Estate Planning in Pennsylvania: A Complete Guide

Our Pennsylvania Estate Planning Background

Russell Law offers 20+ years of estate planning in Pennsylvania. Our attorneys have experience protecting individuals and families planning for an individual’s death or disability. A small investment of time and effort in this planning saves families substantial money, time and expense.

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Why Should I Prepare An Estate?

Attorney Ken Russell
Estate Planning Attorney Kenneth C. Russell

In Pennsylvania, estate planning includes preparing for possible disability or incapacity. This helps prevent a situation where the court might appoint someone else to manage an individual’s assets or medical decisions. Proper planning allows a person to identify the best person who can assist in the event of disability.

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Get Started with Estate Planning in Pennsylvania: The Essentials​

When preparing your estate in Pennsylvania, there are three essential documents Russell Law will set up:

1. Advance Directive for Health Care

The term “advance directive” can describe a variety of documents which set forth your instructions about the healthcare that you want in the future. Advance directives include documents such as a “living will” or a “health care power of attorney.” To the extent that you are able to make your own medical care decisions and communicate those decisions, these directives are inoperative. 

2. Durable Power of Attorney

A “power of attorney” is a document that authorizes another individual to act on your behalf as your agent or attorney. This individual can then act on matters that contain the document.

3. Last Will & Testament

Everyone gets a basic estate plan regardless of their family situation or their assets. In addition, you should prepare your family’s asset information to permit our firm to be as prepared as possible to meet you.

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The Estate Planning Processs

First Meeting – Russell Law’s initial meeting aims to simplify estate planning by explaining the required documents and gathering information about the client. This information will include details about your financial and family background.

Once we understand the client’s unique situation, we discuss the estate planning documents and request our client make some choices about their estate plan. Those choices enable our firm to get together with our estate planning team and draft the initial plan.

Phone Final – Our ‘Phone Final’ usually takes place one to two weeks following our ‘First Meeting.’ In this call, we go over the client’s situation, and the important documents we talked about in our first meeting. We also review the choices the client has made since the last meeting.

The ‘Phone Final’ makes sure we got everything right and answer any questions the client has, preparing us for the next important meeting.”

Execution Meeting – We start by thoroughly understanding the client, their estate planning documents, and their specific choices as outlined in those documents. We then reconfirm these details from our ‘Phone Final.’ After this, we meet with clients to go over the drafted documents.

The purpose of the Execution Meeting is to clarify the documents to the clients and confirm that they match the necessary estate planning documents.

Usually, everything matches, but now and then a client may ask to “tweak” their plan at this meeting.

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What are the Pennsylvania Estate Laws?

One important consideration is the role of state inheritance taxes. Pennsylvania imposes an inheritance tax on the net value of a decedent’s assets.

Pennsylvania Estate Tax

According to the Pennsylvania Department of Revenue, the tax is a percentage of the value of the estate that transfers. The percentage used will vary depending on to whom the estate transfers. If, for instance, the property transfers to a surviving spouse, the tax rate is zero. Transfers to children or grandchildren are subject to a 4.5% inheritance tax. Transfers to siblings involve a 12% tax while anyone else is subject to a 15% tax. Planning can help to reduce these taxes.

What Are The Benefits Of Estate Planning?

The benefit of estate planning is for an individual to protect themselves during their lifetime. Then, upon their death, protect their family and assets.

Estate planning is a critical part of life. An individual spends a lifetime building a life, taking care of family, and loved ones, working, and accumulating assets or wealth.

Estate planning is first and foremost designed to take care of an individual during their lifetime. It guarantees a plan is in place for family members or loved ones to support the individual as needed.

Without basic estate planning, if an individual is disabled, a Court will decide who takes care of their medical decision or assets. So, an estate plan is of critical importance to take care of that individual during their lifetime.

After a person passes away, an estate plan is necessary to ensure the orderly transfer of that person’s assets to their beneficiaries. A person needs to be named to oversee the process – an executor. A good estate plan will minimize the costs of Probate.

A good estate plan can provide for beneficiaries who may not be able to take care of money, such as a special needs child. In addition, a good estate plan may have asset protection features to protect a person’s bequeathed assets from their beneficiary’s divorcing spouse or creditors. Importantly, a good estate plan makes sure that a person’s passing is a time for the family to come together and eliminate interfamily conflict.

Why Do I Need An Estate Planning Attorney?

First, it is important to find a lawyer or firm who specializes in Estate planning in Pennsylvania. But, how to find that individual and firm?

Start by asking friends, family, or colleagues for a “referral.” Referrals are the best way most people can screen professional services. Ask trusted individuals in your family and social circle about a trustworthy lawyer.

Some of the best referral sources are accountants and financial advisors. These two professions involve similar areas to estate planning lawyers and typically have a “go-to” person who has assisted their clients multiple times. Besides considering people who’ve had positive experiences, an accountant and financial advisor will assess the lawyer’s professional skills. They make sure the attorney’s expertise aligns well with the client’s requirements. Also, attorneys who practice in other areas can help. They will know lawyers who specialize in trusts and estates.

