Practice Area: Trusts & Estates

High Swartz | January 23, 2023

Estate Administration and Probate Attorney William J. Benz Joins the Firm

High Swartz LLP is pleased to welcome probate and estate administration attorney Bill Benz to the firm. Bill provides counsel for estate planning, business law, business succession planning and real estate transactions. Bill also brings prior experience serving as Magisterial District Judge for Northampton and Upper Southampton Townships.

"High Swartz is comprised of highly accomplished and motivated professionals who work together in a friendly and collaborative environment. We have a shared beliefs in truly caring about the clients, while we work together as a team to achieve the best possible results."

Bill works with his estates clients to preserve and protect their legacy. Executors and families turn to him when estate issues become overwhelming. More importantly, Bill understands that the practice of law is about humanity. He will listen to your story and guide you to the legal services that fit your needs.

Outside of the office, Bill served as Township Supervisor and Zoning Board member in Northampton Township. And he's no stranger to community work in and around lower Bucks County. In fact, he has received two citations by the Pennsylvania State Legislature for outstanding community service.

Bill attended La Salle College High School in Glenside, PA, earned his bachelor’s degree from La Salle University and law degree from McGeorge School of Law, University of the Pacific in Sacramento, California. In his earlier years, Bill played semi-pro football for the Somerton All-Stars in Northeast Philadelphia.

Tom Gabor | October 1, 2022

Shari Gelfont Williams Joins the Firm's Family Law Practice

High Swartz is pleased to announce the addition of attorney Shari Gelfont Williams to the firm's family law practice. After working as a solo practitioner at her own firm in Huntingdon Valley, Shari will join our Doylestown office and serve both Bucks and Montgomery Counties.

Already established in the Philadelphia region as a strong family advocate, Ms. Williams will also assist the firm in criminal matters, PFA hearings, and other litigation. Furthermore, she will assist High Swartz's estate planning and business practices in drafting and litigation matters.

Pro bono work is extremely important to Shari, noted by her recognition by the Bucks County Bar Association for performing well in excess of her commitment. In 2018, she was deservedly awarded the Pennsylvania Bar Association’s Bucks County Pro Bono Award and the Bucks County Bar Association’s Arthur B. Walsh, Jr. Pro Bono Publico Award.

Ms. Williams advanced her legal experience at several stops along the east coast including Florida and North Carolina. In Charlotte, Shari managed an integral domestic violence legal representation project with United Family Services. Shari coordinated over 80% of the victims in obtaining permanent restraining orders. Most often these were cases that Legal Aid was unable to assist.

In Florida, Ms. Williams served as Assistant Attorney General while representing the Department of Children and Families and the Department of Revenue. Her work included modifying and enforcing child support and paternity actions before hearing officers and Circuit Court Judges.

While obtaining her paralegal certification at Penn State University, Shari obtained her Juris Doctor while attending Whittier College School of Law in Los Angeles. Shari states she is excited to join High Swartz and continue the tradition of excellent representation and assistance that the firm is well known for.

High Swartz | August 2, 2022

How to Write a Valid Will

Do you need a lawyer to create a valid will? Short answer: no. If you have a basic, straightforward estate, you can use an online service to create one. Even so, there are some essentials to ensuring your will is valid.

Each state has laws defining what constitutes a valid will. Consequently, making sure you fully comprehend Pennsylvania will laws is a must regarding how to write a valid will. For instance, if you elect to use an online service, select one that has a customized template for Pennsylvania.

However, as your estate grows in complexity, it becomes more critical to consult with an estate attorney or will lawyer near you. They'll ensure that you cover all necessary details and that the will is valid in Pennsylvania.

Writing a Valid Will in Pennsylvania

The rules for writing a valid will in Pennsylvania are pretty straightforward.

You must:

  1. Be 18 years or older and of sound mind.
  2. Create the will on paper. It can be typed or hand-written (aka a holographic will). However, alternative forms like audio, video, or other digitally created files render the will invalid. So, courts will not recognize it.
  3. Sign the will. However, there is no legal requirement for the will to be witnessed when signed to be considered valid.

Although you don't need witnesses to make your will valid, they may be required at probate to prove the validity of your will. However, Pennsylvania law allows for creating a self-proving will to avoid this requirement.

Self-Proving Will

A self-proving will requires that you sign your will in the presence of two witnesses, known as subscribing witnesses. Then you, as the testator (the will creator), and they as witnesses sign affidavits stating who you are and that you signed your will in the presence of witnesses.

The process requires a notary who then notarizes your signatures. A self-proving will is readily admitted to probate as valid in Pennsylvania.

