Property Inheritance in Blended Families: Understand the Strategies

Blended families have been the new norm in the United States for some time now. Family dynamics can be complicated and blended families face their own unique challenges when it comes to estate planning. Ensuring that everyone feels valued can be tricky, especially if you feel the need to protect assets from someone who may not have the best intentions.  It is also important to understand the potential for some members of the family to become unintentionally disinherited down the road. An experienced estate lawyer can identify potential issues and roadblocks and help you create an estate plan that protects everyone’s interests.

Resolving Inheritance Questions For Blended Families

There are many different ways to be proactive so your children and other beneficiaries do not have to deal with inheritance problems after you are gone, including:

• A well-crafted will that takes possible future scenarios into account
• Pre- and post-nuptial agreements
• Changing beneficiary designations on life insurance policies and accounts
• Trusts

A family wills and trusts attorney can help you find options that meet your specific needs and family situation.

Trusts

A Qualified Terminable Interest Property (QTIP) is an irrevocable trust that can be a useful estate planning tool. If you have had multiple marriages and want to make sure your assets go to your children from an earlier marriage after your current spouse’s death, A QTIP may be a good solution. By establishing a QTIP trust, you can provide for your surviving spouse for the rest of their life, but once they pass away, the funds in the QTIP are distributed to beneficiaries as specified by the grantor of the trust (you). The surviving spouse cannot make any changes to the trust or add additional beneficiaries, so a QTIP is a reliable way to ensure your assets are distributed to the beneficiaries you choose, even after your death.

An Irrevocable Life Insurance Trust (ILIT) is a trust that is specifically set up to own a life insurance policy. After your death, life insurance policy proceeds are placed in the trust and will go to the beneficiaries you specified when the trust was created. These proceeds do not have to go through probate and an ILIT can help to ensure the children you designate as beneficiaries are not disinherited.

When setting up any kind of trust for estate planning it is usually a good idea to choose a neutral party to be a trustee or fiduciary, especially in blended families. If you have a longstanding relationship with a contracts lawyer, accountant, or another professional you trust, naming them as trustee can help cut down on family conflict and stress.

Update all Critical Estate Planning Documents

Forgetting to update your will or beneficiaries on insurance policies when you get remarried can have disastrous consequences for your beneficiaries. Once you marry a new spouse, your previous will may become invalid according to the laws of intestacy in Pennsylvania. Beneficiaries on insurance policies must also be changed—in the event of your death they will be paid to whomever you last named as beneficiary, which may be your former spouse. If you are considering a new marriage, a prenuptial agreement can also be an effective way to specify what your spouse is entitled to and how you want your other assets to be distributed upon your death.

If you want to learn more about estate planning for your blended family, the team at Carosella & Associates can help.

This blog was originally posted at https://carosella.com/property-inheritance-in-blended-families-understand-the-strategies/

Planning to Sell Your Deceased Parent's Home: Here's What The Law Suggests

Selling a parent’s home after they pass on can be an overwhelming and emotional process. It can be especially challenging if there is a family conflict or you are unfamiliar with the legal issues that can arise when settling an estate. Estate planning law firms often work collaboratively with real estate attorneys to develop creative, practical solutions that can help you understand the law and resolve issues to get your parent’s property sold.

Does a Home Have to Go Through Probate?

In most cases, yes. Unless your parent put their home in a living trust, the home is part of the estate and must go through the probate process before it can be transferred or sold to anyone.  Although selling a house while in probate is possible, the process is complicated. The probate court will monitor the process to ensure it is transparent and you are authorized to sell the home. If you are the executor or administrator of the estate, you are required to monitor and approve the sale of the home as well. Your probate attorney can advise you of all your rights and responsibilities as the executor of an estate.

Confirm Ownership

Before you do anything else, find out if your parent is the sole owner of the property. If the home is jointly owned with a spouse or anyone else “with the right of survivorship,” they automatically become the sole owner of the home. These situations can be particularly tricky when an ex-spouse is still on the deed of a home. Experienced divorce attorneys usually advise clients to separate all property and update their estate plan after a major life change, but sometimes these things can fall through the cracks and cause serious problems when someone passes away unexpectedly.

Keep it Current

The transfer of property can take time, so it is important to continue to pay the mortgage, property taxes, and insurance while sorting out the estate. It’s also a good idea to keep utilities such as gas, electric and water on and to check on the property periodically to make sure it is in good shape. Whether you plan on selling the home or not, you will most likely need to get it appraised, so you want to ensure it is properly maintained.

