Understanding Testamentary Capacity in Drafting a Will

 

For a will to be considered valid in Pennsylvania, the person who creates it (testator) must be of sound mind and judgment. A common reason for contesting a will is lack of testamentary capacity. Someone who is contesting a will for this reason must prove that the testator (person who created or changed a will) lacked the mental competence to do so.  Probate litigation attorneys often handle cases involving testamentary capacity. Regardless of whether you are creating your own will or you are thinking of contesting a loved one’s will, a lawyer can help you understand the concept and how it may apply in your specific circumstances.

What is Considered “Sound Mind” in Pennsylvania?

Just because someone is elderly, eccentric, physically weak, suffering from an illness or has a poor memory, it does not mean that they lack testamentary capacity. Some common conditions that may result in testamentary incapacity include:

• Dementia
• Delusions
• Alzheimer’s disease
• Other mental disorders that affect a person’s ability to understand their actions

One Pennsylvania court summarized having testamentary capacity as: “At the time of execution of the will the testator had an intelligent knowledge regarding the natural objects of his bounty, of the property he possesses and of what he desires to do with his estate.”

To put it simply, a person is considered mentally competent to draft and execute a will if:

• The testator understands that the document they are drafting and signing is a will
• The testator understand the nature and situation of the property referred to in the will
• The testator remembers and understands the beneficiaries named in the will

When a testator intends to give all of their property to one person, their knowledge of property has little bearing. Testamentary capacity in creating a will does not rise to the same level required to sign a contract or conduct business. An estate planning attorney would not encourage someone who obviously lacks testamentary capacity to create a will.

Challenging a Will Due to Lack of Testamentary Capacity

If you believe a loved one was mentally incompetent when they drafted their will, you can contest the will in the Orphans Court. You must present evidence showing that their lack of testamentary capacity affected the creation of the will and/or distribution of assets. Some common evidence used in these types of cases includes medical records, witness testimony and testimony from health care providers. If you successfully prove testamentary incapacity, the court will likely invalidate the will and the estate may be distributed according to the laws of intestate succession. These types of cases are complex, so it is critical to seek the counsel of experienced lawyers who handle wills who can evaluate your case and advise on the best course of action.

If you need help with estate planning or are considering contesting a loved one’s will, finding a good probate lawyer in Chester County, PA, can help to ensure your rights and interests are protected.

This blog was originally posted at  https://carosella.com/understanding-testamentary-capacity-in-drafting-a-will/

Estate Planning Terminology You Should Know

Estate planning includes a lot of terminology you may not know if you are unfamiliar with this area of the law. Although estate lawyers can guide you through the process of drafting a will and other important documents, knowing the definitions of these terms can help you explain things to your family members and allow you get a better understanding of the purpose of certain estate planning tools.

Administrator—When someone dies without a will in Pennsylvania, the Probate court appoints someone as an administrator to oversee the distribution and settlement of the estate.

Advance Medical Directive—A document that names an agent responsible for making medical and end-of-life decisions for another person.

Agent—Sometimes called an attorney-in-fact, an agent is a person you designate to represent you in a Power of Attorney. Typically, your agent handles your finances, health care decisions and other manners in the event that you become incapacitated or unable to manage your affairs.

Beneficiary—A person who is named to receive proceeds from a life insurance policy, retirement account, trust or will.

Conservator—When an individual becomes incapacitated or unable to handle their affairs, a court may appoint a conservator, which is similar to the role of a guardian.

Decedent—In the legal world, this term is used to refer to a deceased person.

Estate/Inheritance Taxes—State and federal taxes that are paid on a decedent’s estate.

Executor—Someone who is named to carry out the instructions outlined in a will.

Fiduciary—An institution or individual who has a legal or ethical obligation to act in the best interest of another. In estate planning, a fiduciary may be the executor of a will, personal representative appointed by the court, a trustee or an agent named in a power of attorney. In some cases, probate and estate lawyers act as fiduciaries for their clients.

Grantor—An individual or entity that creates a trust. They may also be called a trustor or settlor.

Guardian—A person who is designated to handle decisions on behalf of a minor child or someone who is incapacitated.

Joint Tenancy—Property owned by two or more people.

Irrevocable Trust—A trust that cannot be altered or changed once it is established by a trustor.

Last Will and Testament—A legal document that lays out a person’s wishes for how their assets are to be distributed to their beneficiaries.

Living Trust—A revocable trust that includes assets placed in the trust during the grantor’s lifetime.