After identifying potential lawyers, using the internet to research them further is a good step. This allows for reviewing their backgrounds, confirming their certifications and social proof, and seeing if they are a good match.

Finally, after identifying some names and doing some background research, you might want to talk to the lawyer yourself. We would recommend calling the lawyer to discuss their approach to estate planning, the process for estate planning, and their firm generally.

Estate Planning in Pennsylvania FAQs

How does an estate plan help me during my lifetime?

An estate plan provides peace of mind during your lifetime by allowing you to designate trusted individuals to make medical and financial decisions on your behalf if you become incapacitated. 

Furthermore, an estate plan guarantees a plan is in place for family members and loved ones to support you, including managing and protecting your assets, minimizing taxes, and ensuring your wishes are carried out according to your preferences.

You can select individuals to make medical decisions through a Healthcare Power of Attorney and financial decisions through a Durable Financial Power of Attorney. These documents allow you to appoint trusted agents who can act on your behalf if you become incapacitated. It is important to select a trusted individual who will responsible carry out your wishes.

No. The individual designated as your Power of Attorney has a fiduciary duty to act in your best interests and manage your finances responsibly. Any misuse of funds or breaches of fiduciary duty can result in legal consequences.

Without a Healthcare Directive or Power of Attorney, decisions about your medical care and finances may be made by individuals appointed by a court, which may not align with your preferences.

No. A Power of Attorney is only effective during your lifetime and terminates upon your death.

If you pass away without a Will (intestate), Pennsylvania law dictates how your assets will be distributed among your heirs. A personal representative, or “administrator,” will be appointed by the Register of Wills to manage the process. The intestacy statute identifies who can serve as administrator, starting with the closest family members. The state intestacy law also sets forth who gets the decedent’s “probate” property. For example, if the decedent was married with children, the estate will be divided between the spouse and children. However, it is very common.

No. This concept is critical to a good estate plan. Assets generally pass one of three ways: (1) through the Will (or probate estate); (2) by beneficiary designation; (3) joint ownership. Assets such as life insurance proceeds, retirement accounts with designated beneficiaries, and jointly owned property with rights of survivorship pass directly to the named beneficiaries. Beneficiary designations or joint ownership “trump” a Will and if an asset has a beneficiary or a joint owner, the asset never “goes into the Will” or estate.

Assets owned jointly with another individual typically pass directly to the surviving joint owner outside of probate.

Assets with designated beneficiaries, such as life insurance policies, retirement accounts, and payable-on-death bank accounts, pass directly to the named beneficiaries upon the owner’s death.

The estate itself is responsible for paying any estate taxes owed, typically from the assets of the estate before distribution to beneficiaries.

A guardian or custodian is appointed to oversee assets for children under 18 until they reach the age of majority.

A trustee can be appointed to manage assets for a child with special needs through a Special Needs Trust to ensure their financial security while preserving eligibility for government benefits.

An Executor is responsible for administering the estate, including collecting assets, paying debts and taxes, and distributing assets to beneficiaries according to the terms of the Will.

A trust is a legal arrangement where a trustee holds and manages assets for the benefit of designated beneficiaries according to the terms specified in the trust document.

The settlor (or grantor) creates the trust. Trustee(s) manage the trust assets. Beneficiaries receive the benefits of the trust.

A revocable trust can be modified or revoked by the settlor during their lifetime. Conversely, an irrevocable trust cannot be modified or revoked once it is established.

Probate is the legal process through which a court oversees the distribution of a deceased person’s estate. Avoiding probate can minimize costs, delays, and maintain privacy in estate administration.

A Revocable Trust can be used to transfer assets to beneficiaries outside of probate, serving as a Will substitute by directing the distribution of assets upon the death of the Settlor(s) or Grantor(s).

A Revocable Trust may be appropriate for individuals who wish to avoid probate, maintain privacy, and have greater control over the distribution of assets upon death.

Nursing home care can have significant financial implications. The average cost for a private room in a nursing home in Pennsylvania is approximately $75,000 per year, and approximately $90,000 per year in the Philadelphia area. At these rates, a stay in a nursing home can significantly deplete the estate of even persons with substantial assets.

One option to pay for skilled nursing care is medical assistance benefits. A person cannot be eligible for medical assistance for long term care unless they have a very minimal amount of assets. However, with careful planning, a person may be able to use gifts, trusts, annuities or other “exempt assets” to preserve their estate for their children while making themselves eligible for Medicaid benefits.

Medicaid, or the Medical Assistance (“MA”) program as it is known in Pennsylvania, is a means tested benefit program, funded jointly by the federal and state government, which provides medical insurance to low-income individuals and families. MA also provides payments for low-income individuals for skilled nursing home care.

Advanced planning strategies, such as Medicaid planning and long-term care insurance, can help protect assets and preserve inheritance for your children or beneficiaries while ensuring access to necessary healthcare services.

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