New Member of the NRA Heritage Society
April 14, 2012
Today, it was my distinct honor and privilege to be inducted into the National Rifle Associations (NRA) Heritage Society. As I am not shy or embarrassed by my support of the NRA, I have no qualms about disclosing that I left 15% of my overall estate to the Civil Rights Defense Fund, commonly referred to as the CRDF. While there are over 20 different non-profit organizations and sub-endowments of the NRA (see my article here listing and offering free gun trust amendments for those wishing to list NRA a beneficiary of their trust), the CRDF has a special place in my heart, as it is responsible for supporting litigation to protect the 2nd Amendment. Without the CRDF, many individuals would be unable to defend against draconian charges and anti-gun District Attorneys. Furthermore, the 2nd Amendment would be trampled in the Civil arena, as well.
I was also informed that I am the youngest Heritage Society member. So, I put this challenge out to all my viewers: become the youngest Heritage Society Ambassador/member. If time has passed you by, it isn’t too late. You can always add the NRA to your estate planning. Whether it is listing a non-profit NRA organization as the beneficiary of your 401k or leaving qualifying real estate to the NRA, you can support the NRA and ensure that your grandchildren still enjoy the Right to Keep and Bear Arms that you and I do. It’s only through such donations that the NRA can continue to protect the 2nd Amendment, whether it is through litigation, legislative action or safety training.
If you want to discuss leaving a portion of your estate to the NRA or amending your existing estate planning, contact me today, so that we can, together, ensure that your desires are carried out and that generations to come can continue to enjoy the protections of the 2nd Amendment.
Who will walk your dog when you’re gone?
May 5, 2010
As a society, we’re known for our love of animals. The amount of money spent every year on our pets, including food, supplies, and toys now exceeds $41,000,000,000.00. There are approximately 72,000,000 domesticated dogs in the US. It’s not surprising that as a society, we’re considering the welfare of our companions once we’re gone.
In 2006, Pennsylvania joined the growing number of states recognizing that some pet owners want to provide for the needs of their pets by passing legislation that recognizes a trusts as a binding instrument. A “PET TRUST” is constructed like any other trust, but concentrates on the anticipated needs of the pet. Your trust appoints someone as trustee, and preferably, someone else as the animals’ caregiver. Direction is given regarding the care you wish your pet to receive and how to determine if and when its time to consider euthanasia.
Surprisingly, many pet owners have given thought to their pets’ needs, and often make arrangements with a friend or relative, leaving them a lump sum of money and the animals in their will. The sad truth is that many of those animals end up at the pound just days after their owner passes on. The neighbor was “humoring” the owner and never really intended to care for the animal, but appreciates the bequest. Or, the family member brings the animal home only to find that someone else in the home develops an allergy. Or, any of thousands of scenarios where the pets’ best interests are the last thing considered.
A properly prepared pet trust will anticipate the pets’ needs and provide for them within the allocated financial resources of their owner. Some thoughts might include:
A. Avoiding any incentive for the caregiver to shorten the pet’s life. Consider “rewarding” the caregiver for the longer life enjoyed by the pet by maintaining annual payments until the pet passes on. Don’t leave the balance of the trust to the caretaker on the pet’s demise. B. Consider funding the trust with a life insurance policy on your life that names the trust as beneficiary. C. Provide for a replacement of the caregiver if he should be unable or unwilling to continue to serve. D. Place the Trustee in charge of the monthly payments to the caregiver and give him the authority to terminate the caregiver if the level of care is unacceptable or not consistent with the terms of the trust. E. Define the point in your pet’s life when the caregiver can consider euthanasia, such as when two veterinarians agree the pet is in pain and there is no chance of recovery.
Lastly, always maintain a log of your pet’s likes and dislikes such as their favorite foods, toys, and people. Warn of situations where your pet doesn’t function well, such as in large crowds or in the presence of other pets. Ask yourself what you would want to know if you were going to be the one responsible for the pet. If there is one thing you can do for your pet as a thank you for its companionship, it should be planning for its health and happiness after you’re gone.
Life Insurance and Estate Planning
January 27, 2010
Life insurance can be an effective tool in planning an estate. One benefit to having life insurance is that the money from a policy can be used by your survivors to help pay for bills at the time of death, such as funeral costs and taxes.
I think one of the most important considerations in end of life planning is…what will my spouse live on after I’m gone? In today’s world of dual incomes and living on credit, the death of a spouse can be a huge shock to the financial system of a household. If the spouse who is primarily responsible for paying the mortgage and bills dies, how will the surviving spouse continue to live in the marital home? Life insurance can either eliminate those concerns, or help smooth out the transition. If the family’s assets have been used up in medical care bills due to a prolonged illness or nursing home needs, a life insurance policy can help restore the family’s funds.
