Pennsylvania Estate Planning, Trust, and Executor and Probate Frequently Asked Questions (FAQs)

Initially, many of our clients come to us with the same questions about: estate planning, being an executor, and about protecting their assets, estate, or inheritance in Pennsylvania. This estate law frequently asked questions page is meant to answer the most common questions we hear from clients each day and to help others build a foundation of knowledge about Pennsylvania estate planning, being an executor  in Pennsyvlania, elder law, trust law, and asset protection.

Do you have a question for us about Pennsylvania estate law that you do not see answered below? Contact us today to talk to an experienced lawyer about your legal needs or email your question to David Frees [email protected]
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  • What Happens if You are in the Middle of Buying Real Estate and the Seller Dies?

    Is a Real Estate Contract Binding on an Executor?

    Just because you enter into a contract to either buy or sell real estate does
    not mean the deal will go through. There are many reasons why a real
    estate closing may not happen. For instance, the seller may get
    “sellers remorse”, or the buyers do not qualify for loans. All of these
    things can be expected when entering into a residential real estate contract.
    But, what happens when the seller dies in the middle of a contract and
    before closing? There are certain remedies, even in the case,
    of death that you, as a buyer, can utilize when a
    contract is not fully executed.

    One remedy available to a buyer is “specific performance”.
    A court can order specific performance where the seller or an
    estate is forced to carry out the terms of the contract instead of
    issuing a judgment for money as the remedy. Specific performance
    is used when there is a breach of contract, such as a death, and you
    as the buyer want to go through with the purchase rather than receiving
    a refund of your deposit monies. This type of remedy is very common
    when dealing with real estate because every piece of real estate is
    truly unique. As a result, money as a remedy is not always sufficient
    when dealing with real estate. Therefore, specific performance is an option
    to consider and to discuss with legal counsel when there is a breach of
    contract regarding real estate due to the death of the seller.


    And, resorting to court proceedings to compel specific performance
    is often not necessary once the executor understands that you still
    want the house AND that the contract still obligates the estate when
    property drafted.

    David M. Frees, III, JD
    610-933-8069
    [email protected]

  • When Does Your Estate Plan "Warranty" Run Out?

    When, Where, and Why to Update Your Will and Trusts

    While, lawyers cannot offer a warranty (in fact it is not permitted) on
    the effectiveness of your will, trusts, powers of attorney, and estate plan,
    there are a few important factors to consider whether or not you should
    update your estate planning documents. Here are some factors to think
    about and which can guide you as you are making the decision to update
    your documents:

    1. Have you gotten married or divorced since your last plan?
    2. Have any of your children or grandchildren gotten married
        or divorced since your last plan?
    3. Have you had children or adopted one or more children?
    4. Have you had the joy of becoming a grandparent?
    5. Have you purchased or canceled one or more life insurance policies?
    6. Have you received an inheritance?
    7. Has the economy has changed?
    8. Have you experienced a change (up or down) in your personal finances
        and personal net worth?
    9. Have any relationships with guardians, trustees, or executors
         that you have listed in your estate planning documents changed?
    10. Have you bought or sold any real estate recently?
    11. Have there been changes in the law including tax laws,
          which might affect your plan?

    Now circumstances, as we all know, can change right after you sign your
    will or trusts but we recommend, that you review your estate planning
    documents every three (3) to five (5) years. However, within that period
    of time even small changes in the law, your finances, and personal situations
    can cumulatively require changes to your will and/or other estate planning documents.

    David M. Frees, III
    Pennsylvania residents can
    call for more information on updating
    your estate plan, will, or trusts
    610-933-8069
    Click here to get a free copy of an enhanced estate planning guide

  • Am I Responsible For My Parents Nursing Home Bills and Costs?

    Generally speaking, children are not responsible for their parent's nursing
    home bills once the
    parent's funds have been exhausteed. 

    However, Pennsylvania became one of the first states to enforce a law
    on it's books
     imposing that liability.

    This is a disturbing course of events for families paying for college
    educations and
     other expenses.

    For a fuller discussion of this case see out article on Paying For Your Parents'
    Nursing Home Care. 

