Practice Area: Wills

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.

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.

Just when you thought you were done with the fine print of a dead loved one's will, you find an "ancillary" problem, in another state.

In the following paragraphs, we offer a brief understanding of probate, ancillary probate, and how one can avoid this sometimes tricky situation. Talk to an estate lawyer for more insights.

What is ancillary probate?

Ancillary probate is a second probate proceeding necessary when a decedent (the person who has died) has a property to transfer in a state other than the one handling their estate.

To fully understand ancillary probate, you first need to understand probate.

What is probate?

Basically, probate is a court-supervised process in which the decedent’s Will is authenticated, the decedent’s debts are paid and the remaining assets are distributed to beneficiaries. That is the short version.

The long-form definition of probate is that petitions are filed, notices are published, executors/administrators are appointed, lawyers and accountants are hired, income, estate, and inheritance tax returns are prepared, etc. Like any other process, it can be smooth and efficient, or long, expensive, and complicated. We take a deeper dive into probate in another article found here.

In either event, it is a process that occurs in the state where the decedent resided, and with the exception of federal estate and income taxes, that state’s law governs the proceedings. Make sure you work with an estate lawyer conversant in your state laws.

When is "regular" probate not enough?

The potential problem arises because each state court’s power or jurisdiction extends only to real property within that state.

So, if you’re a Pennsylvania resident, your estate would be probated in Pennsylvania, under Pennsylvania law. But only your real property in Pennsylvania and all tangible personal property would be subject to those proceedings.

So, the question is, what happens when a decedent resides in one state but owns real property in another state? The answer is, a second, or ancillary, probate proceeding must be held in the other state. If the decedent owned property in three or four different states, well, you can see where this is going.

Is this necessarily a problem?

Well, not if you are one of those rare individuals who enjoy a lot of court proceedings. All kidding aside, multiple court proceedings result in multiple fees and court costs. It may mean multiple estate attorneys, ancillary executors, and accountants, and of course their fees. It may even lead to additional travel and time.

Above all, it means adding another level of complexity to a process that may already be complicated.

How can I avoid ancillary probate?

So, if you are a resident of Pennsylvania and own a winter home in Florida or some other sunny state, what can you do to avoid the added cost, time, and complexity of ancillary probate? We have the answers below.

Lifetime gifts

You could consider lifetime gifts, which basically consist of retitling your property, adding your children as co-owners with a right of survivorship. This consists of joint ownership, and the surviving owner absorbs the full ownership when the other owner dies.

For example, if you own a Florida vacation home that you intend to leave to your children, you could lifetime gift the home to them, and upon your death—as a matter of law—the property will pass to your children without the need for any court proceeding.

Life estate

You could also gift the home outright to your children while retaining a “life estate” in the property. Your children would own the property, but as long as you lived, you would have the right to use the property and have the responsibility for maintaining it.

Great, so what are the downsides?

These are simple solutions that would make ancillary probate unnecessary. But they do have their drawbacks. Such lifetime transfers may have tax or Medicaid consequences. The transfers may subject your property to the debts and liabilities of your children. Such transfers also limit or prohibit your ability to sell the property should the need or desire arise.

Living trust

Another more flexible solution is placing your property in a “living trust”. A living trust is a fully revocable trust which becomes irrevocable upon your death. The trust, rather than you, actually owns the property. You, as the trustee of the trust, would retain full control of the property. Upon your death, the trustee would distribute the assets owned by the trust to the beneficiaries named in the trust documents, avoiding the need for probate or ancillary probate.

The benefit of a living trust is again, its flexibility. As a trustee, you have total control over the trust property. As settlor and trustee, you control and can change how and to whom the trust assets are paid. Finally, if circumstances change, you retain the right to revoke the trust altogether and have the property returned to you, personally.

These are some simple solutions for simple problems. For even more complex issues, like business or investment properties in other states, you can structure your ownership interests, through stocks, partnerships, and LLCs in ways that those out-of-state interests pass in-state through your will or outside of probate altogether. A trust and estate attorney can determine what works best for you.

There is no “one size fits all” solution to guarantee an orderly, efficient transfer of your property to your beneficiaries upon death. Each solution has its own pros and cons, some of which may or may not be relevant to your situation.

The attorneys at High Swartz can help you tailor your estate planning to ensure that your assets go where and how you want them, as simply, quickly, and efficiently as possible, hopefully avoiding the need for any ancillary probate proceedings. Please call us at 1-833-LAW-1914 or visit our Estate Planning page for individual estate lawyers and email addresses.

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.

