ESTATE PLANNING OVERVIEW
In Pennsylvania, individuals and married couples should adopt a comprehensive estate plan. A comprehensive estate plan includes planning for death through the use of a Last Will and Testament or Revocable Living Trust and planning for incapacity through the use of Durable Powers of Attorney and a Living Will.
LAST WILL AND TESTAMENT
A Last Will and Testament, commonly referred to simply as a “Will,” is a written declaration of a person’s intentions for the distribution of his or her property upon death. A Will directs how and to whom a deceased person’s property is to be distributed and is often the cornerstone to an effective estate plan. A properly executed Will serves as legal assurance that your personal wishes for asset distribution will be honored, including specific bequests and disposition of the remainder of your estate. Other advantages of a Will include the following:
- Naming a guardian for children
- Establishing trusts for minor children
- Naming trustees to administer trusts for children including how the trust funds should be distributed (e.g. health, maintenance, support and education of the children)
- Designating charitable or religious gifts
- Naming a personal representative (executor or executrix) to administer your estate
- Implementing tax savings strategies
REVOCABLE LIVING TRUST
Some individuals and married couples choose to create a Revocable Living Trust as the cornerstone of their estate plan instead of a Will. To create a Revocable Living Trust, the settlor of the trust (the creator of the trust) will prepare a trust document. The settlor will then transfer property into the trust (e.g. naming the Trust on the deed to the home) and he or she will retain the right to income and principal and the right to amend or revoke the trust at any time prior to his or her death. When the settlor dies, the trust becomes irrevocable, and the assets in the trust are distributed pursuant to the terms of the trust instrument.
In Pennsylvania, the Will is usually the preferred estate planning option. The Revocable Living Trust can have several advantages over a Will including avoidance of Probate which can save costs and avoidance of ancillary estate administration (estate administration in another state). In Pennsylvania, probate costs are relatively inexpensive and some of the other advantages are not always significant. As such, individuals and married couples should discuss their particular needs and circumstances with an estate planning attorney to determine whether the Will or the Revocable Living Trust is the better option.
DURABLE POWERS OF ATTORNEY
Estate planning also involves planning for incapacity. A Durable Power of Attorney is a written, legal document by which a “Principal” (you) confers certain financial and related powers to an “Agent” (often a spouse or close family member).
Many people think that it is unnecessary to have a Durable Power of Attorney if they do not have much money or if they hold all property jointly with a spouse or partner. However, there are many actions that an agent will need specific authority to do, including the following:
- Banking and paying bills
- Buying and selling real estate
- Running a business
- Making changes to life insurance or retirement plans
- Filing taxes
- Hiring workers for personal assistance
- Hiring lawyers or accountants
- Making gifts
- Creating or transferring assets to a trust
- Applying for work-related disability or income continuation benefits
- Applying for public benefits such as Social Security Disability
Durable Powers of Attorney allow the Principal two options. First, the Principal may give the Agent the “immediate” power to act on the principle’s behalf. Married couples often choose this option. There are no conditions that are necessary for the Agent to act on behalf of the Principal. Second, the Principal may give a “springing power”. A springing power means the Agent can only act on behalf of the principal if and only if the Agent obtains a written certification from a physician that the Principal is incapacitated or disabled.
MEDICAL POWERS OF ATTORNEY
The Medical Power of Attorney enables a person to designate an “Attorney-In-Fact” to make medical decisions for the person when the person becomes incapacitated or disabled and is unable to make his or her own medical decisions. The Attorney-In-Fact has the legal authority to make any and all decisions regarding the person’s medical care, including medical and surgical treatment or procedures and the administration of medications. A carefully drafted Medical Power of Attorney will incorporate all of the necessary powers and will refer to any incidental powers that may be necessary to effectuate the document. The person who is named as an Attorney-In-Fact under a Medical Power of Attorney is usually a spouse, another family member, or a close friend.
A Living Will also referred to as an “Advance Health Care Directive” allows a person to make predetermined decisions regarding the medical care the person will receive in the event he or she suffers from a serious medical condition requiring life sustaining treatment. Serious medical condition includes “end state medical condition” or “permanent unconsciousness”. The person can predetermine whether he or she will receive or continue to receive life-sustaining treatment or whether he or she prefers to have life-sustaining treatment withdrawn or withheld.
“End-stage medical condition” under Pennsylvania law is defined as an incurable and irreversible medical condition in an advanced state caused by injury, disease or physical illness that will, in the opinion of the attending physician to a reasonable degree of medical certainly, result in death, despite the introduction or continuation of medical treatment. Except as specifically set forth in the Living Will, the term is not intended to preclude treatment of a disease, illness or physical, mental, cognitive or intellectual condition, even if incurable and irreversible and regardless of severity, if both of the following apply: (1) the patient would benefit from the medical treatment, including palliative care or (2) such treatment would not merely prolong the process of dying.
“Permanently unconsciousness” is a medical condition that has been diagnosed as total and irreversible loss of consciousness and capacity for interaction with the environment. The term includes, without limitation, an irreversible vegetative state or irreversible coma.
Without a Living Will, a family member may have to decide whether to allow for the continuation of your life sustaining treatment or to remove the life sustaining treatment. This can be an extremely difficult decision for family members to make and can be contrary to your own desire.
ESTATE PLANNING ATTORNEYS – THE MARTIN LAW FIRM, P.C.
Standard Estate Planning
Our standard estate planning services often include the following:
- Last Will & Testament
- Living Will
- Power of Attorney
- Advance Health Care Directive
- Revocable Living Trust
Customized Estate Planning
In certain instances, Trust planning can help our clients best achieve their objectives, especially for asset protection and minimizing taxes. This advanced estate planning may include:
- Disclaimer Trust
- Qualified Terminable Interest Property (QTIP) Trust
- Irrevocable Life Insurance Trust
- Crummey Trust
- 2503c Minor’s Trust
Estate Planning For Children With Special Needs
We also provide highly customized services for children with special needs. Our firm can help you set up a special needs trust so that a child’s eligibility for government benefits can remain intact while at the same time the parent(s) can supplement those benefits.