    This case is not final and the law in this area is devlopig so make sure to get
    a free or paid consultation on elder law planning to get the best advice in
    your particular situation 

    David Frees Can be reached at 610-933-8069 and mention the OFEER CODE ELDER LAW
    CONSULT to get a complimentary consult and elder law planning reports. 

  • How can I use a charitable lead trust in my Pennsylvania estate planning?

    A charitable lead trust is an estate planning tool that also serves as a way to donate to charitable causes. A donor can set aside donations in the form of money, stocks, property, etc., for a set term of years after their passing.

    It is referred to as a “lead” trust because the charity that the donor designates gets benefits from the Pennsylvania estate before any other beneficiaries (i.e. spouse, family, etc.). In simple terms, it means that once the trust’s terms run out, whatever money or property is left goes to the deceased’s heirs.

    Many people choose a charitable lead trust because after the set amount of time for charity has passed, the heirs can usually receive their benefits tax-free. However, 1 downside to a charitable lead trust is that they are irrevocable.

    This means that once a person puts their assets into a trust they cannot be taken out or changed. Because of this, it’s important to make sure that a charitable lead trust is set up properly and carefully considered before it is but into effect.

    A charitable lead trust attorney can help you make the best legal and economical decision when planning for the future of your family and preferred charities.

    Contact a Pennsylvania Charitable Lead Trust Attorney

    Our experienced estate planning attorneys will help clients implement plans ranging from simple to sophisticated. Contact a Pennsylvania charitable lead trust attorney for more information on how the Law Offices of Unruh, Turner, Burke & Frees can help you. Call us today – 1-610-933-8069.

    References:

    http://nonprofit.about.com/od/fordonors/f/leadtrust.htm

  • What is Pennsylvania charitable remainder unitrust?

    A charitable remainder unitrust, which differs from a charitable remainder trust, carries the features of other charitable remainder trusts, but the value of its assets is variable. There is potential either for growth or decline in the amount of the payments received by the designated beneficiaries.

    A charitable trust attorney can assess your situation and help you determine if a unitrust is the best option for you.

    Why choose a charitable remainder unitrust?

    With this type of trust, often abbreviated as CRUT, assets are revalued on an annual basis. So if the value of the assets attached to the trust drop during a given year, the beneficiaries’ trust income also will drop. Conversely, beneficiaries will receive an increase in payment if the trust’s assets appreciate.

    At least 5% of the trust's annual value must be payments, which are made out of the trust’s income. If the income is unable to cover the total amount, payments will pull in money from the trust’s principal.

    Another feature of a unitrust is that supplemental funds may be added after the initial funding. Many younger individuals or risk takers favor the growth potential a charitable remainder unitrust offers to offset inflation.

    For those thinking about investing in a unitrust, there are other considerations to keep in mind, such as:

    • economic expectations; 
    • other income sources; and 
    • your risk tolerance, as well as those of your recipients.

    Contact a Charitable Trust Attorney

    To learn more about these features or to discuss a charitable remainder trust, talk with one of our charitable trust attorneys at Unruh Turner Burke & Frees. We can be reached at our offices in West Chester: (610) 692-1371; Phoenixville: (610) 933-8069; and Malvern: (610) 240-0750.

    References:

    https://www.utbf.com/
    http://www.law.cornell.edu/uscode/text/26/664#d_2
    http://dictionary.law.com/Default.aspx?selected=178
    http://definitions.uslegal.com/u/unitrust/

  • What is Pennsylvania charitable remainder trust?

    A charitable remainder trust is one that is set up to distribute a person’s assets over a stated period of time to designated beneficiaries. Once that time expires, the remaining assets are donated to a charity of choice.

    This type of trust is tax exempt and can help lessen the taxable income of the individual whose Pennsylvania properties and assets will be divided. While a charitable trust attorney can answer your specific questions about a charitable remainder trust, below are some of the general aspects inherent in this type of trust.

    Tax-exemption

    A great benefit in a charitable remainder trust is that it is tax-exempt.

