy is usually the most costly and time-consuming method of passing your assets to your loved ones.

2. If You have Signed a Will or Trust has it been reviewed in the last 2 years?
Assuming that there have been no personal, family or financial changes since your Will was last reviewed, there have been major tax law changes in 1997, 2001, 2002, 2003, 2005, and in 2006. An out-of-date estate plan may be worse than no estate plan at all

3. Are All of Your Beneficiaries Over Age 18 and Financially Responsible?
Under Pennsylvania law, children inherit property no later than age 18 without restriction. Proper planning is crucial to prevent your beneficiaries from squandering his or her inheritance, or losing it to creditors or predators.

4. Are You Aware of which of Your Assets Will be Subject to Probate?
We encourage you to make a list of each significant asset you own and identify which assets are going to avoide probate. Assets owned as “joint tenants with right of survivorship,” assets owned in the name of a trust, and assets that pass by beneficiary designation (such as IRAs, life insurance, annuities, etc.) will avoid probate. Everything else is subject to probate. (Also, note that assets owned jointly are typically subject to probate upon the death of the last joint tenant.) Probate can be costly and typically requires twelve (12) to eighteen (18) months from the date of death to conclude.

5. Do You have Assets Titled Jointly with a Child, or Someone Else?
Holding assets jointly with someone other than a spouse is quite common, but has some potentially devastating consequences of which most people are unaware. The Pennsylvania Supreme Court says that a creditor of a joint tenant could have a claim to jointly owned property in order to satisfy the creditor’s claim. A creditor could include a divorcing spouse or business creditor. Additionally, problems can be created if joint tenants die in the “wrong order.” There is also the potential for substantial gift tax and capital gain tax consequences. Creating joint tenancies may also make you ineligible to receive Medicaid.

6. Does Your Current Plan Provide Your Family with Asset Protection, Divorce Protection, and Lawsuit Protection?
The most common way assets are passed on to designated beneficiaries is through an outright distribution. However, upon receipt, the entire inheritance can be claimed by one or more current or future creditors of your beneficiaries. You can provide protections for your loved ones by placing the assets beyond the reach of their creditors, including your son or daughter’s ex-spouses, in the event of a divorce.

7. If you have a Child from a Previous Marriage, Does Your Will Ensure that Your Child is Not Disinherited, in the Event that You Predecease Your Spouse?
Second marriages present unique planning issues, particularly if one or both spouses have one or more children from a prior marriage. Proper estate planning is critical to prevent undesired results, including the possibility of disinheriting your children.

8. Have You Prepared for the Cost of Nursing Home Care?
The average cost of nursing home care in Pennsylvania now exceeds $78,000 per year, and the cost of long-term care is one of the fastest growing expenses. If your estate plan has not taken these costs into consideration, a stay in a nursing home may consume all or a significant portion of your assets. Current Federal and Pennsylvania law substantially change how planning for nursing home care should be done. If you are concerned about the cost of nursing home care, your estate plan needs to be reviewed.

If you answered “no” or “don’t know” or “yes” to #5, you should make an appointment to speak to an attorney about your estate plan. If you don’t have an estate attorney, give Phil Levin a call! He was kind enough to provide the information for this post and can help you. As always, if you have any questions, please let us know.

Source: The Levin Law Firm, Radnor PA
Bill Mayer, CFP
Bill Mayer, CFP ®




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