Estate Planning

Miller, Turetsky Rule & McLennan offers a full range of estate planning services for its clients. Jack Rule, Esquire, the lead attorney of the Probate and Estate’s practice in the office has over 38 years of continuous experience in all aspects of estate planning and estate and trust administration.  The Firm’s services include basic and customary wills and plans up through more complicated situations, including:

• substantial federal estate tax and generation skipping tax planning;
• business succession planning;
• life insurance trusts;
• living trust plans;
• planning for families with beneficiaries who have special needs; and
• planning for families with children from multiple marriages.

We provide clients who have basic estate planning needs and objectives two alternatives with respect to consultation and completion of the plan. One approach involves us providing an information gathering questionnaire that the clients can complete and return to us with the intention of us producing drafts which will be reviewed and finalized in a single in-person consultation. The other approach is to meet to discuss the plan and objectives in person and then meet a second time to finalize the completed documents.

Part of the information gathering questionnaire involves a summarization of assets owned and the manner in which these assets are titled (sole title, joint titling, or sole title with a designated individual beneficiary). This is a very important part of the process because it is important that the assets controlled by your will are coordinated properly with assets that might pass outside of your will.

It is our strong recommendation that in addition to a will, husbands and wives consider exchanging financial and health care powers of attorney with each other in addition to completing mutual, reciprocal wills.  Powers of Attorney allow the designated agent to act for the grantor of the power in the event he or she would become incapacitated. The main estate planning goal achieved by this is the avoidance of having to go to court for the appointment of a guardian. Statistically, younger adults have a much higher probability of suffering an incapacitating illness or accident than dying.  Guardianship is a costly procedure which has the legal effect of taking away the rights of the incapacitated individual and also requiring the guardian to proceed with the administration of the person’s affairs under fairly strict court supervision and accounting obligations.  It is easily avoided by granting a power of attorney.

Thank you for considering our firm; we look forward to the opportunity to assist you.

If you have agreed to serve as an agent under a power of attorney given to you by another person it is vitally important that you understand exactly what your duties and responsibilities are and how to carry them out properly and make sure you are protected from liability.

You are a Fiduciary.

First, understand that you are a fiduciary and have the potential for fiduciary liability to the same extent as an executor of an estate or trustee of a trust. Your actions can be questioned by an appropriate party in interest filing a petition with the Orphans’ Court. Everything you do should be done to promote transparency and the ability to provide information and if necessary produce a financial accounting of your actions should the need arise.

The agent’s primary obligation is to act only in the best interest of the principal who granted the power of attorney. Another obligation is to not commingle assets with the principal, but keep all of the agent’s and principal’s property separate. While these obligations may seem simple and obvious at first blush, there are a number of commonly encountered actions by agents that we have observed which while appearing innocent and commonplace can be challenged as violating these primary duties.

Joint Accounts.

We frequently encounter agents using an account established in joint title between the principal and the agent as the account through which the bulk of the financial transactions carried out for the benefit of the principal are being conducted; this should be avoided. A joint account is deemed to be property of both the agent and the principal, so immediately there is a question of commingling assets. Upon the death of the principal questions can also arise as to whether there was a true intent that the joint account be treated as a gift to the surviving tenant agent, or whether the remaining balance of the account should be included in the estate of the principal.

If the principal has established a joint account with the agent prior to the agent assuming active duties under the power of attorney this account should be kept separate and not utilized in  conducting business for the principal. An account titled in the sole name of the principal, but with the agent having access is the proper form of account to use in doing business for the principal. Of course, if the principal runs low on funds and all of the funds of the joint account were contributed by the principal, it would be appropriate to access the funds in the joint account and make them available to the principal by depositing them into the account that is actively being used to conduct business for the principal.

If the principal desires to establish a joint account with the agent with the intention of making the contents of the account a gift to the agent upon the death of the principal and this desire occurs while the agent is actively serving under the power of attorney it is essential that the agent not use the authority under the power of attorney to complete this gift. This gift should be accomplished through the actions of the principal making the arrangements for the joint account and clearly directing the establishment of the account. The agent is well advised to request his or her own copy of the paperwork establishing the account to be able to clearly prove if needed in the future that the account was created at the express direction of the principal and not through the actions of the agent.

Giftgiving.

