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 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 "Asset Protection"?

    Asset protection is the pratice of using a series of strategies, and tactics, of designed to protect a persons asssets from litigation, divorce and other claims.  It is, when done properly, a legitimate form of preserving wealth from depletion by creditors and other claimants.  In its most common form it the srategies use retirement accounts (such as IRAs, and 401(k)s), life insurance policies, and other forms of property ownership to shield assets from potential claimants.

    Asset protection planning techniques often employ revocable and irrevocable trusts. However, great care needs to be taken to preserve the legitimacy of the strategies.  For example, the transfer of assets into these protective structures, must be done before a claim is made, or before you have reason to know a claim.  Transers made  in an attempt to avoid creditors once a claim exists, are called fraudulen conveyances or transfers.  And, fraudulent transfers bring grave and negative asset protection consequences. Assets can be recaptured and the protection planning can fail.

    For that reason, asset planning should be done well in advance of claims.

    This blog will examine such issues andwill give you a practical guide to avoiding the legal traps of asset protection planning. In particular it will examine:

    • Tension between asset protection planning and fraudulent transfers
    • How legitimate forms of asset protection planning can go wrong and how to avoid such problems
    • The many types of creditors and their specific and often very different rights
    • Special estate planning, divorce, tax, and criminal law considerations

    Please leave us a comment of question.

    You can also reach David M. Frees III at 610-933-8069 or [email protected]

  • Doesn't holding my assets in joint names protect them from my creditors or from lawsuits?

    In many states that designation will protect your assets fromt the creditors of one spouse.  But, if you are both sued, and a jusgment goes against you then those assets can be reached.  Also, those assets are not protected from mediciad (for long term care expenses).  Finally, joint  accounts with children and others may not be protected and in some states (including Pennsylvania), if the joint account holder dies you may be taxed on your own funds.

  • How do I use a trust to protect assets in the event that I need nursing home care?

    Clients who want to protect assets from being spent for long term nursing care often make gifts to Irrevocable Trusts. The clients choose gifts to trust rather than outright gifting because gifts to trust are protected from the recipients' creditors, law suits or divorce the giftor can choose a single trustee to be in charge of the assets for the giftor's lifetime. This type of planning needs to be done sooner rather than later in Pennsylvania becasue of the most recent state adoptions of the mediciad laws. Furthermore, careful consideration needs to be given to whether or not an income flow is retained by the person or persons making the gift. If you keep the right to income, the asset is taxed in your estate but your heirs get a setp -up in nasis for tax purposes. If you don't need the income, then the trust will not be taxed in your estate but the trust's tax basis is the value of the gift at the time you make it. There is no single best answer. It really depends on your individual circumstances but make sure that you consider these questions with your lawyer and tax advisor.