If you have questions about creating a self-proving will when you want to make sure you write a valid will, you should consult with a will lawyer or estate attorney.

Authenticating Your Will in Pennsylvania

If a will is not self-proving, the Register of Wills for your PA county requires witness testimony to validate the will. So, they must authenticate the will before admitting it to probate. Most often, this testimony comes in the form of an affidavit.

If a subscribing witness (a witness who signs the document at the end) testifies, you must file an "oath of subscribing witness" with the Register of Wills. However, if a non-subscribing witness testifies, the non-subscribing witness must verify that they are familiar with the signature of the testator/decedent (person who has died). In addition, they must verify that they recognize the signature of the testator/decedent.

Contrastingly, a subscribing witness must sign the will for it to be valid.

Validity of a Will When the Testator Can't Sign

Pennsylvania law recognizes that some people may not be able to sign their names. Therefore, it allows another person to sign the testator's will. Otherwise, the testator may merely make a mark indicating their consent to write a valid will.

As you may imagine, the standard of proof in these instances is more significant than a will bearing the full signature of the testator. Pennsylvania law requires two subscribing witnesses to verify the signature or mark a case where the testator can't sign.

How to Write a Valid Will: Case Law in Pennsylvania

The case of In Re: Staccio, 143 A.3d 983 (Pa. Super. 2016) tested these Pennsylvania law provisions. In this case, the decedent was weak and sick, so the decedent's girlfriend helped him make his signature.

The testator's attorney witnessed the signature and testified that the testator was fully aware of his actions and the consequences of signing the will. The attorney, however, was the only subscribing witness to the will.

The Superior Court held that a person signing a will, even with another's assistance, doesn't need to meet the higher threshold imposed upon those signing with a mark or by another person.

It's essential to note that the court found that the testator was aware and asked for help signing the will. The testator did not ask his girlfriend to sign the will on his behalf.

What to Include in Your Will

Your will presents your wishes for property distribution and other concerns following your death. Typically, it addresses these concerns:

  • Listing of property and assets
  • Assigning beneficiaries to those property and assets
  • Assignment of an executor
  • The naming of a guardian for children
  • Naming someone to care for pets

Remember, your will addresses settling your estate after your passing. It doesn't address concerns like advanced medical directives or end-of-life care.

Revoking Your Will

A valid will becomes a legally binding document. However, you can change it any time. You can revoke your will by taking any of these steps when writing a valid will:

  • Destroying your will
  • Creating a new will stating that you revoke the previous one
  • Writing a document stating you revoke the will and notarizing it

You can create an addendum or codicil citing the adjustment if the changes are minor. Just remember that the appendix is validated the same way as your will.

The Importance of Writing a Valid Will

A will avoids probate, so your property can pass to your beneficiaries automatically. Otherwise, courts determine the distribution of your assets through the probate process. As a result, your property is subject to intestate distribution based on state laws concerning descent and distribution.

Fortunately, a valid will forgoes the probate process making it far more straightforward and less costly.

Talk to an Estate Attorney or Will Lawyer

Even if you decide to create your own will, it makes sense to consult with an estate attorney or will lawyer on how to write a valid will. They can provide insights into critical items that might impact the validity of your will.

As mentioned, if you have a complex estate, an experienced attorney can not only draft a valid will but also support you with other estate documents like a living will.

Get in touch with our local firm. We have law offices practicing estate planning in Doylestown and Norristown, PA. U.S. News recognized our firm on its Best Law Firm Rankings and cited several of our attorneys on the Best Lawyers List.

High Swartz | June 17, 2022

The 5 Most Important Estate Planning Documents

What are the 5 Most Important Estate Planning Documents?

Noted author and financial planner Suze Orman says, "Estate planning is an important and everlasting gift you can give your family." And she's right. But if you create one, you need to do it right. So first, talk with an estate attorney. Second, make sure your plan includes the five most important estate planning documents.

When it comes to those documents, the average person immediately thinks about a last will. And yes, that's one of the five most important estate planning documents. But unfortunately, the average person often stops at will creation.

A comprehensive estate plan considers these 5 essential documents:

  1. Last will and testament
  2. A durable power of attorney
  3. A medical power of attorney
  4. Revocable trust
  5. Living will

An estate planning attorney can assist you in drafting these crucial planning documents.

Beneficiary Designations

Another important factor when addressing estate planning is establishing who will get your assets and designating beneficiaries. Again, an estate attorney can guide you in selecting beneficiaries.

A beneficiary designation determines who will get life insurance policies, IRAs, 401(k)s, and other types of financial accounts upon your death. Once assigned, your executor or executrix, upon your death, ensures that your beneficiaries receive assets per your designations.