People love to make plans-the perfect wedding, that dream vacation, a comfortable retirement, the kitchen remodel.  Making plans is one of the great joys of life- except for when it comes to making plans for the end of it.

Understandably, we don’t like to think about—much less make specific plans for—our own deaths or the death of a loved one. When we do, we’re often prompted by necessity—an illness, concern for the well-being of dependent children, or an insistent estate attorney or financial planner.

But, even then, most of our planning involves tax consequences and the disposition of assets.  Those are certainly the most important parts of estate planning, but they’re not the only part.

Too often, we fail to plan for the events that almost always follow our own deaths. And, if the purpose of estate planning is to lessen the burden on those who are left behind and to ensure that the wishes of the deceased are followed, funeral planning should be an essential part of any estate plan.

When my own mother passed away last Spring, it was an event that put me on the other side of a terrible process.  And even as an experienced estate attorney, I was dismayed by the amount of decisions (small and large) I had to make on behalf of my mother; and I had to make those choices at a time when grief left me barely capable of deciding on what to wear each day.

A lot of those decisions involved issues that, as an attorney, I had previously considered to be outside the “estate planning” process. I asked my clients if they had any burial wishes (i.e. cremation or burial), but that was the extent of it. The rest were details that I assumed were planned and decided within families. Unfortunately, as I learned the hard way, those details weren’t planned or even discussed within my own family, and now I assume this is the same for my clients and their families.

Many of the decisions are small and simple, and easily made while making the sometimes more complicated decisions regarding assets. They may seem fairly trivial compared to what is to be done with the family home or heirlooms, or how investment accounts are to be divided, and therefore, they are easily overlooked. But, to your loved ones, who care more about you than your possessions, your guidance in these matters will be every bit as important.

Based upon my own experience with my Mother’s funeral, here are some examples of things to consider:

1. Funeral Home - The funeral home is important not only for the aesthetics of, or facilities for, any viewing or reception, but for the funeral director, who can be an invaluable source of advice and practical knowledge.
2. Internment - Would you prefer to be buried or cremated? If buried, do you have a burial plot or a cemetery of choice? If you have a burial plot, do you have copies of the plot contract(s) to ensure there is in fact room for you to be buried? What kind of coffin would you prefer? Wood, metal, color, ornate or simple? Does your cemetery require a vault as well, and if so, what is your preference? Do you have a choice of clothing, a certain suit or dress, or something of sentimental value you want to be buried with? If cremated, would you like your ashes preserved in an urn or spread in some location? What kind of urn would you prefer?
3. Service - Would you like a viewing, mass or a reception? A solemn and quiet occasion of remembrance, or a festive celebration of life with food and wine, and music? A small intimate gathering, or an open invitation to all those who knew and cared for you?Is there a church, synagogue, mosque or other place of worship that you would prefer to have your service? If so, is there a particular priest or cleric you would want to perform that service? A poem, a prayer, a passage from a book that you would like read? A favorite reading or gospel read? What music would you like played and do you have a preference who sings or plays at your funeral? Do you have a preference on pallbearers?

4. Flowers – Do you have favorite flowers or colors that you want incorporated in the funeral sprays at the service and cemetery?
5. Photos – Do you have a favorite photograph of yourself, that embodies who you were or how you lived your life, that you want people to remember you by?
6. Memorial - Would you like a simple tombstone, or something more elaborate? What material or design?  Is there a particular inscription you want? Are there other family members buried there that need to be included on the tombstone and if so, does your Executor have those details?
7. Miscellaneous – Do you have any unusual wishes that your family and/or Executor needs to know about? For example, moving a buried relative to the family plot or language you want incorporated in your obituary or eulogy.
8. Death Certificates- Your family should order extra Death Certificates from the funeral home, as they are readily available and less expensive than ordering them from Vital Statistics (which can take over six weeks). I suggest one Death Certificate for every account number (even if there are multiple accounts in one financial institution) and other assets (i.e. home, car), and about ten extra.

It’s not necessary that all or any of this be incorporated into your Will.  In fact, it is better that the last plans of your life are kept somewhere easily found and separate from your testamentary documents. Wills may not be read until after the funeral is over.

Please understand that none of this planning will lessen your tax burden, or ensure the orderly administration of your estate. These considerations may have no economic value to you or anyone else.  But perhaps to your grieving loved ones, they may be the most important plans you leave.

The High Swartz estate attorneys in Bucks County and Montgomery County support your decision to be proactive in protecting your family’s future. Our estate planning attorneys help you protect, preserve and manage your estate so you can reach your goals of safeguarding assets, planning for orderly business succession, minimizing inheritance taxes and making sure the benefits of your hard work go to your family.

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.