If done properly, life insurance can also keep assets out of a probate estate, thus limiting the amount of estate tax. As you can see, life insurance can have many beneficial uses, and should not be overlooked when planning.
What is a Guardianship?
December 31, 2009
Guardianship is a legal process whereby an incapacitated person’s control over their person or property, or both person and property, will be appointed to another. Guardians are typically qualified individuals, corporate fiduciaries, nonprofit corporations, guardianship support agency or county agency.
In order for a guardianship to be granted, a determination of incapacity must be made. The petitioner for guardianship must prove incapacity which has impaired the individual’s ability to manage his or her financial resources or his or her physical well-being, and that there is a need for guardianship services.
By PA statute, an incapacitated individual is an adult whose ability to receive and evaluate information effectively and communicate decisions in any way is impaired to such a significant extent that he is partially or totally unable to manage his financial resources or to meet essential requirements for his physical health and safety.
In PA, the two types of guardianship available are plenary and limited. The plenary guardianship is a guardianship over both person and property. A plenary guardianship is only appointed when a totally incapacitated person is no longer capable of making a contract, gift, or other instrument in writing.
The limited guardianship seeks to give the incapacitated individual the ability to retain control over the areas of their person or property that they are able to control. For example, in a limited guardianship, a person may be found to be able to make decisions about where to live or whom to marry, but is unable to manage their financial matters. The incapacitated individual will retain the right to determine where to live and whether or not to marry, but financial matters will be handled by the limited guardianship fiduciary. Under current PA law, the limited guardianship is the preferred guardianship.
Should my children be co-executors?
December 9, 2009
Many parents with more than one child find it difficult to choose one to administer their estate. Sometimes they don’t want to offend a child. Sometimes it’s truly hard to choose. Often their solution is to ask their attorney to appoint both children as co-executors. While this may appease a parent’s conscience, it is rarely the best solution.
No matter how well you know your children, and no matter how well they get along, it is very unlikely they have always agreed on everything. Should an issue arise on which they disagree, discussion and relations can quickly deteriorate, destroying a family the parents wanted nothing more than to keep together. Litigation to resolve the issues can result in substantial expense that would erode the estate.
The answer is to simply pick one to administer the estate. Its not infrequent that one child excels over the others in understanding economics or dealing with people. That’s the child to pick. If that doesn’t help, pick the oldest child. If you still feel guilty about leaving a child out, we can appoint that child to be a substitute executor to take over in the event the executor is unable to serve for whatever reason. Remember, the attorney representing your estate is always there to make sure the executor properly administers the estate and all of your heirs are treated as you intended. Making every effort in drafting your will to avoid disagreements after you are gone is the best way to keep your family together.
Effect of Death on a Divorce: Can the Spouse take under the Decedents Will or is the Spouse Limited?
September 23, 2009
With a divorce rate above 50%, the inevitable sometimes occurs. During the divorce proceeding, one spouse dies. The affect of this situation can lead to a complex interaction between the Divorce Code and the Estate Code. Because there are so many different possibilities, I will briefly lay out the possible scenarios and likely effect on the surviving spouse.
Divorce Granted: Under 20 PA.C.S. 2507, Modification by Circumstances, “If testator is divorced from the bonds of matrimony after making a will, any provisions in the will in favor of or relating to his spouse so divorced shall thereby become ineffective for all purposes unless it appears from the will that the provision was intended to survive the divorce.” 20 PA.C.S. 2507(2). Furthermore, in somewhat similar terms, 20 PA.C.S. 6111.1, Modification by Divorce, states, “If the conveyor is divorced from the bonds of matrimony after making a conveyance, any provision in the conveyance which was revocable by him at the time of his death and which was to take effect at or after his death in favor of or relating to his spouse so divorced shall thereby become ineffective for all purposes unless it appears in the governing instrument that the provision was intended to survive the divorce.” “Connveyance” is the creation of an interest in real or personal property whether intended to have inter vivos or testamentary operation and includes the exercise of a power of appointment. 20 PA.C.S. 6101. Thus, if the Divorce has been granted, the surviving spouse will be limited to the divorce agreement, even if, the surviving spouse is mentioned in the Will, unless the Will makes clear that the provision is intended to be enforceable after divorce.
Settlement Agreement Reached, but not Carried out (no divorce yet decreed): In re: Estate of Bullotta, 575 Pa. 587 (Pa. 2003), the PA Supreme Court was faced with the issue of a pending divorce, where a settlement agreement was reached and the trial court entered a consent order setting forth the terms of their agreement, which provided the divorce could be finalized when the terms of the settlement were completed. Unfortunately, husband died before all those terms were carried out, and no final divorce decree was entered. The PA Supreme Court held that, “Once such a contract is made, though fulfillment may be delayed until entry of the final divorce decree, the contract is still enforceable.” (Id. at 592). The Court went on to deny the Wife’s claim that the contract was executory, and unable to be completed since the husband died, and stated, “The agreement is still enforceable though the parties may no longer divorce.” (Id.) The Court continued, “In other words, if the contract can be completed by the estate of a party, it is not void due to the death of a party.” Thus, the Court denied the Wife’s plea to set aside the settlement agreement.