The making of gifts by the agent can be problematic for a number of reasons. First, gifts take funds away from the principal, so they are inherently not in the exclusive best interest of the principal, so they automatically come under scrutiny. Next, the power of attorney must be carefully consulted to determine whether it enables the agent to make gifts and, if so, are there limitations on the ability to make gifts. Under the current law in Pennsylvania a general durable power of attorney does not inherently have the ability to make gifts unless the written power of attorney clearly states this in writing. Additionally, the power of attorney might restrict the giftgiving to only certain family members or it may be limited as to the amount. A power to make “limited gifts” is statutorily defined to be up to, but not in excess of what is then the current federal annual gift exclusion amount (currently $14,000, per donee).

Even if the power of attorney permits the making of gifts it is a best practice if possible to include the principal in the process and where appropriate other family members, so it is clearly established that the making of the gifts is being done with the knowledge of and at the direction of the principal. If the principal is not in a position to be involved in the process,  gifts should be approached even more carefully. Does the principal have sufficient assets remaining in his or her name after making the gifts that the giftgiving would not be considered imprudent? What is the motivation for the giftgiving (is there an established practice from prior years of the principal making the gifts in question, for example)? Who is being chosen as the recipients of the gifts and are all potential donees being included? If the answers to these questions are no or otherwise raise concerns, it may be a good idea to forego the giftgiving.

Record keeping.

It is essential to keep appropriately detailed records and copies of all financial documents. It must be remembered that you may be called upon to prepare a detailed financial accounting many years in the future at the conclusion of serving as agent. Copies of bank and other financial statements should be maintained in a safe and secure manner throughout the period you are serving as agent. Banks and financial institutions are only maintaining records for 7 years presently. If you do not maintain copies yourself and need to go back beyond 7 years our experience is you will be unable to do so.

Items of receipt and expenditure need to be recorded with specificity. For example, a deposit of 3 checks which total $150 should not be noted simply as “Deposit – $150”. The payor of each check should be noted in the records so you will clearly be able to establish the various sources of funds received by the principal, which is required in a power of attorney account. Ideally, copies of all checks presented for deposit and copies of all invoices paid from the power of attorney account should also be maintained and kept in date sequence, such as in looseleaf binders, or digitally, categorized by date and with appropriate backup security.

Use of Cash.

Using cash to make payments on behalf of the principal is not a good idea. If the cash in question is obtained by cashing a check that otherwise would be deposited in the principal’s account, it may make it harder to determine the specifics of the that particular item of income since only the net deposit will be seen as going into the bank account and it will not match the check issued by the specific income payor. On the disbursement side, it makes it difficult, if not impossible, to be able to record or remember what the cash was used to pay. We frequently encounter the use of cash in making routine purchases for the principal, such as for groceries, household supplies and medicines. A better approach for these would be to use a dedicated credit card that would otherwise not be used for any purchases by the agent, since the credit card statements and store receipts will provide  documentation of what is being acquired for the benefit of the principal and the payment of the monthly credit card bill will also be clearly reflected in the financial records. If cash is required to be used it is essential to make written contemporaneous records of what the cash is being disbursed for.

Conclusion.

You take on a lot of responsibility when you serve as agent under power of attorney and in most instances this is a “labor of love”. We think it is unfair when an agent later feels like a victim at the hands of  family members, or other interested parties questioning their actions which in most cases were innocent and well-intentioned, but lacking either in the required formalities or proper understanding of their legal obligations. The observations noted above are intended to assist you in avoiding situations that could potentially lead to financial liability or, at a minimum, a great amount of time, effort and embarrassment if your record keeping and conduct can be called into question under the law. Anyone about to actively begin serving as agent under a power of attorney should consult with a competent attorney experienced in Orphans’ Court matters.

Statistics show that a majority of Americans die without a Will or some other safeguard of estate planning in place. If a loved one dies without an estate plan, the surviving family members may face unnecessary headaches and hardship at a difficult time.

No matter how large or small your estate and assets are, you need to have a plan … one that protects and provides for your loved ones. You should explore every option and cosider the type of estate planning that is right for you. Although a Will should be considered a necessity and is a good start, in some cases you may want to consider such things as a trust. This brochure provides information about Wills, trusts and living wills.

As always, you can – and should – make your best choices about estate planning by consulting with us. You should ask us if documents such as a Will, a Durable Power of Attorney and an Advance Health Care Directive (Living Will) fit into your individual estate plan.