    No capital gains taxes on the sale of assets are required to be paid when you set up a charitable remainder trust. This can save a grantor a lot of money in terms of tax dollars, particularly on highly appreciated assets. Plus, the trustee will receive the full value of the investment, which can in turn, be transferred into another investment with a higher yield.

    Charities

    If outlined correctly, the charity you select will receive the full value of the transfer of assets. There are some restrictions on what types of charities qualify, so it’s recommended to seek counsel from a Pennsylvania charitable trust attorney.

    What types of assets qualify?

    A wide range of assets can be included in a charitable remainder trust, such as:

    • personal property; 
    • art; 
    • real estate; 
    • mutual funds; 
    • exchange traded funds; 
    • bonds; 
    • stocks; 
    • restricted securities;
    • partnership interests; and 
    • limited liability companies (LLCs), among others.

    Contact a Pennsylvania Charitable Trust Attorney

    To learn more about a charitable remainder trust, an attorney at Unruh Turner Burke & Frees can help. Give us a call at our offices in West Chester: (610) 692-1371; Phoenixville: (610) 933-8069; and Malvern: (610) 240-0750.

    References:

    https://www.utbf.com/
    http://codes.lp.findlaw.com/uscode/26/A/1/J/I/C/664
    http://www.investopedia.com/terms/c/charitableremaindertrust.asp#axzz1rIu0DI2h
    http://www.ehow.com/how_2075660_set-up-charitable-remainder-trust.html
    http://www.ehow.com/list_7593563_disadvantages-charitable-remainder-trusts.html

  • What planning can be done to reduce taxes on mineral right ownership at death in Pennsylvania?

    To reduce taxes on mineral right ownership at death, you can develop an estate plan that includes a revocable living trust. With a living trust arrangement, the trustee can deed the property to a beneficiary while still exercising his or her owners’ rights until death.

    A living trust also allows your beneficiaries to avoid probate and increases the tax reduction at death.

    Estate planning can be difficult, especially when mineral right ownership is involved; therefore, you should work with a Pennsylvania estate attorney to ensure that your beneficiaries are protected.

    Transferring your mineral right ownership into a living trust varies based on whether the rights are deeded or non-deeded. If you have deeded mineral rights, you will have to create and sign a new deed transferring ownership to the trust. If you have non-deeded rights, you must assign your lease or royalty interest to the name of the trust.

    This process can be more complicated, as you may have to contact the company that provides the royalty payments to learn about their procedure. The taxes for mineral right ownership can be quite expensive, depending on the total value. In addition to paying Pennsylvania inheritance tax, your beneficiaries may also be responsible for paying Federal Estate taxes.

    Contact a Pennsylvania Estate Attorney

    With proper planning, you can help your beneficiaries obtain a tax reduction at death. The Pennsylvania estate attorneys at Unruh, Turner, Burke & Frees are dedicated to helping you with your trust and estate needs. Contact our law office at 610-692-1371 (West Chester), 610-933-8069 (Phoenixville), or 610-240-0750 (Malvern) or fill out our convenient online form today.

    References:

    http://wills.about.com/b/2010/11/16/have-you-made-an-estate-plan-for-your-oil-gas-or-mineral-rights.htm

    http://wills.about.com/od/howtofundatrust/qt/How-To-Fund-Oil-Gas-Or-Mineral-Rights-Into-A-Trust.htm

    https://www.utbf.com/trust-estate/2010/02/avoid-probate-with-revocable-living-trust-in-pennsylvania-pa/

    https://www.utbf.com/trust-estate/2010/10/protect-your-mineral-rights-oil-and-gas-leases/

    http://marshallelder.blogspot.com/2010/10/new-gas-wealth-complicates-estate.html

    http://ezinearticles.com/?Estate-Planning-When-Mineral-Rights-Are-Involved&id=2843835

    http://wills.about.com/od/fiveessentialdocuments/a/rlts.htm

  • How are IRAs and qualified retirement plans taxed at death in Pennsylvania?

    IRAs and qualified retirement plans are subject to federal and state income tax as well as estate taxes, which can greatly reduce their value. Whether you are planning your estate or are the beneficiary of an IRA of 401k, you should speak with a Pennsylvania estate attorney to learn how to reduce the retirement plan tax after death.

