Building Your Future Financial Legacy:

Making beneficiary designations can help distribute your assets according to your wishes. Without clear designations, the process of transferring your assets can be complicated and could cause disputes. 

Designating a beneficiary can help your heirs avoid probate court — which can be an expensive and time-consuming process — and allow for expedited transfer of your assets. 

Choosing a beneficiary provides a simpler way to transfer assets, minimizing the need for extensive paperwork. It also offers greater flexibility for modifying your choices in some estate plans, as you can typically update designations based on your changing life circumstances. 

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In Pennsylvania, it is only necessary to probate if the decedent owned assets, whether financial or real estate holdings, solely in their name which did not already have a beneficiary designated. Such assets are called probate assets, and in order to convey ownership of them it is necessary to probate. If the decedent had a will, then the person responsible for the probate is the executor named within the will. If, on the other hand, the decedent died without a will, then the probate is handled by the next of kin. This would be the surviving spouse, if any. If there is no surviving spouse, then the responsibility for probate would pass to the children. The children can agree among themselves as to which of them will bear the responsibility for probating the estate.

Probate, or the opening of the estate, is done at the Office of the Register of Wills in the county where the decedent lived at the time of his/her death. If the decedent has left a will, the executor named in the will must present the original will and death certificate to the Probate Clerk in the Office of the Register of Wills. They also will be required to present a list of the assets owned by the decedent solely in their name without a designated beneficiary. With this information in hand, the clerk in the Office of the Register of Wills will help the executor complete the paperwork and open the estate. There is a similar procedure to be followed by the next of kin when a person dies without a will.

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As with wealth planning in general, many people think trusts are appropriate only for the very affluent. But personal trusts are a powerful planning tool that can deliver benefits for a wide range of people across the wealth spectrum. Are trusts an appropriate planning tool for you? It depends, of course, on your unique financial situation, family needs and goals. But trusts are growing in popularity precisely because they are so flexible and able to address a variety of objectives, from the simple to the complex. Some of the ways trusts might benefit you include:

• Protecting and preserving your assets

• Customizing and controlling how your wealth is distributed

• Minimizing federal or state taxes

• Addressing family dynamics; for example, divorce or blended families, and helping a parent or other relative manage their financial affairs.

Revocable Trust vs Irrevocable Trust:

Revocable trusts allow you to retain as much control as you like over the trust and the assets you place in it. You can serve as trustee of your own revocable trust, change the trust’s terms whenever you like, add or withdraw assets at any time, and name a successor trustee to take over should you no longer wish or be able to serve as trustee. Your ability to transfer almost any type of asset to the trust, including financial assets, real estate and even private business interests, makes them helpful in consolidating and managing assets. You can also use a revocable trust to document how you want the assets in the trust to be managed, distributed and used after you are gone. Often, people believe a will is sufficient to handle all their needs. However, it’s important to note that a will only works when you die. A revocable trust provides benefits during your life as well, such as continuity in the event you become incapacitated. Assets in revocable trusts also avoid probate, enabling you to avoid the public disclosure, time and fees associated with it. 

Irrevocable trusts allow you to permanently remove assets from your taxable estate and cannot be changed once executed. Irrevocable trusts can be used to provide for a spouse and children from a prior relationship, help ensure that your heirs manage and use funds wisely and minimize federal and state wealth transfer taxes.

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Power of attorney is a legal document you sign to grant someone you trust with authority to make decisions on your behalf. You must sign when you are still mentally competent for your power of attorney to be valid. This is a good reason to plan early for your later years, so that your affairs are in order.    

A power of attorney arrangement can be important—even essential—to managing your financial affairs in the event you unexpectedly become unable to manage things on your own. Planning for the future with a power of attorney could minimize complications to achieving your financial goals, but it may feel like a daunting task. Depending on your circumstances, you may want to talk to an attorney who specializes in these types of arrangements. 

The laws governing powers of attorney are specific to each state, so it is important that you understand the applicable laws both where you live, and where you have assets, before you set up your power of attorney. Most states require that your power of attorney be in writing, witnessed and notarized. For many states, you can find the state power of attorney requirements and forms on the official state website. It is also advisable to contact an attorney licensed in your state to ensure that you understand the local laws so your power of attorney meets legal standards. 

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Advance care planning involves discussing and preparing for future decisions about your medical care if you become seriously ill or unable to communicate your wishes. Having meaningful conversations with your loved ones is the most important part of advance care planning. Many people also choose to put their preferences in writing by completing legal documents called advance directives.

Advance directives are legal documents that provide instructions for medical care and only go into effect if you cannot communicate your own wishes.

The two most common advance directives for health care are the living will and the durable power of attorney for health care.

Preparing A Living Will:

A living will is a legal document that tells doctors how you want to be treated if you cannot make your own decisions about emergency treatment. In a living will, you can say which common medical treatments or care you would want, which ones you would want to avoid, and under which conditions each of your choices applies. Learn more about preparing a living will.

Durable Power of Attorney For Health Care:

A durable power of attorney for health care is a legal document that names your health care proxy, a person who can make health care decisions for you if you are unable to communicate these yourself. Your proxy, also known as a representative, surrogate, or agent, should be familiar with your values and wishes. A proxy can be chosen in addition to or instead of a living will. Having a health care proxy helps you plan for situations that cannot be foreseen, such as a serious car accident or stroke. Learn more about choosing a health care proxy.

Think of your advance directives as living documents that you review at least once each year and update if a major life event occurs such as retirement, moving out of state, or a significant change in your health.

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