Beneficiaries may be different than those named in your last will and testament. You can also have multiple beneficiaries in your estate plan.

For example, assets can divide among more than one primary beneficiary. In addition, you can include multiple secondary beneficiaries if a primary beneficiary dies before you, can't be located, or refuses to accept the asset.

Beneficiaries fall into three categories:

  • Eligible designated beneficiaries (see below for types of EDBs)
  • Designated beneficiaries
  • Non-designated beneficiaries

In addition, eligible designated beneficiaries cover five individual types:

  1. The account owner's surviving spouse
  2. A child who is younger than 18 years of age
  3. A disabled individual
  4. A chronically ill individual
  5. A person not more than ten years younger than the deceased IRA owner

If a living person named as a retirement account beneficiary does not fall into these five categories, they are considered a designated beneficiary.

The Most Important Estate Planning Documents

Now that you understand beneficiary designations, let's move on to the five most important estate planning documents.

1. Last Will and Testament

So, let's start with the most prominent document, your last will and testament. It states who receives your assets after death. It also assigns the person managing the will (an executor or executrix), your beneficiaries, and guardians for your minor children, if any. To that point, you need to take the time to determine your executor or executrix, as they will handle everything associated with your estate.

Where assets are concerned, your will determines where your assets will go. These assets can be money, real estate, possessions, or anything else you want to designate a beneficiary.

Your will also presents how your estate pays off debts. That relieves the burden on your loved ones. A common concern of clients during the initial estate planning process is what happens with debt from the estate. We've addressed that answer here.

Keep this in mind. Your will must be executed properly and based on state laws. It must also clearly state how you bequeath your assets. Otherwise, someone could contest your will, or your assets will be in probate court. So rather than taking the do-it-yourself approach with a web-based template, you might consider using a will lawyer or estate planning attorney.

2. Durable Power of Attorney

A durable power of attorney (POA) document, also referred to as financial power of attorney, assigns someone to manage your finances should you become incapacitated or suffer memory loss. Apart from finances, a POA designates someone to handle your legal and business matters.

The person you appoint is known as your agent or attorney-in-fact. They can be a friend or even an attorney. Your agent handles any number of affairs:

  1. Buying and selling property
  2. Managing finances, including bank accounts, bills, and investment
  3. Tax matters
  4. Applying for government benefits

A power of attorney document saves your family from petitioning the court to become your conservator. So, this simple estate planning document saves time, money, and hassles.

3. Medical Power of Attorney

Although a chief consideration of any estate plan focuses on your finances and assets, a good estate planning document addresses medical or healthcare decisions. A medical power of attorney document determines who makes medical care decisions on your behalf should you become incapacitated.

Typically, a healthcare POA gets created in conjunction with a living will. Indeed, they can be in the same document as both focus on your medical care. Both documents classify as advanced healthcare directives that address your medical care.

As with a POA, that person is known as an attorney-in-fact. Generally, you assign it to a family member such as your spouse or adult child. But you can elect to give it to anyone.

Similar to a durable power of attorney, without this estate planning document, your family faces court time and costs to petition for guardianship so that they can make medical decisions for you. Your estate planning attorney can ensure this document gets executed properly to address your wishes.

4. Living Will

A living will document presents another advanced healthcare directive that addresses your end-of-life treatment and care. Specifically, it outlines the procedures, medications, and treatments you want, or don't want, to prolong your life if you're incapable of addressing those issues with your doctor.

Your living will addresses numerous considerations:

  1. Tube Feeding: Do you want to be tube fed to prolong your life? If so, for how long?
  2. Resuscitation: What happens if your heart stops? Do you want medical staff to conduct CPR? Or do you want a do-not-resuscitate (DNR) order in your living will?
  3. Intubation: You can determine if and how long you want to be intubated and placed on a mechanical ventilator.
  4. Pain Management: Your living will presents what pain management and medications you want. You can also determine whether you wish to die at home.
  5. Organ Donation: You can elect to donate organs for transplant following your death in your living will.

Without this document, your loved ones will have to determine your treatment, which burdens them with difficult choices.

You can access living will templates on the web. But considering the importance of this document, it's worth talking with an estate planning attorney to ensure you capture all the details correctly. And that the document is legally sound.

5. Revocable Trust

That brings us to the last of the five most important estate planning documents – a revocable trust. Unfortunately, these documents can be a bit more complex.

At its core, a revocable trust allows you to pass your assets over time. Best of all, a trust avoids probate. Equally important, because it's revocable, you can change or terminate the trust anytime.

