Pennsylvania Estate Planning, Trust, and Executor and Probate Frequently Asked Questions (FAQs)
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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Question Four: What are the most important financial topics that should be discussed with your elderly parents?
Answer: The very first thing you should do, if it is possible and comfortable for them, is to encourage them to discuss their current financial status. You would want to discuss bank accounts, mortgages, loans, credit card accounts, life insurance policies, and ownership documents regarding houses, cars, and other assets. We often take it for granted that our parents are financially savvy only to discover that they are in difficult financial circumstances. Once you have received this information you will be able to know how you are going to be able to care for your parents long-term. It is a good idea that once you have discussed these topics that you then seek the advice of an attorney and in some cases a financial or life insurance planner. This will ensure that you are able to set up a financial plan that would secure your parents for the remainder of their lives. Talking with an attorney and financial planner is important because many different choices will need to be made as your parents continue to age.
Please contact David M. Frees, III at [email protected] or call us at 888-573-7407 regarding your elder law questions.
New Medicare Surtax for Trusts and Estates- Will your estate or trust administration be affected?
How Will Your Estate or Trust Administration Be
Affected By This New Surtax?
The Affordable Care Act has been upheld by The Supreme Court.
This has confirmed that trusts and estates will in fact be subject
to the additional 3.8% Medicare Surtax in 2013. This particular
act has been put into place to try and help reform and finance
healthcare. The 3.8% surtax will be applied to certain types of
investment income. For example, dividends, taxable interests,
capital gains, annuities, royalties, and rental income. Therefore,
if your net investment income exceeds the threshold for the
highest bracket (which is $12,000) the Medicare surtax will be
applied. It is important to remember that this Medicare surtax is
an addition to the federal and state tax that an estate must
This raises issues for executors and trustees about whether or
not they should distribute income to tax payers
(who might be at a lower rate). This can be a complicated question
so to avoid personal liability, an executor or trustee should get
legal advice ( about what the trust permits) AND tax
advice (about key saving strategies).
For more information regarding the tax changes in 2013,
please contact David M. Frees, III at [email protected]
or call 888-573-7407.
What Court is in Charge of an Adult Guardianship?
How to Determine Jurisdiction for An Incapacitated Person?
Typical Scenario: Bridget lives in Maryland. Grandparents of Bridget,
Joe and Josephine live in Pennsylvania during the summer months.
however, during the winter months, Joe and Josephine migrate to Florida
to enjoy the warm weather. Josephine has been diagnosed with early stages
of Alzheimer’s leaving Joe to be the primary care taker. He suddenly passes
away while the couple is living in Florida for the winter months. Bridget decides
to go to Florida to spend time with her grandmother. She realizes that Josephine
is no longer able to care for herself and would like to file for guardianship.
Where does she file and what court has jurisdiction?
Bridget is now unclear as to where the guardianship proceedings should
take place because she does not know which state has proper jurisdiction.
Bridget’s choices of possible jurisdiction are Pennsylvania
(her grandparents’ primary home), Maryland (her primary home), or
Florida(her grandparents’ vacation home) . To try and solve issue of the
jurisdiction over adult guardianship, many states have adopted the
Uniform Adult Guardianship and Protective Proceedings Jurisdiction Act.
This Act specifically states which court has proper jurisdiction in order
to appoint a guardian for an incapacitated person. Primary jurisdiction is
determined by the “home state” of the individual. This means the state in
which the individual lived for at least the past six months. If this could not
be determined, the next court that would have appropriate jurisdiction is
decided by where the incapacitated person had “significant connection”.
Significant connection to a state would be considered as having family members,
owning assets in that state, maintaining social relationships, or having a
voting address in a particular state. Lastly, if the incapacitated person
did not have a home state or did not have a significant connection,
another court could claim jurisdiction.
As a result, in our situation above, Pennsylvania would have proper jurisdiction.
The reason that Pennsylvania has primary jurisdiction is because
Pennsylvania is considered JoAnn’s home state.
For more information regarding, adult or child guardianship
please contact David M. Frees, III at [email protected]
or call 888-573-7407
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
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.