UPCOMING EVENTS

SEMINARS FOR SEPTEMBER 2016

MONROEVILLE / PITTSBURGH
Tuesday, September 13, 2016
2:00PM
Courtyard Marriott / Monroeville
3962 Wm Penn Highway
Monroeville, PA 15146
Between Sheetz and Eat ‘n Park
 
MURRYSVLLE / DELMONT
Tuesday, September 13, 2016
7:00PM
Holiday Inn Express
Delmont/Murrysville
6552 Route 22
Delmont, PA 15626
Behind Lamplighter Restaurant on Rt. 22
 
HARMARVILLE / PITTSBURGH
Wednesday, September 14, 2016
2:00PM
TownePlace Suites / Pittsburgh
2785 Freeport Road
Pittsburgh, PA 15238
Just off of Exit 48 of PA Turnpike
 
MONROEVILLE
Wednesday, September 14, 2016
7:00PM
The Estate Planning Centers
3824 Northern Pike, Suite 801B
One Monroeville Center
Monroeville, PA 15146
Just west of Red Lobster on Rt. 22
 
MURRYSVLLE / DELMONT
Saturday, September 17, 2016
10:00AM
Holiday Inn Express
Delmont/Murrysville
6552 Route 22
Delmont, PA 15626
Behind Lamplighter Restaurant
 

 
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Proudly serving clients throughout Allegheny, Westmoreland, Butler, Fayette, and Washington Counties; including Pittsburgh, Monroeville, Greensburg, Latrobe, Cranberry, Wexford, Sewickley and YOUR community.

12 Mistakes Which Can Unravel Your Estate Plan

As I work through consultations with my clients to consider, design and ultimately implement an estate plan to protect their family in the event of death or serious injury, we discuss a wide variety of issues.  Over time, I see some mistakes arise again and again when people try to plan on their own, or with someone who doesn’t focus on family estate planning issues.  In this season of the 12 Days of Christmas, take a couple minutes to see if you or your family might unknowingly be a victim of the following examples of mistakes we see:
 

1. Thinking you don’t have an “estate” to plan: Very often, families ask me if their estate is ‘worth’ having a plan.  All of us, from the ultra-wealthy to those of the most modest means, die with the same assets; all that we have. Large or small, everyone wants to see that their assets pass to the right people, at the right time, in the right way, and with the least expense and inconvenience.  Those goals, however, don’t happen all by themselves.  

2. Not understanding what controls your assets upon death: Most people assume their Will controls what happens to assets upon their death.  Numerous other factors can alter the assumed operation of the Will, however.  For example, joint tenancy property, beneficiary designations, and Transfer-on-Death designations often are structured differently from the Will, and must be considered. An incomplete Will disposition, an elective share claim to one-third of assets by an undercompensated spouse, or intestate share elections claimed by a purportedly forgotten heir can further disrupt a plan without attention in advance.

3. Failing to understand how retirement accounts pass on: Tax advantaged retirement accounts (401k, IRA, Roth IRA, 403b, etc) have become a routine asset in many families’ lives, but few people really understand what will happen to these assets when they die. Properly structured, your plan can permit your family to continue to enjoy tax-deferred growth of those assets for many decades after you pass on.  Simple mistakes, however, can jeopardize the tax-deferred nature of those accounts, and accelerate the income tax liabilities so quickly that your family has to pay not just death taxes, but also income taxes, shortly after your death on the entire account. Other actions can expose those assets to claims of your beneficiaries’ creditors and others.

4. Planning using asset-by-asset balancing: Some families achieve their goals by leaving certain assets to certain individuals. For example, the house at 123 Main Street to Daughter, and the Bank Account of roughly the same value to Son.  What if the house is sold?  What if the Bank Account goes up or down significantly, is closed, or is moved to another institution?  Suddenly, the perceived balance is thrown into disarray.

5. Belief that having a Will avoids probate for the family: If you use a Will as the basis for your plan, you necessarily invoke the probate process to implement it.  Probate is the court process to prove the validity of a Will, appoint an Executor, collect the assets and debts, and generally administer your estate through the time of final distribution. The expense, delay and frustration of probate from a Will-based plan may warrant consideration of a Living Trust based plan for some families.

6. Relying on joint tenancy to avoid probate: Property owned as a Joint Tenant with Rights of Survivorship, frequently between spouses or family members, is a way to avoid probate. Unfortunately, if both owners die together, it actually creates two probates, one for each owner. Further, using this tool to avoid probate exposes the asset to creditor claims and liability against family members in a way not often intended.

7. Setting up joint tenancy to avoid probate incorrectly: A parent may put their child on a deed to the family home, for example, hoping to avoid probate. Unfortunately, in Pennsylvania the law presumes that when you add your child, or anyone other than your spouse, you are adding them as a Co-tenant unless careful wording is used.  This means that if you die, the child gets to keep their interest in the property, but the half that you still are considered to have owned must pass through the probate process. Thus you had the expense of the initial transfer and the risk of joint tenancy, and yet still have left your family with the probate process. 

8. Putting other names on your accounts for convenience:  A parent may add a child to their accounts in order to make it easier for the child to help with paying bills.  By doing so, parents are unwittingly exposing their assets not only to their children’s control, but to control by their children’s creditors.  As a co-owner of your account, debts and obligations of your child can now be taken by creditors. In an age of lawsuits, child support, bankruptcy, tax liens and fraud, this risk usually isn’t worth the risk.

9. Ignoring special planning for special needs children: The daily demands of taking care of disabled children are enough to wear down any parent, but unless care is taken in your planning, you may be unwittingly leaving your assets to the government. Special needs children are often eligible for governmental benefits, however these benefits impose asset limitations. If your child inherits assets, they lose those benefits until their money is gone or they put it in a trust which will pay it to the government when they die.  With advance planning, however, you can let your child inherit money in a way which lets them keep both the government benefits and the inheritance. A Supplemental Needs Trust is a powerful way to give your disabled child the best of both worlds, but only if you take the time to set it up in advance. 

10. Failure to consider a child’s experience in financial matters: For most people, the gift of an inheritance is the single largest amount of money they will ever receive in their lifetime. Suddenly, they are faced with choices, decisions, opportunities and temptations they have not faced in the past. Many families decide that placing some restriction on a child’s use of some of the inheritance for at least a period of time makes sense, in order to let the child get used to making these types of decisions.

11. Leaving an inheritance to children or grandchildren by name: Many people want to pass some or all of their estate to their children and/or grandchildren, so they specify those gifts in their Will.  If you leave a gift to your son John, your daughter Susan, your grandchild Billy and Grandchild Linda, that may seem fine.  What if Susan has another child after you put this plan in place?  What if John predeceases you?  Does John’s inheritance pass to his children, his spouse or his sister?  Does your new grandchild get anything at all?  Careful drafting of an estate plan is required to avoid such hidden ambiguities.

12. Failing to fund a Living Trust: A revocable Living Trust can be a powerful estate planning tool to protect family members, reduce death taxes and avoid probate.  A trust, however, is only as good as the assets it holds title to.  If you had a Living Trust prepared by an attorney, or heaven forbid some online company or other fill-in-form, but haven’t titled your assets and adjusted your beneficiaries to properly fund the trust, then the trust won’t be able to give your family the full benefits.  Attention must be given to when and how assets get into your trust in order to avoid that the proper tax, risk and expense considerations are balanced.  We enjoy helping families to make sure that their trusts are properly funded to achieve the desired goals.