Tips for putting together a successful Pennsylvania estate plan

A recent article in Fox Business addressed some of the more common mistakes that can be made while putting together an estate plan. The takeaway of the article: the biggest mistake that you can make is not having a plan at all.

Those who find themselves considering putting together an estate plan may be overwhelmed by the thought of putting together all the required legal documents. There are many legal tools that can be used, including a will, a financial power of attorney, a health care power of attorney and a living will. Sometimes, a trust may be appropriate, whether it is a revocable trust for asset management during your life, an irrevocable trust for asset protection planning, a charitable trust or a special needs trusts for a family member with a disability. These are just a few tools available to structure an estate plan customized to your unique needs, but determining which tools are best for each situation can vary. However, knowing the basics can help you to begin the process.

Wills and trusts

An estate plan is designed to address how real estate, bank accounts, stocks, and all other possessions will be managed if you become incapacitated or disabled or distributed after death. The plan can include a power of attorney in place to handle financial or make medical decisions. It can also include a living will which contains end-of-life care preferences.

A will may be the most recognizable tool used to make an estate plan. This legal document establishes who inherits various assets, names a personal representative and may name a guardian to take care of minor children or set up a trust to handle funds for minor children.

Trusts may be used to place the management of property and other assets in the control of a third party. There are many different types of trusts that can be designed to help meet the creator’s goals. These goals could include tax savings or spendthrift provisions helping to shelter the funds from creditors.

Pennsylvania estate laws

Although the basics of wills and trusts are fairly universal, it is important to recognize that state laws play a role in how the estate is administered. One important consideration is the role of state inheritance taxes. Pennsylvania imposes an inheritance tax on the net value of a decedent’s assets. According to the Pennsylvania Department of Revenue, the tax is a percentage of the value of the estate that is transferred. The percentage used will vary depending on to whom the transfer is made. If, for instance, the property is transferred to a surviving spouse, the tax rate is zero. Transfers to children or grandchildren are subject to a 4.5% inheritance tax. Transfers to siblings involve a 12% tax while anyone else is subject to a 15% tax. Planning can help to reduce these taxes.

In some cases, additional fees or discounts can apply. This is just one complication that can make the use of a legal professional valuable. As a result, those considering putting together an estate plan should contact an experienced Pittsburgh estate planning attorney. This legal professional will be able to discuss your wishes and help you design an estate plan that is more likely to meet your needs than doing no plan.

Talk to lawyer Carol Sikov Gross, CELA.