You become a grantor, trustor, or settlor by creating the trust. As the grantor, you are also the trustee and primary beneficiary during your lifetime. Although it offers no tax benefits, it does accomplish several things:

  1. Privacy: As mentioned above, the primary purpose of a revocable trust is to avoid probate, where our assets get distributed at death. However, the probate process is public. So, by avoiding probate, you maintain privacy.
  2. Aligns with Your Wishes: Similar to a will, a revocable trust distributes assets. But you can amend limitlessly. So, you can change your asset distribution at any time.
  3. Beneficiary Protection: A revocable trust provides creditor protection as long as the assets remain in the trust upon death.
  4. Estate Tax: A revocable trust may reduce state estate taxes if you live in a state with an additional estate tax. Fortunately, Pennsylvania has no extra state tax.

Estate Planning isn't Easy.

Creating an effective estate plan is complex. That's why you should enlist the support of an estate planning attorney. They'll ensure you have the proper documents, that each gets appropriately executed, and that each complies with state laws.

High Swartz has experienced estate attorneys versed in advanced healthcare directives, inheritance tax, probate, estate litigation, and more. We have law offices in Bucks County and Montgomery County, PA.

We'll make sure your estate plan covers all the bases, so you know all your wishes will be met.

High Swartz | March 17, 2022

What is Estate Planning?

Let’s start by understanding what estate planning is before moving on to why it’s essential. But hopefully, after reading through this, you’ll feel comfortable reaching out to an estate attorney near you to begin planning your estate.

What is an Estate?

To answer the question of what is estate planning, let's first begin with defining an estate. Webster defines estate as “the degree, quality, nature, and extent of one’s interest in land or other property.” More specifically, your estate comprises all the property you own, including real estate, cars, possessions, cash, investments, life insurance, furniture, and any other assets in which you own or have a controlling interest.

Now, here’s the question. What happens to that estate after your death? It really doesn’t matter if you’re net worth reaches billion dollars or more down-to-earth figures. What matters is what you want to do with those assets when you’re gone.

So, what is Estate Planning?

And that answers the question about what estate planning is. An estate plan gives you a say in how you confer your assets to your family, organizations, charities, or whatever. An estate plan leaves a written record of your intentions and presents how you want your property and other belongings distributed.

Beyond allocation of assets, however, an estate planning designates who carries out your wishes at death or even if you become incapacitated. And that’s why it’s best to speak with an estate attorney to make sure that the estate plan is ironclad. Unfortunately, many people fail to recognize the importance of estate planning.

Make Sure You Have These 5 Critical Documents

If you’re working with an estate planning attorney, you’ll want to focus on executing these critical documents.

1. Will

Your will represents a foundation document or any estate plan. You can elect to use an online service to create your own will. Or you can work with a will lawyer at an estate planning law firm. Either way, your will names your executor who administers distributing your assets per your wishes.
But will does more than that. It allows you to determine what happens to your possessions. Plus, it lets you designate guardians for anyone under your care. Moreover, it presents funeral provisions, if you so choose.
Sans a will, your property becomes subject to intestate law in Pennsylvania. Intestate law distributes your assets for you based on how the average person might have created a will when estate planning. That’s why it’s essential to work with an estate attorney to avoid this scenario.
Note that wills do not control the distribution of all assets. For example, they can’t control the distribution of life insurance, living trusts, or assets in joint title.

2. Durable Power of Attorney

What happens if you can’t make decisions on your behalf? That’s when a POA document becomes a vital component of estate planning.
A power of attorney appoints an agent to manage your affairs, preferably someone close to you that’s trustworthy. That individual makes decisions about financial and legal matters on your behalf. For example, if you’re injured and comatose, your agent manages your affairs.
You can activate a POA only if you become incapacitated. By the same token, you can use it to have your agent make a decision if you’re out of town, for example.

3. Healthcare Power of Attorney

Unlike a durable power of attorney that focuses on financial or legal concerns, a healthcare POA appoints someone to make medical decisions for you if you can’t. Often, people appoint spouses as their healthcare power of attorney.
As part of your estate plan, healthcare directives eliminate having your family members make impossible decisions about your treatment without knowing your wishes.

4. Advanced Healthcare Directive

Otherwise known as a living will, an advanced healthcare directive nominates an agent to make healthcare decisions for you if you’re unable. Without one, Pennsylvania law dictates who makes those decisions. Talk to an estate planning attorney about details surrounding this document.
Your living will spells out what treatment you want or don’t want—for instance, ventilators, feeding tubes, and resuscitation.