    When a beneficiary receives a qualified retirement plan after a loved one’s death and cashes it out, this could place him or her in a higher tax bracket. The amount received will be considered taxable income, and the beneficiary may be required to pay a higher percentage of taxes.

    Another form of an IRA tax after death is the estate tax. Even though retirement plans are considered non-probate property, their value is added to the entire value of the estate. Therefore, any probate property and assets must be used to pay the taxes for the estate value.

    There are several ways to avoid paying a retirement plan tax after death. For example, if you are the beneficiary, you can open up an inherited IRA or transfer the assets to your own existing IRA. This will help you avoid any penalties and you will not be taxed.

    If you are planning your estate, you can leave your retirement plans to a charity and other assets, such as real estate, to your loved ones. In this case, the charity will be exempt from paying retirement plan taxes after death and your family can avoid paying federal income or capital gains taxes.

    Hire a Pennsylvania Estate Attorney

    When planning your estate, it is important to keep the tax implications in mind and take measures to reduce the IRA tax after death. The Pennsylvania estate attorneys at Unruh, Turner, Burke & Frees are dedicated to helping you with your trust and estate needs. Contact our law office at 610-692-1371 (West Chester), 610-933-8069 (Phoenixville), or 610-240-0750 (Malvern) or fill out our convenient online form today.

    References:

    http://www.umainefoundation.org/retirementplan.html

    http://www.schwab.com/cms/P-1625576.3/CS13416-02_MKT13598-10_FINAL_118091.pdf?cmsid=P-1625576&cv8

  • When would I use a charitable remainder uni-trust/charitable remainder annuity trust in my Pennsylvania estate planning?

    You would use a charitable remainder uni-trust/charitable remainder annuity trust when you wish to reduce your income and estate taxes as well as provide a contribution to the charity of your choice. A qualified Pennsylvania estate attorney can help you weigh the pros and cons of each type of trust and ensure it is properly established.

    A charitable remainder uni- trust/charitable remainder annuity trust works by allowing you to transfer an asset (such as real estate or stocks) into the trust. The trustee will then sell the asset at full-market value in order to reinvest the proceeds into other assets to produce income.

    The trust will then pay you or your designated beneficiary an income for the rest of your life. After you die, the remaining assets from the trust will be donated to your chosen charity.

    As mentioned earlier, a charitable remainder uni-trust/charitable remainder annuity trust allows you to reduce your income and estate taxes. In addition to the tax breaks, a charitable trust also allows you to avoid capital gains tax, which would significantly reduce the amount you would receive if you had sold your assets on your own.

    The difference between these types of trusts is the way in which the income is paid out each year. With a charitable remainder uni-trust, you or your beneficiary will receive a percentage of the principal value each year.

    This amount is revalued on an annual basis. A charitable remainder annuity trust, on the other hand, provides fixed annual payments.

    Contact a Pennsylvania Estate Attorney

    Establishing a trust is a wise business decision, but can become complicated. The Pennsylvania estate attorneys at Unruh, Turner, Burke & Frees are dedicated to helping you with your trust and estate needs. Contact our law office at 610-692-1371 (West Chester), 610-933-8069 (Phoenixville), or 610-240-0750 (Malvern) or fill out our convenient online form today.

    References:

    http://plannedgiving.med.upenn.edu/charitableremainderunitannuityrust.php

    https://www.thecolemanlawfirm.net/What_is_a_CRT.php

    http://www.charitabletrust.com/faq.aspx?id=9

  • How is a will properly executed in Pennsylvania?

    After a person passes away, it is the charge of the executor to carry out the instructions of the will once it is filed with probate court. This generally happens as soon as the Testator (or person who wrote the will) has passed, and usually the will specifies an executor; otherwise, one is appointed by the court.

    If all goes accordingly, the will is first and quickly filed with the local, county, or municipal probate court in which the Testator died or last lived. Anyone in possession of the will may file it with probate court, but often it’s the executor who does so, as the will is often left in the care and possession of the executor.