Power of Attorney—A document that allows someone to name an agent who will act on their behalf should they become incapacitated. A Durable Power of Attorney for Health Care enables an agent to make medical decisions. A Durable Power of Attorney for Finances allows an agent to manage an incapacitated person’s financial affairs.

Probate—The legal process for validating a decedent’s will, distributing their estate to beneficiaries and heirs and settling their debts.

Revocable trust—a trust in which a living grantor can add or remove assets, change instructions , or terminate the trust. Wills and trusts attorneys can help you understand the different types of trusts and the benefits they may provide for you and your family.

Testator—A person who creates a will.

Trustee—An institution or person who manages and distributes assets in a trust.

If you need help creating an estate plan, the experienced team at Carosella & Associates can help.

This blog was originally posted https://carosella.com/estate-planning-terminology-you-should-know/

Revocable Trust vs Irrevocable Trust- What's the Difference?

A trust is an arrangement that enables one party (a trustor) to allow another party (a trustee) to hold assets for the benefit of a third party, the beneficiary. Lawyers who deal with wills and trusts often advise clients to use trusts as a way to allow assets to avoid probate, lessen tax burdens for beneficiaries or take care of loved ones with special needs. Different types of trusts are used for different purposes—it is important to understand each type and their benefits and drawbacks.

Revocable Trusts

A revocable trust allows the trustor to take assets in and out of the trust, change its terms and beneficiaries or terminate it at any time. When a trustor dies, the property in the trust is distributed to beneficiaries according to the terms of the trust agreement. The major advantage of a revocable trust is that the trustor has the flexibility to modify or terminate the trust while they are alive. A revocable trust can also ensure that your assets remain available to be used for your benefit should you become incapacitated or unable to manage your affairs.

Typically, the assets in a revocable trust do not have to pass through probate, but are subject to creditors and estate and inheritance taxes. Probate is the legal process required to validate a will and distribute an estate. It can be a costly and time-consuming process. Having the majority of your assets in a revocable trust can help your loved ones save the cost and hassle of dealing with probate. Having an attorney explain the probate process and going over the pros and cons of irrevocable trusts can help you make informed decisions that can benefit you and your loved ones.

Irrevocable Trusts

Except in very rare circumstances, the terms of an irrevocable trust cannot be changed once it is set up. The trustor is no longer the owner of the assets placed in the trust–they cannot take them out, modify the terms of the trust, or terminate it. Property, securities and other assets placed into the trust during the trustor’s lifetime must be registered in the name of the trust. Although irrevocable trusts do not provide as much flexibility as revocable trusts do, they sometimes offer more tax savings. Because the trustor no longer has ownership of the property in the trust, these assets, in many cases, are not subject to income taxes or estate/inheritance taxes.

With this type of trust, assets are more protected from creditors and taxes unless fraud is involved. For estate planning purposes, an irrevocable trust may be set up to hold monies for funeral costs or special types of life insurance payouts as well.

Which Type of Trust is Right for You?

There is no one-size-fits-all solution in estate planning. Revocable and irrevocable trusts can be powerful tools that can protect your interests when used correctly. An estate planning attorney can assess your circumstances, talk with you about your wishes and goals and devise a plan that works for you and your family.

This blog was originally posted at https://carosella.com/revocable-trust-vs-irrevocable-trust-whats-the-difference/

A Living Trust Can Protect You When You Are At Your Most Vulnerable

Although it may be unpleasant to think about becoming disabled or incapacitated, without a plan to protect yourself you could become a victim of financial abuse. A revocable living trust is a valuable tool that can safeguard your assets and interests. A power of attorney for finances is also an important estate planning document that can help to ensure a trustworthy person manages your money should you become incapacitated. Regardless of your age, creating a plan with an experienced lawyer who provides estate planning services can give you peace of mind.

Benefits of a Revocable Living Trust

When you create a revocable living trust, you (the grantor) can transfer ownership of almost anything to the trust itself. As the grantor of the trust, you have control over the assets in the trust and may remove or add assets to the trust at any time. You must also name a successor trustee, who will automatically take control of the assets in the trust in the event of your incapacity.

In addition, you may offer specific instructions about the circumstances in which a successor trustee should take over. You can specify how the trust assets should be invested, the type of care you wish to receive, and which expenses you want the trustee to pay. When a living trust is created properly, there should be no need for court involvement to manage your assets.

