By Attorney Matthew Parker, CELA*
A recent survey of Pennsylvania residents indicated that many of them are not prioritizing their estate planning. Those who were polled felt that they didn’t have enough assets to justify an estate plan. Perhaps many of the respondents did not fully understand that a good estate plan involves more than just a Will. It typically also includes Powers of Attorney and an Advance Directive. In addition, there may be some very good reasons to have a Will despite having modest assets.
1. Guardians for minor children. If there are minor children, a Guardian can be named in the Will to care for them if you and your spouse are deceased. Courts tend to favor the designation of a Guardian named in your estate plan over choosing someone at the court’s discretion. A Guardian will not only be the caregiver for the children, but that same individual (or someone different) can also be named as the person responsible for managing the money designated for them.
2. Specific wishes regarding the home. Most people who are drafting a Will own a home. They may have specific desires for the home, such as leaving the home to one child (or at least the right to reside there during the child’s lifetime) over other children in the family. There may also be a desire to give the right to purchase a home to a specific individual or group of people, such as children or grandchildren.
3. Trusts. Trusts are arrangements in a Will so that an inheritance can pass to a loved one while naming another person to manage those funds for the beneficiary. The person inheriting the funds may have special needs and be receiving government assistance (SSI or Medical Assistance). The trust is a way to prevent an inheritance from negatively impacting their benefits. Trusts can also be used to protect the inheritance of a spouse in a nursing home when leaving assets outright to them would result in those assets being paid towards the cost of nursing home care.
4. Inheritance Taxes. A Will can designate how Pennsylvania Inheritance Taxes will be paid. Inheritance taxes are levied on assets that pass through the Will, as well as those that have beneficiaries, including IRAs and annuities, or are jointly owned. Rather than have each beneficiary contribute their share of the taxes on these assets, a Will can state that all inheritance taxes are paid out of the probate estate of the deceased.
5. Estate Plans include Powers of Attorney. Powers of Attorney are documents that are used during your lifetime to allow an individual to make medical and financial decisions for you in the event you are unable to do so for yourself. It is often as important to have good Powers of Attorney as it is to have a Will. Without Powers of Attorney, a family member cannot sell assets such as a home, cars, stocks or access accounts such as IRAs. Medical Powers of Attorney are helpful for children who need to make medical decisions for you, including end of life decisions that are included in an Advance Directive.
These are just some of the reasons an estate plan is a good idea for those who have limited assets as well as those who have significant savings. If you would like to learn more about how an estate plan can help you, please reach out to an estate planning attorney.