Possibility of Judicial Estoppel: There appears to be a possible avenue, extremely fact specific, that may allow an estate to prevent a soon-to-be ex-spouse from bringing a claim at odds with a previous claim. As a general rule, a party is estopped from “assuming a position inconsistent with his or her assertion in a previous action,” if the party is successful in maintaining that action. In re: Estate of Bullotta, 575 Pa. 587 (Pa. 2003)(citing Trowbridge v. Scranton Artificial Limb Co., 560 Pa. 640, 747 A.2d 862, 864 (Pa. 2000)). The purpose of the doctrine is to “protect the integrity of the courts by preventing litigants from ‘playing fast and loose’ with the judicial system” by switching positions as required by the moment. (Id.) While the majority opinion In re: Estate of Bullotta didn’t decide the outcome on the Judicial Estoppel claim, Chief Justice Cappy, in a concurring opinion (joined by Justice Castille and Nigro), said that the case should be disposed of by Judicial Estoppel. Specifically, since the wife had filed a Petition to Enforce the Settlement Agreement, in the divorce proceeding, she should be estopped from now claiming a portion of the estate, other than that agreed to in the settlement agreement.
No Divorce Decree but Grounds Established: Under 23 PA.C.S. 3323(d.1), the section of the Domestic Relations title regarding Divorce, “Death of a party. In the event one party dies during the course of divorce proceedings, no decree of divorce has been entered and grounds have been established as provided in subsection (g), the parties’ economic rights and obligations arising under the marriage shall be determined under this part [AKA the divorce code] rather than under 20 Pa.C.S. (relating to decedents, estates and fiduciaries).” Subsection (g) states, “Grounds established. For purposes of subsections (c.1) and (d.1), grounds are established as follows: (1) In the case of an action for divorce under section 3301(a) or (b) (relating to grounds for divorce), the court adopts a report of the master or makes its own findings that grounds for divorce exist. (2) In the case of an action for divorce under section 3301©, both parties have filed affidavits of consent. (3) In the case of an action for divorce under section 3301(d), an affidavit has been filed and no counter-affidavit has been filed or, if a counter-affidavit has been filed denying the affidavit’s averments, the court determines that the marriage is irretrievably broken and the parties have lived separate and apart for at least two years at the time of the filing of the affidavit.
Elective Share Issue and No Grounds Established: If no grounds have been established, the wife can take as given in the Will. However, the wife can ALSO take under the Elective Share under 20 PA.C.S. 2203, which gives 1/3rd of almost all husband’s assets, including revocable trusts, and any gifts given within one year prior to death in the amount of more than $3000.
Inheritance Tax Rates
June 30, 2009
In 2009, in order to be subject to Federal Estate tax, an estate must exceed $3,500,000 in value. The maximum tax rate for 2009 is 45%. By the year 2010, the Federal Estate tax is eliminated!! This means that in the year 2010, no one leaving an estate of any size will pay a Federal estate tax. Unfortunately, on January 1, 2011, the Federal Estate returns with a vengeance. The tax automatically comes back for any estate exceeding $1,000,000, with a maximum rate of taxation of 55%.
In Pennsylvania, there are technically three different rates of taxation. The first rate of taxation is zero percent for assets that are left to a spouse. If you are giving an inheritance to children, grandchildren, and/or stepchildren, the rate of taxation is 6%. If you pass on property to others, the rate is 15%.
Please make my son and daughter co-executors NOT!
January 7, 2009
When drafting a will, our clients with more than one child often request that we name both of their children as co-executors so not to offend one of them. While that decision is ultimately up to our client, in most circumstances, that is not the best solution.
First, if one or more of the children have moved away from the area, it can be difficult to discuss matters with all the executors at the same time. This is especially a problem with signing checks to pay the estate’s expenses. Within the last week, we had a sizable check to pay the Inheritance Taxes lost by Federal Express, and a Petition lost by the US Postal Service. Both items were sent to out of state executors. While we have receipts from both carriers, the Department of Revenue will NOT grant much leeway when you claim that the “check was lost in the mail.”
Second, with two equal voices, it is very easy to end up in a deadlock, and no tie breaker. This can, and has resulted in extensive litigation and cost to the estate, breaking the family further apart than has ever been the case. Even if they get along now, the decisions to be made can quickly destroy that relationship.
We strongly suggest you pick ONE of your children to handle the estate’s affairs. We can easily name the other as substitute executor in the event the named executor resigns or can’t serve. This demonstrates that you have no lack of faith in them. If you’re having problems picking which child to name, an easy solution is to pick the oldest.