5. Trusts

By placing assets in a trust, they become the legal property of that trust. So when you die, those assets avoid probate court proceedings. Instead, your trustee distributes the assets based on your wishes.
Trusts come in two forms. First, a revocable trust retains control of assets with the freedom to alter the terms at any time. Your assets transfer to your beneficiary upon death and avoid probate.
Second, an irrevocable trust transfers assets to your beneficiary. As a result, you cannot change the trust without their consent. You generally create this form of trust to minimize your estate taxes or protect assets from creditors.

Numerous trust options exist. It’s best to talk with a trust and estate attorney to determine which works best for your needs.

An estate planning attorney can support you with creating each of these documents.

Why is Estate Planning Important?

Not surprisingly, your estate becomes most relevant at death. As mentioned, estate planning lets you determine how and where you want your assets distributed. As a result, it gives you control and a way to ensure your wishes get carried out as you intended.

But an estate plan affords other benefits. As you’ve learned, estate planning goes well beyond executing a will with your estate attorney. It includes:

  • Determining a POA to make financial or healthcare decisions
  • Medical directives that outline what treatment you want or don’t want
  • Beneficiary designations for who receives your money for life insurance, retirement accounts, annuities, and other financial assets
  • Trusts to pass your property to heirs that carry potential tax benefits

Estate planning is essential for even more reasons.

Estate Planning Reduces Taxes

Federal estate taxes impact the wealthy. For example, the federal estate tax exemption will be $12.06 million in 2022. However, six states impose an inheritance tax. And yes, Pennsylvania is one of those states. So, immediate family members pay 4.5 percent. But that rate climbs to 15 percent to non-immediate family members.

Estate planning offers a means to reduce your tax implications. You can work with an estate attorney to avoid taxes using one or more of these options:

  1. Spending down your assets
  2. Gifts to family
  3. Irrevocable life insurance trust
  4. Charitable donations
  5. Establishing a family limited partnership
  6. Funding a qualified personal residence trust

Work with a financial advisor or estate planning attorney to determine the best route for your situation.

An Estate Plan Avoids Probate

As mentioned, without a will, your assets fall under intestate laws, which determine what happens to your assets and who distributes them. The probate court assigns that agent.

Unfortunately, your assets effectively become frozen. The courts must sort through your estate, apply state laws, and decide how to allocate your assets.

Equally important, probate can take months or even years to complete. So you not only lose time, but you’ll wind up spending legal fees for a probate lawyer. Estate planning avoids all these delays and costs by creating the appropriate documents to manage the process of asset distribution.

Estate Planning Protects Your Children

What happens to your children if you die without a surviving spouse? Probate courts appoint a legal guardian such as a family member or grandparent without an estate plan. In addition, a third party can petition the court to become the guardian.
Most importantly, if no one steps forward and your child is under 18, they could become a ward of the state and enter foster care. But you can control who cares for your children by identifying a guardian in your will.

Ready to Start Planning?

You’ve gained some valuable insight into what is estate planning and why it’s crucial. So how do you get started?

Start by determining your net worth. Create a list of your financial assets, personal property, life insurance, and liabilities. Then select the beneficiaries for those assets. Equally important, determine your agent(s) to execute your wishes.

Finally, consult with an estate planning attorney near you. Our local law firm has offices in Doylestown and Norristown, PA. Our estate attorneys can talk with you and draft the essential documents for your estate plan.

So what are you waiting for? There’s no time like the present to plan your estate.

Tom Gabor | August 10, 2021

17 High Swartz Attorneys Named Main Line Today Top Lawyers for 2021

We are pleased to announce that 17 attorneys have been included in the 2021 Main Line Today Top Lawyers Around the Main Line and Western Suburbs List.

Main Line Today is a Southeastern Pennsylvania regional magazine focusing on the communities of the western suburbs of Philadelphia and surrounding Counties. The Best Lawyers of Chester County, Delaware County and Montgomery County are nominated through peer balloting then vetted through Main Line Today's editorial process.

2021 sees the addition of 3 High Swartz attorneys to the Top Lawyers list. New attorneys include family lawyers Chelsey A. Christiansen and Michael B. Prasad for Divorce and Family Law and Stephen M. Zaffuto for Real Estate Law. Congratulations to all winners!

Below is the full list of High Swartz Top Lawyers from Main Line Today in 2021.