Choosing A Successor Trustee

It is vital to choose wisely when naming a successor trustee. The person should be someone you know has your best interests in mind. It may be tempting to select someone just because they are your child or relative, but if they are not reliable or trustworthy, you could risk losing your financial security when you are at your most vulnerable. A good trusts lawyer will discuss your circumstances and options with you and give you a candid, objective perspective on who may be the best person to manage your finances. If you do not have a family member or close friend to serve as your successor trustee, you can name a fiduciary such as a financial institution, accountant, or attorney to manage the trust. Because it is a revocable trust, you can replace the successor trustee with someone else at your discretion.

Living Trust vs. Power of Attorney for Finances

Although a durable power of attorney for finances also allows you to appoint someone to take over your financial affairs if you become incapacitated, it does not shield your assets. A revocable living trust enables the assets in the trust to avoid going through probate upon your death and protects your privacy, as it is not part of the probate process or public record. A successor trustee can still manage the assets in the trust after your death, but a power of attorney is no longer in effect if you pass away.  A probate or estate lawyer can help you understand the benefits and purposes of each document and advise you on what may best meet your needs.

Do you need assistance with estate or incapacity planning? The experienced team at Carosella & Associates can help you create a plan that protects you and your family.

This blog was originally posted https://carosella.com/a-living-trust-can-protect-you-when-you-are-at-your-most-vulnerable/

What Happens If You Die Without a Will?

A well-drafted will is a vital part of any estate plan. However, millions of Americans die without a will each year. Failing to have a will in place at the time of your passing can make things challenging for your loved ones and may result in your estate being distributed in manner that is not aligned with your wishes. Discussing your estate planning goals with a wills and trusts lawyer and creating a will can give you peace of mind and ensure that your legacy lives on as intended.

What Is Intestate Succession?

It is a common misconception that all property goes to the Commonwealth of Pennsylvania when someone dies without a will. In actuality, this is a rare occurrence. In Pennsylvania, when someone dies without a will their assets are distributed according to the laws of intestate succession. This means that the probate court will distribute your estate to your closest relatives in a particular order of succession. Typically, the order is as follows:

• Surviving spouse of the decedent
• Children or grandchildren of the decedent
• Parents of the decedent
• Siblings or nieces and nephews of the decedent
• Grandparents of the decedent
• Decedent’s aunts, uncles, and their children and grandchildren
• Commonwealth of Pennsylvania

Each case is unique. There are specifics that are taken into consideration when distributing an estate, such as whether or not a decedent’s children are also the children of the surviving spouse. An estate lawyer can help you understand the laws of intestate succession so you have an idea of what could potentially happen if a close family member has died without a will.

Probate

Most estates in Pennsylvania must pass through probate, even if there is a valid will. Some assets that typically do not have to be probated include proceeds from life insurance, retirement accounts, joint bank accounts, and living trusts. Joint tenancy property is also exempt from probate in most cases. If your estate has to be probated without a will, your loved ones will most likely have to hire a lawyer to explain the probate process and guide them through it. If there is a family conflict or other issues surrounding the estate, probate can be a long, costly process. In addition, if you are the only surviving parent of minor children, the court will appoint guardians for them, which can leave your children in the charge of people who may not have their best interests in mind.

Benefits of Having a Will

The best way to plan for your future and properly provide for your loved ones is to create a comprehensive estate plan. This is particularly important if you own a business. Using a full-service law firm with business attorneys and estate planning lawyers who work collaboratively can help to ensure all your legal bases are covered and your beneficiaries’ inheritance is maximized. Even if you have a very simple estate with few assets, having a lawyer help you draft a will is an affordable, easy way to make your wishes known and take some of the burden off your loved one’s shoulders.

This blog was originally posted https://carosella.com/what-happens-if-you-die-without-a-will/

Contesting A Will Due To Undue Influence

Those with nefarious intentions often manipulate the elderly and other vulnerable people in our society. If someone convinces a loved one to change their will, power of attorney, or other vital documents you may not find out until after their death. Although this situation can be frustrating and upsetting, you can take action to prove undue influence and contest the will. If you need to contest a loved one’s will, it is vital to seek the counsel of an experienced wills and trusts attorney who understands the elements involved in proving undue influence.

What Is Undue Influence?

When someone in a confidential relationship with a testator (signer of a will) who has a weakened intellect convinces them to change their will, it can be considered an undue influence in Pennsylvania. This kind of manipulation often happens when a person suffers from dementia, Alzheimer’s, or another condition that affects their ability to make decisions.