    Some states have laws that demand that anyone in possession of a decedent’s will file it with probate court, so check with a probate attorney to discuss the laws in Pennsylvania.

    Listed beneficiaries from a will don’t receive their assets from the estate until after probate has ended; before that happens, the executor must make an inventory of all the assets and the bills of the estate, such as taxes and debts, must first be paid.

    How long the probate period takes depends on several things, including:

    • the size of the estate;
    • how many outstanding bills there are; and
    • whether or not anyone files a claim against the estate or disputes any aspects of the will.

    Consult a Pennsylvania Attorney About Your Will and Estate

    Whether it’s collaborating with your tax advisors, assisting with the filing of Federal Estate and Gift Tax Returns and Pennsylvania Inheritance Tax Returns, or providing services to facilitate the resolution of estate and trust administrations, our firm is dedicated to providing unparalleled and uncompromised service to our clients. Contact a Pennsylvania probate and estate attorney for more information on how the Law Offices of Unruh, Turner, Burke & Frees can help you. Call us today – 1-610-933-8069.

    References:

    http://info.legalzoom.com/soon-wills-executed-after-death-4569.html

  • How much can I give to a grandchild each year for federal gift tax purposes?

    Each year, you're permitted under federal law to make gifts to each grandchild in an amount of $13,000.00.

    Whether your gift is to a child or grandchild, if your gift is at or below this amount, no return is required.

    For gifts above that amount, a gift tax return may be required but each person also has a $5,000,000.00 million dollar lifetime exemption (during 2011 and 2012) before they must begin to pay tax. 

    There is also a provision that allows you to pay more for a child or grandchild's college education but
    only if the payment is made directly to the college or educational institution.

    Between the $5 million exemption (per donor) and the $13,000 annual exclusion, per recipient, it is possible for a married couple to move huge sums through gifting during 2011 and 2012.

    Becareful, however to get advice about filing a gift tax return, and the best startegy for optimizing transfers to children or grandchildren.

    David Frees, JD is Chairman of the Trust, Estate and Wealth Preservation Section of
    Unruh, Turner, Burke and Frees.

    For questions of more information about transfering wealth through gifting, trusts, and wills, call 610-933-8069
    to reach Mr. Frees

  • How Do I Select A Trustee For A Special Needs Trust?

    You create a special needs trust for a beneficiary such as a child or an adult, who has a special need and is, or will at some point, be receiving government or other benefits or programs and from which they might be disqualfied if they were to receive funds outright or in a traditional trust.

    Because the trustee of a special needs trust usually has unlimited discretion as to when and how to disperse funds, the selection of the trustee is vitally important.  And, becasue any individual trustee may not be available for the entire life of a disabled or special needs beneficiary, there should be a clear series or replacement trustees, a process for someone to fire and replace trustees, and a process for educating the trustees about the special needs of the beneficiary.

    For more information or reports on special needs trusts, call David M. Frees at 610-933-8069.

    David's assistants can also help you with any questions or to schedule a phone or personal consultation

  • Which is Better The Will or Revocable Living Trust? The probate vs. non probate debate continues.

    In Pennsylvania, the probate system can be simple and trusts are used less frequently than in other states.  There is no set answer to the question of using a will or a trust. 

      However, this article has a good overview of the trust vs. will debate.

    For more information about trusts and wills in Pennsylvania read below.

    In general, we recommend using a trust when:

    1) You are disinheriting an heir since it is harder to challenge a trust under Pennsylvania law

    2) You own property in multiple jurisdictions and want to avoid multiple probates

    3) You reside in a state with an expensive or complex probate system

    4) You have a high risk job and do not want assets such as life insurance to be reachable by creditors of your estate

    5) You have a special needs situtation and need to make lifetime gifts and have protection after your death

    6) You are elderly and want a trust company, bank trust department or trusted person to manage your assets during your lifetime,

    7) You are subject to federal estate taxes and want to move assets such as homes, investments, and life insurance outside of your estate (these trusts are irrevocable)

    8) You want to use the trust laws of states such as Delaware, Nevada, Alaska or others that permit asset protection planning through trusts.