  • Joel D. Rosen - Business Law
  • Kevin Cornish - Civil Litigation
  • Mark Fischer - Civil Litigation
  • Melissa Boyd - Divorce & Family
  • Mary Doherty - Divorce & Family
  • Elizabeth Early - Divorce & Family
  • Chelsey Christiansen - Divorce & Family
  • Michael Prasad - Divorce & Family
  • Thomas Rees - Employment Law
  • James B. Shrimp - Employment Law
  • David Brooman - Municipal Law
  • Gilbert High - Municipal Law
  • William Kerr - Municipal Law
  • Richard Sokorai - Personal Injury
  • Arn Heller - Real Estate Law
  • Stephen Zaffuto - Real Estate Law
  • Thomas Panzer - Workers’ Compensation

If you're looking for lawyers near you in Norristown, Doylestown, and the Greater Philadelphia area, get in touch with our law office. Our attorneys and lawyers are some of the best you'll find to handle all your legal concerns.

High Swartz | March 8, 2021

What Happens to A Deceased Relative's Debt When They Die?

A common concern of clients during the initial estate planning process is what happens to debt when you die. This is a valid concern for next of kin and estate beneficiaries, and we'll delve into it below.

Who is responsible for paying off the debts of a loved one? Can the debt of the deceased be forgiven? What happens if the deceased estate does not have enough money to pay the debts? The answers to these questions can be found in case law, the Internal Revenue Code & Regulations and Pennsylvania statutory laws. To make it easier to understand what happens to debt when you die, let’s look at a hypothetical estate. And remember, it's in your interest to have an estate attorney to support you with any estate planning concerns.

Ester, a Pennsylvania resident, died with $50,000 in credit card debt, medical expenses from her final illness, and various utility expenses associated with her West Chester Borough home. Ester’s assets are her home, and funds of $25,000 held in her checking and savings accounts. Ester’s children are the beneficiaries of her residuary estate per her Will.

Pennsylvania law, 20 Pa.C.S.A. Section 3381, states that Ester’s debts don’t just disappear at her death. If the debts don’t disappear, who pays? Only Ester’s Estate is responsible for payment of her debts unless a third-party (family member, neighbor, etc.) co-signed a loan or credit card with Ester.

For now, let’s assume no one co-signed any loans with Ester. Ester’s credit card debt, her final medical expenses and her various utility expenses will be paid by her estate from the assets that pass pursuant to the terms of her Will. These assets are Ester’s home and the $25,000 funds from her checking and savings accounts. Ester’s Executor will need to sell the home and use the proceeds from the sale to pay off the credit card debt, final medical expenses and utility bills.

It's possible that Ester’s estate could fail to pay her credit card debts due to insolvency (inability to pay one's debts). And it's possible that the Executor's attempts to have the credit card discharged fail as well.

What happens if the estate can't pay the debts?

If you recall, Ester has used her credit cards to purchase items worth $50,000. The borrowed funds used to purchase items are not included in Ester’s gross income because at the time Ester borrowed the funds, she also created a corresponding liability to pay back the funds to the credit card companies. Ester’s overall net worth has not increased. Courts have consistently held that borrowed funds are not included in taxpayer’s income. The IRS has consistently agreed with this treatment.

Do credit card companies forgive the debt when someone dies?

It would be logical to think that if the credit card companies forgive the debt, the debt should disappear, right? WRONG! The general rule under the IRS Rules & Regulations states that the cancellation of a debt for less than adequate consideration causes the debtor to recognize ordinary income in the amount of debt that was forgiven.  Section 61(a)(12) of the Internal Revenue Code states that gross income includes “[i]ncome from the discharge of indebtedness.”  No matter how you slice it or dice it… “cancellation of indebtedness”, “cancellation of debt”, “discharge of debt”, and “forgiveness of debt” converts to ordinary income!

The credit card companies report the forgiveness of deceased debt to the IRS by using a 1099-C – Cancellation of Debt form. Even if the credit card company fails to issue a 1099-C form, the cancellation of debt income is still reportable on the estate fiduciary income tax return. An estate attorney can support you with any questions regarding taxes.

The $50,000 of credit card debt has been converted into income, which must be reported on the estate’s federal fiduciary income tax return, Form 1041 – US Income Tax Return for Estate and Trusts. Here, at the very least, Ester’s estate has $50,000 in reportable income to the IRS. If an estate has reportable income, it likely has income tax to pay unless the estate’s deductions wipe out income.

But what if Ester’s estate is insolvent (unable to pay the taxes)? Section 108 of the IRS Code provides exceptions for which Ester’s estate may be eligible. Section 108(a)(1)(B) excludes from gross income the cancellation of indebtedness of an insolvent debtor, but only to the extent of the amount of the debtor’s insolvency immediately before the debt was forgiven. Section 108(a)(3). So if Ester’s estate is insolvent prior to the debt being forgiven, the estate may exclude the cancellation of debt using IRS Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness.  