Contesting a Will in Pennsylvania

Will contests are heard in the probate court (orphan’s court in PA). If a will has not been filed with the probate court, filing a caveat with the Register of Wills in the county where the testator lived at the time of their death puts a hold on the probate process until the challenges to the will are addressed. If a will has already been filed, you must file an appeal with the Register of Wills. Once an estate is open, it is important to act fast if you are going to contest a will.

Proving Undue Influence

To establish grounds to contest a will for undue influence in Pennsylvania, three elements must be established:

Confidential relationship – This means that the person who exerted influence over the testator was in a position of trust that inspired good faith. The person in the confidential relationship may be a relative, caregiver, doctor, accountant, attorney, or someone else who has access to the testator.

Substantial benefit – You must show that the person who influenced the testator would receive a large or considerable benefit from the changes to the will.

Weakened intellect –There are quite a few ways to describe a weakened intellect. In Pennsylvania, it has been successfully argued that a weakened intellect is one that is inferior to normal minds in reasoning power, factual knowledge, freedom of thought and decision, and other characteristics of a fully competent mentality.

To prove undue influence you must provide evidence. A seasoned probate attorney will know what type of evidence to collect and how to present it to show that undue influence occurred. This evidence may include medical records, statements from a decedent’s attorney, medical provider, family and friends, and the expert testimony of medical professionals, forensic accountants, and others. A judge will consider all the arguments and evidence and determine whether undue influence occurred. If fraud, physical or mental coercion, or other wrongful acts are proven, the court may void the will and enforce a previous will or distribute the estate according to the laws of intestate succession.

Involving your loved ones in estate planning can help protect your interests and avoid problems with your will after your passing. If you need assistance with contesting a will, our experienced team at Carosella & Associates can help.

This blog was originally posted https://carosella.com/contesting-a-will-due-to-undue-influence/

Steps for an Executor to Take When Settling an Estate

Being the executor or personal representative of an estate can be daunting. Although it is good to have a probate attorney assist you with the process, it is important to have a general idea of what the process of settling an estate entails. Taking it step-by-step can help you get organized and prepare you for the tasks that lie ahead.

Secure Property and Gather Documentation

The first thing you should do as the executor of an estate is to make sure all property and assets are secure. Promptly collecting documentation can help to ensure that you have what you need to open the estate. The executor of an estate should gather:

• Will
• Receipts or bills for funeral expenses
• Bills for medical expenses
• Tax returns
• Bank account statements
• Investment account statements and documentation
• Life insurance policies and beneficiary information
• Outstanding bills, credit card statements, and invoices
• Death certificates – You will need multiple certified copies of the death certificate to provide proof of death and to have certain assets released.
• Deeds –If your loved one owned multiple investment properties, you may want to contact their real estate lawyer if you need any additional information or documentation
• Appraisals of real estate, jewelry, artwork, or other valuable items

It is also vital to find the names and contact information for everyone who is named as a beneficiary in a will.

Determine Which Assets Can Skip Probate

Assets in a living trust, proceeds from life insurance policies, property owned in joint tenancy, and retirement accounts with named beneficiaries usually do not have to pass through probate. An estate law attorney can go over all assets with you and determine which are exempt from probate. A lawyer can also advise you on what to do if there are any problems with beneficiary designations.

File the Will and Open Probate

You must file the will with the Register of Wills in the country where your loved one lived at the time of their death.  You will also need an original of the death certificate. You must fill out an Estate Information Sheet, Petition for Probate and other required forms. Letters Testamentary will be granted, which give the executor authority to act on behalf of the estate. In Pennsylvania, probate is conducted in the Orphans Court.

Settling the Estate

Once the estate is opened, you must:

• Collect and inventory all assets
• Put estate notices in local newspapers
• Notify beneficiaries and any other relevant parties and file certification of these notices with the court
• Have certain assets appraised, if necessary
• Sell estate assets if applicable
• Pay creditors
• File a Pennsylvania inheritance tax return – if inheritance taxes are paid within 3 months of opening the estate, you receive a discount of 5%. The final inheritance tax return must be filed within nine months from the date of death.
• Distribute assets to beneficiaries
• Prepare a final accounting of the estate administration
• Discharge the estate

This is by no means a comprehensive guide to the responsibilities and tasks you perform as an executor. Our wills and trusts attorneys can guide you through the process and help solve any legal issues that may arise.

This blog was originally posted https://carosella.com/steps-for-an-executor-to-take-when-settling-an-estate/