UPCOMING EVENTS

SEMINARS FOR SEPTEMBER 2017

MONROEVILLE
Tuesday, September 12, 2017
2:00PM
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
Tuesday, September 12, 2017
7:00 PM
Holiday Inn Express
Delmont/Murrysville
6552 Route 22
Delmont, PA 15626
Behind Lamplighter Restaurant on Rt. 22

MURRYSVLLE / DELMONT
Thursday, September 14, 2017
2:00 PM CANCELLED DUE TO CONFLICT

Holiday Inn Express
Delmont/Murrysville
6552 Route 22
Delmont, PA 15626
Behind Lamplighter Restaurant on Rt. 22

MONROEVILLE
Thursday, September 14, 2017
7:00 PM 
 CANCELLED DUE TO CONFLICT

The Estate Planning Centers
3824 Northern Pike, Suite 801B
One Monroeville Center
Monroeville, PA 15146
Just west of Red Lobster on Rt. 22

MONROEVILLE
Saturday, September 16, 2017
9:30 AM
The Estate Planning Centers
3824 Northern Pike, Suite 801B
One Monroeville Center
Monroeville, PA 15146
Just west of Red Lobster on Rt. 22

 
 

 
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We would enjoy bringing your group timely estate planning information.

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All seminars are
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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.

Should I put my children's names on my assets?

A frequent question we get from clients is “Can I add my children's names to my accounts, or to the deed to my property?" The short answer is that you can, but that doesn't mean that you should. There are liability, tax, and other considerations which play into the seemingly simple decision to add your children’s names to your assets.
 
When evaluating adding your children's names, the first question to consider is why you are considering this process. The frequently cited reasons include providing ease of access to a family member for account management assistance, avoiding probate, eliminating inheritance taxes or sheltering assets from long-term nursing care expenses. These goals, however, can be achieved through other methods, reducing or eliminating the disadvantages discussed below. For example, account access can be provided through a durable financial power of attorney or revocable living trust. Avoiding probate can be achieved through the use of a revocable living trust, or even by designating a “transfer on death" beneficiary for many assets. While a joint ownership may reduce inheritance taxes due at death, it may increase income tax consequences for your children unnecessarily. Finally, transferring assets to your children may protect those assets from being considered as “available assets" for long-term nursing care assistance under the Medicaid program. However, there is a five-year “look back period,” during which the government will not recognize those gifts, and such gifts leave your assets exposed to numerous other risks.
 
It is important to consider the disadvantages of adding your children to your accounts, or simply transferring assets to your children, when making your decision. Obviously, an outright transfer to your children means that you have given up control over how your assets are managed, after spending a lifetime to save those assets for this part of your life. Further, with your children as full or partial owners of your assets, your assets are subject not only to the control of your children, but the risks and liabilities in their own lives. If your children become involved in litigation, debt, divorce, bankruptcy, or other financial perils, you can end up losing your assets flowing from their life choices. For many families, an understanding of this lack of control and exposure to risk is enough to lead them to decide that they are not ready to transfer significant assets to their children.
 
There are also important tax consequences which families frequently overlook when transferring ownership of assets to their children. The first tax issue to be considered is the income tax consequences which arise. When you add your children to your account, or transfer it to them completely, you are making a gift to your child. When we gift an asset to someone, we also gift to them our own tax basis in the asset. For example, if Dad purchased his home 20 years ago for $30,000, and transfers the house by deed to his son, what happens if the son later sells the property following Dad's death, when it is worth $105,000? As long as the property was transferred to the son more than one year before Dad’s death, no inheritance tax is due.  What they overlooked, however, is that when Son sells the property for $105,000, he has just generated income of $75,000 ($105,000 sale - $30,000 basis), subject to both state and federal income tax. If instead Dad had permitted the property to pass to his son at his death, under a will or revocable living trust, his son’s tax basis would become the value of the property as of Dad’s death, or $105,000 in our example. Using this method, when his son sells the home, he does not create any gain subject to income tax, resulting in a substantial tax savings. While the son will have to pay Pennsylvania inheritance tax on the value of the property (4.5% tax rate for children and grandchildren), that is better than paying state and federal income tax rates on the gain under the “gift" approach.
 
As estate planning attorneys, our job is to help families identify their goals and interests for themselves and their families, and develop the best strategies and techniques to implement the plan in a way which balances the various needs and risks, including control, taxes, incapacity, divorce, creditors, long-term care expense, and more. Our lives are all far more complicated than they were just one or two generations ago, and it is our pleasure to help families to develop a plan to navigate their way to the best outcome. In an effort to make this process as easy as possible, we continue to offer initial consultations to review such matters on a complimentary basis. If you have not given yourself and your family the benefit of a recent review by an attorney who focuses on estate planning, we encourage you to do so soon.