FAQs

WHY SHOULD YOU MAKE A WILL?*
There are a number of reasons why people make a Will. The primary reason for making a Will, however, is to leave your property to those you care about, and in the proportions you choose.

If You Die Without a Will
If you die without a Will, the property in your name in most instances will be distributed, pursuant to law, among your family members. This distribution may not be exactly the way you prefer. For example, if you are survived by a spouse and children, your spouse receives the first $50,000 and one-half of the balance of the property, and the children share the rest.

If You Die Without a Will Leaving Children Under 18
If you and your spouse should die without a Will leaving children under 18 years of age, the court may appoint a guardian for your children without considering your wishes.
A court-appointed guardian will also be required to manage assets that you leave to your children who are under 18 years of age at your death. If your spouse survives you, the court probably would appoint your spouse as guardian, but a bond may have to be posted. Payment of the bond premiums will cost money--money that could be used to pay for your childs education, clothing or living costs. The court will also require annual accountings of income and expenses. In addition, investment of the funds by the guardian may be limited by the court. Because of these limitations, the childs funds may not grow at an acceptable pace if the guardianship lasts for any length of time. All of these problems could be easily avoided with a properly drafted Will.

As you can see, it is important that you make provision not only for a guardian of the property of any child under age 18 but also, and perhaps more importantly, you should name a guardian of the childs person. A guardian of the person is given custody of the child during minority.

A Will is Your Personal Plan
A Will is tailored to your own particular needs. Through a Will you can choose how your wishes will be carried out after you die. In the Will you name "executors" who will handle your property. An executor can be a relative, a friend, your lawyer or a bank or trust company that specializes in the handling of estates.

While you can make your own Will using pre-printed forms prepared in your own handwriting, it may not be legally valid and it may not be the best Will for your personal situation. Making the best plan and the best Will takes knowledge and expert advice. For example, did you know that property held jointly with another may not be distributed by Will? Or that life insurance, individual retirement accounts, pension plans and other assets may not be distributed by Will depending who is named as beneficiary? Or that a spouse has a right to a car and some other items, and to a large share of the property no matter what your will may say? The best plan recognizes that the best Will is only part of the total plan for the distribution of your property.

Your Lawyers Fee
You should discuss your lawyers fee in advance. The cost of drafting a Will usually depends on the amount of time your lawyer spends on the matter and the complexity of your assets. In small estates, when a Will contains no complicated provisions or unusual problems, the fees are nominal. Remember, making a Will is one of the wisest investments of your life--and after. To have the best plan for yourself and for your beneficiaries, call a lawyer and make an appointment to discuss your Will. Remember, the advice of an expert may prove invaluable.

*NOTE: The information provided here is not intended to provide you with advice. No one should attempt to apply or interpret any law without the aid of an expert. You should consult a lawyer before making any decisions in this area.

WHAT IS A LIVING WILL?

A Living Will is an expression of your wishes with respect to the use of "extraordinary" life sustaining measures in the event that you become unable to make your own health care decisions. Adults of all ages should consider preparing a living will, which will become effective only in the event that you are incapacitated and cannot make decisions for yourself. Pennsylvania permits you to decline "extraordinary" life sustaining measures if the situation should arise in which there is no reasonable expectation of your recovery from extreme physical or mental disability.

WHAT IS A REVOCABLE TRUST?

A revocable trust is an arrangement by which you transfer ownership of your assets to another entity, called a trust. You may establish a trust during your lifetime ("inter vivos trust") or you may provide for one in your Will ("testamentary trust"). You generally have the power to revoke the trust when you wish.

If you establish a trust during your lifetime, you (the settlor) can set up the trust with your own assets and retain management and control of these assets if you act as your own trustee. You can also designate someone else as your trustee; for instance, in the event you become incapacitated.

An inter vivos trust is an good arrangement for many. An inter vivos trust can be used as a substitute for a Will, in that it provides for the distribution of assets upon the settlors death. The trust assets are distributed directly to the beneficiaries and, unlike a Will, there is no automatic court supervision or probate. One advantage is that the allocation of assets is faster and less costly than through distribution pursuant to a Will.

Persons who are considering a trust arrangement should be aware that there is no ongoing court supervision of the trustee; therefore there is less protection if the assets are mismanaged. A trust costs more to draft than a Will; these expenses occur during your lifetime, as opposed to probate costs paid by heirs. Transferring ownership of all your assets to the trust can be a lengthy process. Many financial advisors recommend also drafting a Will, to ensure that any assets not captured by the trust are transferred upon the settlors death.

WHAT IS AN IRREVOCABLE TRUST?

A irrevocable trust is one which cannot be changed or canceled once it is set up without the consent of the beneficiary. Contributions cannot be taken out of the trust by the grantor. Irrevocable trusts offer many tax advantages which often make it plausible for a person to give money and assets away even before he/she dies.

There are a number of types of irrevocable trusts that can be used to make gifts to other persons with the assets under the control and management of a trustee. Transfers of property to an irrevocable trust are sometimes motivated by a desire to minimize taxes or to shelter assets from the claims of future creditors and other claimants (including spouses in divorce cases and plaintiffs in civil lawsuits).