    By:  David Frees Esquire  610-933-8069


    David Frees practices law with Unruh, Turner, Burke and Frees
    He maintains law offices in Paoli, Phoenixville, and West Chester Pennsylvania which serve many communities including: Exton, West Chester, Malvern, Phoenixville, Chester Springs, Devon, Wayne, Berwyn, Ardmore, Downingtown and others.

  • If we have a child named as a beneficiary of an account or POD (Pay On Death) and that child goes into bankruptcy, can our assets be taken away?

    As long as the child is a mere beneficiary, or POD, he or she is not the owner of the account.  No lifetime benefit has been conveyed, and in the event the child is sued, or declares bankruptcy, your assets will not be implicated.  However, this raises to important issues.  First, confirm that your child is not a co owner of the accounts.  Secondly, consider putting these assets into a living trust or a trust at your death, so that your daughter doesn't end up losing them.

    Finally, these assets will remain in your taxable estate for both federal estate tax purposes and for Pennsylvanina inheritance tax purposes.

    David M. Frees III, Esquire
    Call 610-933-8069  for a consultation on estate planning  or asset protection planning

  • Can family members be paid for providing care to an elderly parent or relative without disqualifying them from long term care under medicaid?

    Yes.  When properly structured family members can be paid for providing such care without it appearing to be a gift which would disqualify the elderly person from mediciad.  However, it must not be excessive, it should  be properly documented under a care agreement that meets the requirements of Pennsylvania law and it is taxable as income for the receipient fo the payments.

    For elder care issues call:  Aks for David Frees 610-933-8069
    He will make sure that you are helped by one of his partners or associates
    with extensive elder law and nursing home experience.

  • I have a revocable living trust. Does that protect my ssets from a nursing home spend down?

    No.  That is a very common misconception.  There are many reasons to have a living (revocable trusts) trust.  However, asset protection planning and nursinghome protection are not reasons to have a revocable trust.  Under federal mediciad law and under most states laws, your revocable trust is considered your asset and must be spent before you qualify for long term care in a nursing home.  Liewise, becuase your trust is your asset it can also be reached by your creditors if you get sued.

    The solution?  Get a free elder law consultation from a lawyer that practices regularly in this area and develop the strategies that are customized to you.  These techniques include but are not limited to irrevocable trusts, care agreements, and more.

    David M. Frees III
    610-933-8069

    David's firm ( Unruh, Turner, Burke and Frees ) has lawyers practicing in the many areas related to elder law and David and his attorneys have been representing elderly clients at all levels of influence and assets for over 24 years.  Call David to get exactly the right representation for your situation.  Our policy is to find you the best representation for your particular facts and to refer you to another lawyer or firm if we cannot offer you representation matched to your needs.
    [email protected]

  • Will I save estate taxes by creating a revocable trust?

    Merely creating the revocable trust will not save estate tax and in most states will not save on on state inheritance taxes. However, your situation may lend itself to using estate tax savings techniques that can be incorporated into the trust. Also, irrevocable trusts can be used to eliminate estate and often inheritance taxes.

  • Do I give up control to my trustee if I create a revocable or living trust?

    No. As long as the trust is revocable and you are competent, you can be the trustee and can retain  full control and even the ability to terminate the trust.  However, thesse very powers cause the assets to be available to your creditors if you are divorced or sued, and they remain taxable.

  • Can my spouse and I do one revocable trust for both of us?

    In Pennyslvania, husbands and wives usually have their own indivdual trusts and must carefully divide their property to achieve maximum estate tax planning, if that is desireable. Joint revocable trusts are common in community property states (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin). For complex tax reasons, joint trusts usually are not recommended for residents of states other than community property states.

  • Do I need to change my bank and investment accounts for the revocable trust?

    You should retitle your accounts so that they are in the name of the revocable trust and in such a way that the trustee signs to confirm all transactions. Much of the advantage of a revocable trust is that it affords ease of administration, both during incapacity and upon death. Assets that are not titled in the revocable trust will not receive these benefits. However, you should also have a pour over will for just this reason. If your trust contains all of the instructions for distribution, the pour over will can move the assets into the trust for distribution after death.