It’s important to note that only assets that pass through probate are considered for determining insolvency. Recall probate assets are those assets that pass pursuant to the terms of a decedent’s Will. Here, probate assets would be Ester’s West Chester Borough home and the funds held in the checking and savings accounts. An estate with cancellation of debt  (COD) income and very few probate assets will be insolvent if all assets pass directly to beneficiaries through beneficiary designations (life insurance, IRAs, 401(k)). Designated beneficiaries who receive these kinds of assets are not liable for paying a decedent's debts.

So who is responsible for paying the debt?

In the end it falls on the estate to pay the decedent’s debt. If the debt is forgiven, it becomes ordinary income reportable on the estate’s fiduciary income return regardless if a Form 1099-C was issued by the creditor.  If the estate is insolvent, it may be able to exclude the cancellation of debt under Section 108(a)(3) of the IRC.

Before undertaking an estate administration without an estate lawyer, remember the law is complex because:

  1. there are usually exceptions to the rules,
  2. the law changes frequently, and
  3. multiple areas of law can impact an estate, such as IRS Rules & Regulations, Pennsylvania statutory and case law.

Talk to Our Estate Planning Lawyers

With any estate planning matters, it's best to have an experienced estate planning lawyer on hand. They can support you with any number of concerns, including power of attorney, wills, advanced healthcare directives, and more.

Reach to our local estate planning law firm here. We have law offices in Doylestown and Norristown, PA.

Stephanie A. Henrick | January 22, 2021

How to Access the Digital Assets, logins, and passwords of Someone who Has Died

Accessing the digital assets of a loved one after they have passed can be difficult. Below are some tips to make it easier for everyone.

In the age of Covid-19, most of us do everything electronically. Banking, communicating, paying bills, shopping, storing important papers, photos and contacts, filing taxes, keeping a calendar and reminders, sports betting, dating….the list goes on. But where does all of that electronic content go and who can access it for me? What happens if I go on an “extended vacation” - physically, mentally or permanently? Well, things can get messy if you’re not prepared. An estate attorney can support you, however, with your efforts.

I used to tell my partner (half-jokingly) if anything happened to me, to keep my thumb so he could open my phone and computer, to gain access to my accounts/passwords (digital assets) with my fingerprint. Unfortunately, that plan won’t work with the upgrade to facial recognition security, unless he wants to face some tough questioning by the police. And not to mention, the Criminal Fraudulent Access Act prohibits the impersonation of a decedent. So what is he supposed to do when clues of assets and liabilities no longer come through the mail and there is no way to do a global search of assets?

In comes the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA), effective January 19, 2021, with a default rule, to help address the frequent challenges fiduciaries (trustees) encounter in accessing the digital assets of a Ward or Decedent.

What is a digital asset?

A digital asset is defined as an electronic record that an individual has a right to or interest in, but not the underlying asset itself (unless we are talking about Bitcoin and the like). For instance, my online bank statement is a digital asset, but the money in the account is not.

The default rule under RUFUDAA, provides methods for a fiduciary to access a catalog of electronic communications and other types of digital assets, but not the content.

What is a catalogue of electronic communication?

A catalog of electronic communication “identifies” the person communicating and the electronic address, along with the date and time of the communication. The substance of the communication is not accessible under RUFUDAA.

How can you access a catalogue of electronic communication of a decedent?

In order for a fiduciary to access the content of electronic communications (documents, photos, emails, basically any information concerning the meaning of the communication stored electronically), the user must specifically do so by an online tool (Facebook and Google have these tools) or in an estate planning document.

What if the online tool and estate documents don’t match?

If the online designations conflict with the estate planning documents, the online designation controls. More importantly, the Custodian’s Terms of Service will control what the fiduciary may or may not do with your digital assets.

Tips for legacy planning of your online accounts

Google.

For accounts that have legacy planning, like Google and Facebook, designate a person who can access your data. You can customize the information you want to share, with up to 10 people, if your account is inactive for a designated period of time (3-18 months).

Facebook.

Under memorialization settlings, you can designate a legacy contact who can manage your account after you pass away.

Financial Powers of Attorney.

Have your Financial Powers of Attorney updated to provide your Agent with authority to specifically access digital asset content.

Wills and/or Trusts.

Update these documents to provide your fiduciary with authority to specifically access digital asset content.

  • If you find yourself in Orphans’ Court on a guardianship matter, make sure to include language requesting Custodians of digital assets to disclose a catalogue of electronic communications and digital content to the Guardian of the Estate of the Incapacitated Person, in the proposed Order.

Write it down.