Wills

Why do I need a Will? A Will is a legal document that helps you put your affairs in order when you die. Every adult should have a Will to outline his or her intentions regarding home, finances and other assets and possessions upon death. Your Will should identify who will handle your estate, how your assets will be divided and who will server as guardian for your minor children. If you die without a Will, your money and possessions will be distributed according to a formula fixed by law, which means that your spouse may have to share assets with other family members not of your choosing. It also could create lengthy delays in the final distribution of assets.

Additionally, dying without a Will could result in your minor children being placed in the care of a court-appointed guardian rather than with people you would have chosen to care for them.

What if I change my mind about the contents of my Will? In Pennsylvania, a Will is not filed (or probated) until after a person dies. As a result, you can change or update your Will at any time throughout your life, as circumstances require.

Is it expensive to have a Will prepared? There is no set price attached to the preparation of a Will. The fee to prepare a Will that addresses your specific needs will depend upon the complexity of your situation and intentions. We offer a free initial consultation through which we are able to review your needs and then estimate the cost of your Will.

Trusts

What is a trust? A trust is a legal entity to which your assets (bank accounts, securities, house etc.) can be transferred and managed by a Trustee. Trusts can be created while you are living to manage your assets while you are alive or to help your heirs manage their inheritance after your death. There are a number of types of trusts, each with its own set of benefits. As such, trusts can be complicated, so it is important that you contact us to make sure that you understand all of the issues about trusts.

One form of trust that has been aggressively marketed by some financial planners and lawyers is a “living trust”. Be aware that although a “living trust” could be right for you, you should review any trust with a lawyer experienced in estate planning before making a commitment. Trusts can ensure flexibility in your asset management and may have tax benefits, but you should be sure that you really need one and it fits your needs.

Common Myths about Living Trusts

If I have a living trust…

• I don’t need a Will. False. Even if a living trust is right for you, you still should have a Will. If some of your property is left out of the trust, or if any portion of the trust is invalid, a Will can ensure your assets are transferred consistent with your wishes.
• My estate won’t pay attorney’s fees. False. Because transferring assets under a living trust will require accumulating assets and distributing them (and since taxes may be due), it is usually necessary to hire a lawyer to help administer the living trust after death. In addition, there are legal fees associated with preparing the trust document.
• The assets will not be considered mine if I need to go to a nursing home. False. Because living trusts usually are revocable (meaning you can alter them during your lifetime), they will be considered your assets if you apply for nursing home benefits.
• My estate won’t pay inheritance or estate taxes since my estate won’t need to “go through probate.” False. Generally speaking, any transfer of assets as a result of death will result in inheritance and possibly estate taxes being due. Thus, in most cases, property passing by a living trust will be subject to tax. Certain trusts, referred to as irrevocable trusts, may have tax advantages that other trusts can’t provide.
• My assets automatically will be part of it and my Will won’t have to be probated. False. Only property that you specifically list as part of the trust will be part of it. If you own property individually and do not include it in the trust, your Will still must be probated.

Why Shouldn’t You Prepare Your Own Estate Plan?

Estate planning involves judgment and skills acquired only through professional training and experience. Standardized Wills and trusts, such as those produced using kits or computer software programs, may not be drafted to comply with Pennsylvania laws. A Will or trust that is not properly drafted could result in your estate being distributed in a manner contrary to your wishes. Your family also may incur unnecessary legal costs should the Will or trust be challenged.

Remember… The only way to be certain that your specific needs and desires in estate planning are being met is by consulting a knowledgeable lawyer or a lawyer referred to you by a trusted source. High-pressure sales by mail or in person and do-it-yourself kits should be viewed with skepticism.

Individuals with mental health problems regularly face legal battles in which they must fight to maintain government benefits, housing, secure an adequate income, etc. In some instances, individuals with mental health problems are taken advantage of due to a lack of or diminished capacity. At Miller, Turetsky, Rule & McLennan we assist mental health consumers with issues involving the above matters along with many others. If you or a loved one suffer from mental health problems and feel as though you may need legal advice please do not hesitate to contact us.

Special Needs Planning is an area of law which is centered on the legal needs of families that have loved ones with disabilities. At Miller, Turetsky, Rule & McLennan, we plan the future and security of your loved ones with disabilities by providing services that fully encompass the current and future financial needs of said individual(s). In most instances, public benefits do not provide for all of a person’s needs to be met, therefore other financial resources must be put in place in order to ensure your loved one(s) needs are being met by utilizing tools that enhance quality of life, all while not affecting eligibility for public benefits such as Medicaid and Veterans benefits. If you have a loved one with special needs, please contact us for a consultation. We would love to help your family plan for the future.