To be effective for estate-reduction purposes, the trust must be irrevocable, and the trusts settlor should not be a beneficiary of the trust. It is also best if the settlor is not a trustee, either. Again, there are many types of irrevocable trusts, here are a few examples:

Minors Trusts: A trust can be established for younger beneficiaries to provide for education and/or other needs of life. Federal tax law has facilitated the creation of trusts for beneficiaries under the age of 21 years, but trusts can be designed to continue until any age or during a beneficiarys entire lifetime.

Supplemental Needs Trusts: If an intended beneficiary is a recipient of Medicaid, SSI, or other governmental assistance programs, an outright gift or a gift in trust may disqualify the beneficiary from continuing to receive such assistance. Trusts can be designed so that distributions are made only to "supplement" the benefits already being received. So long as distributions made by the trustee are discretionary and not mandatory, the trust assets and trust distributions are not, under most programs, considered disqualifying resources.

Specialized Trusts: Irrevocable trusts can be designed in an infinite number of ways. There are some very special types of irrevocable trusts that have evolved over the years as basic estate planning tools, including irrevocable life insurance trusts and charitable trusts.


WHAT IS PROBATE?

Probate is the process of proving that a Will is valid. The term is also used to refer to the process of administering the estate of the deceased according to the terms of the Will.

The probate process is usually initiated by filing the decedents Will with the Orphans Court in the county where the decedent lived, together with a petition in which the petitioner asks the court to approve the Will and appoint the executor named in the Will. If the court determines the Will is valid, the court then "admits" the Will to probate.

Many people are so concerned about the cost of probate that they spend a great deal of effort in trying to "avoid probate." The probate process, however, is not always something to be feared. In fact, where there are no objections to a properly executed Will, probate is a relatively quick and straightforward process. Thus, a prerequisite to ensuring that the probate process will be a smooth one, is the execution of a properly drafted Will.

The probate process does not have to be ridiculously expensive. The process may require the payment of court fees amounting to several hundred dollars. It is likely that fees for legal services will be the most significant expense associated with estate administration for those estates not subject to estate tax. This applies to both Probate and Administration proceedings.

Attorneys fees are often based upon the size of the estate, but many attorneys employ an hourly rate. You should discuss fees with your attorney before he/she begins his/her representation.

WHAT IS AN ADMINISTRATION PROCEEDING?

Estate Administration usually takes place when a person dies without a Will and has property that must be distributed to his or her heirs. In Pennsylvania, state law directs how to distribute the deceaseds estate where there is no Will (see "What happens to my property if I die without a Will" below).

WHAT HAPPENS TO MY PROPERTY IF I DIE WITHOUT A WILL?

Pursuant to Pennsylvania State law, the property of a decedent who dies without a Will shall be distributed as follows:

The intestate share of a decedents surviving spouse is:

1. If there is no surviving issue or parent of the decedent, the entire intestate estate.
2. If there is no surviving issue of the decedent but he is survived by a parent or parents, the first $30,000 plus one-half of the balance of the intestate estate.
3. If there are surviving issue of the decedent all of whom are issue of the surviving spouse also, the first $30,000 plus one-half of the balance of the intestate estate.
4. If there are surviving issue of the decedent one or more of whom are not issue of the surviving spouse, one-half of the intestate estate.
5. In case of partial intestacy any property received by the surviving spouse under the will shall satisfy pro tanto the $30,000 allowance under paragraphs (2) and (3).

§ 2103. Share of others than surviving spouse.

The share of the estate, if any, to which the surviving spouse is not entitled, and the entire estate if there is no surviving spouse, shall pass in the following order:

1. Issue.-To the issue of the decedent.
2. Parents.-If no issue survives the decedent, then to the parents or parent of the decedent.
3. Brothers, sisters, or their issue.-If no parent survives the decedent, then to the issue of each of the decedents parents.
4. Grandparents.-If no issue of either of the decedents parents but at least one grandparent survives the decedent, then half to the paternal grandparents or grandparent, or if both are dead, to the children of each of them and the children of the deceased children of each of them, and half to the maternal grandparents or grandparent, or if both are dead to the children of each of them and the children of the deceased children of each of them. If both of the paternal grandparents or both of the maternal grandparents are dead leaving no child or grandchild to survive the decedent, the half which would have passed to them or to their children and grandchildren shall be added to the half passing to the grandparents or grandparent or to their children and grandchildren on the other side.
5. Uncles, aunts and their children, and grandchildren.-If no grandparent survives the decedent, then to the uncles and aunts and the children and grandchildren of deceased uncles and aunts of the decedent as provided in section 2104(1) (relating to taking in different degrees.)
6. Commonwealth.-In default of all persons hereinbefore described, then to the Commonwealth of Pennsylvania.

WHICH ESTATES ARE SUBJECT TO ESTATE TAXES?

Depending upon the size of a decedents estate, the estate may be subject to Federal or Pennyslvania State estate tax, or both.

The executor must file federal estate tax return (Form 706) for the estate of a U.S. citizen or resident whose gross estate, plus adjusted taxable gifts and specific exemption, is more than the applicable exclusion amount of the unified credit for the year of death. For the year 2007 and 2008, the applicable exclusion amount is $2,000,000.

The executor must file a Pennsylvania State inheritance tax return if there are taxable assets in the estate.