As an estate attorney, I give all of my clients the same homework assignment- which always starts off with “Make a binder with the below outline in mind. Identify automatic debits and payments and keep an inventory of digital and cybersecurity assets. Keep a hard copy and a digital copy, and give your estate planning attorney a copy to secure in the law firm’s vault.

The binder should include:

  • A list of logins and passwords for each of your devices (phone, tablet, watch etc.)
  • A list of all online accounts with user names and passwords
    Banks (brick & mortar and online banks)
  • Social media
    • Facebook
    • Pinterest
    • LinkedIn
    • Twitter
    • Snapchat
    • TikTok
  • Email addresses
  • Online shopping sites
  • Online Bill Pay
    • Utilities
    • Phone
    • Internet
  • Payment Services
    • Paypal
    • Venmo
    • Google Pay
    • Stripe
    • Square

Talk to Our Estate Planning Attorneys

Estate planning is an essential task regardless of your assets. Our estate planning attorneys are here to help. We can work with you to draft critical estate plan documents like a POA, will, living will, and more. Give our local law offices a call. We represent clients in Bucks, Montgomery, and Philadelphia counties.

High Swartz | July 20, 2020

College-Bound Kids? Why a POA for Teens is More Important Than Ever

With the possibility of students returning to school during a pandemic, making sure they make the right decisions regarding their health is paramount. Talk to an estate attorney about a POA for teens.

Colleges and universities across the country are releasing their return-to-school plans in an effort to address the uncertainty for students and staff. Will in-class teaching be available? Will every student be able to attend? What about safety practices and social distancing? All of these questions will need to be addressed before any decision can be made. And with the unpredictability of the coronavirus, those plans could change in an instant. That's why you should talk with an estate planning attorney about a POA for teens.

Whether your child is a freshman or returning senior, the most important question you’ll ask yourself is whether it will be a safe place for them. What will happen if my child gets sick or hurt? For this reason, more importantly, it is also time for them to consider a Medical Power of Attorney and Durable Power of Attorney for your teens.

Why do I need a medical POA for my college-bound teen?

Doctors, hospitals and even the college they are attending are limited in what information can be shared with parents or other adults. Without a Medical Power of Attorney, a parent, even one paying their tuition, covering their health insurance, and claiming them as a dependent on their tax return, could be helpless to aid their adult child if an emergency arises. A Power of Attorney for medical and financial matters allows your college-bound child to appoint someone to handle these matters for them if they are unable or unavailable to handle them themselves.

You cannot rely on documents executed through the school since they are limited to accessing school records and in limited circumstances, to medical treatment at the school only. To assist your student or any young adult, a POA for teens, which includes access to medical records and treatment must be executed. It is best to have these documents drafted by an estate planning attorney and not rely on forms downloaded from the internet as they may not meet all of the necessary legal requirements.

Proper planning is essential

Proper planning can allow your young adult to appoint the person or persons they trust to handle financial and medical matters for them. If they have a serious illness or accident, having these documents in place can save the family time and significant costs by avoiding the immediate need to seek a court-appointed guardian. If they are traveling abroad and need assistance with matters at home, a Durable POA for your teen allows their agent to handle banking transactions, sign tax returns, and many other types of matters for them.

A young adult, or any adult for that matter, should take the time to be sure these documents are in place before they become necessary. Please call one of our estate planning attorneys for more information.

If you have any questions about a Medical Power of Attorney or Durable Power of Attorney, please contact the estate planning attorneys at High Swartz at 610-275-0700 or via our contact form.

The information above is general: we recommend that you consult an attorney regarding your specific circumstances.  The content of this information is not meant to be considered as legal advice or a substitute for legal representation.

Donald Petrille, Jr. | March 6, 2020

Guardianship Tracking System (GTS) Online Workshops for Spring 2020

The Administrative Office of Pennsylvania Courts (AOPC) is offering a series of online workshops that educate guardians that are court-appointed on how to navigate the newly-created GTS or Guardianship Tracking System. The GTS allows the guardians of incapacitated adults to file annual reports and inventory online.

The workshops are accessed online and conducted through an application called WebEx. Guardians are welcome to attend any session but registration is required.

Guardianship Workshop Topics:

  • Overview of the Guardianship Tracking System
  • How to log in to the GTS
  • How to Navigate the GTS Dashboard
  • How to submit reports online
  • How to determine the court accepted a report
  • Discussion of additional support for submission to the GTS

Online Schedule

  1. April 8, 2020, 10am
  2. April 24, 1pm
  3. May 4, 9am
  4. May 21, 2pm
  5. June 2, 8am
  6. June 18, 5pm

Registration is completed through WebEx and you must bring your own laptop that has is internet-accessible.

Click Here for Registration Instructions.