Get an Appraisal

An appraisal is a professional valuation of what a home is worth. It is often required when an estate goes through probate and is used for tax purposes and to ensure all beneficiaries know the value of the property.  An appraisal is usually required in any real estate transaction, so it is a must if you plan on selling the home. Once all of these matters are settled, a real estate attorney can assist you with the process of transferring the property and putting it up for sale.

Do you need assistance with settling an estate or selling a parent’s home? Our full-service law firm in West Chester can help you understand the process and walk you through it every step of the way.

This blog was originally posted at https://carosella.com/planning-to-sell-your-deceased-parents-home-heres-what-the-law-suggests/

Do You Have Minor Heirs in Your Estate? Here's What You Need to Do

In the age of COVID-19, ensuring that your children are protected in the event of your passing is more important than ever. Although many people believe that naming a guardian in their will is sufficient, there are other estate planning tools that can help to ensure your minor children’s inheritance is properly managed. An experienced trusts attorney can help you understand your options and assist you with creating an estate plan that clearly outlines your wishes and protects your children’s interests.

Leaving Assets to Minor Heirs

Parents who are married typically leave all their assets to their spouse, but what happens if you are a single parent or you and your spouse pass away at the same time? When creating a will and estate plan, it is critical to consider different scenarios that may affect your minor children. Although minors can be beneficiaries, legally they cannot own property until they turn 18. In addition to naming a guardian for them, you need to ensure that any assets you want them to receive are properly managed until they are adults. There are several ways to do this. Your estate planning lawyer can assess your specific situation and recommend the options that provide the most benefit.

Why You Should Provide for Asset Management for Minor Heirs

If you do not name someone to manage assets for your minor children, the probate court will appoint a guardian of the estate to oversee them until minor heirs come of age. This means that if you die you have no control over who will manage your children’s assets. The person who is appointed by the court may not be a good fit or could mismanage assets. An attorney can explain the probate process to you so you have a better understanding of what is involved and why naming someone to manage your children’s assets ahead of time is advisable.

Asset Management Options for Minors

There are several ways to arrange for someone to manage your minor child’s inheritance. Some of the most common include:

Naming a property guardian in your will. If you appoint someone to be a property guardian in your will, when your will is validated in probate the court will appoint that person as your child’s estate guardian.

Naming a custodian under the Pennsylvania Uniform Transfers to Minors Act. The PAUTMA enables you to select a custodian to manage assets you leave to your children up to the age of 21. You may do this in your will, living trust, or when naming a beneficiary on a life insurance policy. It is vital to make sure this done correctly, so it is best to have an attorney assist you.

Setting up trusts. Creating a family trust for all your children or individual trusts for each child can help to ensure your wishes are carried out according to your specific instructions. Any trustee you name is required to act in your children’s best interests, whether it involves their education, health, living expenses or any other issues. It is important to keep in mind that a trustee has more responsibilities than a custodian, such as filing annual tax returns for the trust.

Do you need assistance with estate planning? The team at Carosella & Associates can help you create a plan that protects your children’s financial future.

This blog was originally posted at https://carosella.com/do-you-have-minor-heirs-in-your-estate-heres-what-you-need-to-do/

Here's How Bankruptcy Can Affect Child Support

Issues surrounding child support and divorce can be contentious, but when bankruptcy is involved things can become even more complicated. Regardless of the circumstances, it is always a good idea to consult a seasoned attorney to figure out your options if you are facing issues surrounding bankruptcy and child support. The best bankruptcy lawyers will take the time to answer your questions and help you understand your rights and responsibilities.

Bankruptcy and Child Support

Debts are divided into two general categories when you file for bankruptcy. Dischargeable debt can be eliminated, while non-dischargeable debt cannot. Some examples of dischargeable debt include medical bills, credit card debt, car loans and mortgage payments. Child support and alimony arrears are considered non-dischargeable debt in both Chapter 7 and Chapter 13 bankruptcy. Child support is also considered a “priority debt,” which means that repayment often takes precedence over other non-dischargeable debt like income tax debt.

Chapter 7 vs. Chapter 13: How Each Type of Bankruptcy May Affect Child Support Payments

When you file for bankruptcy, an automatic stay is usually placed on any collection actions against you. However, if you file for Chapter 7, your post-filing income is not considered part of the bankruptcy estate. This means that a stay will not halt collection of child support payments. If you fall behind on your support obligations, a creditor (whether it is your child’s guardian or the state) can sue you to collect them.

Filing for Chapter 13 also triggers an automatic stay, but your post-filing earnings are considered part of the bankruptcy estate. This means that before someone can sue you for child support, they would have to file a motion to lift the stay. However, once it is lifted you can be sued. To ensure you keep the benefit of the stay, making timely, full payments according to your repayment plan is critical.

Regardless of whether you are the person who receives or pays child support, a good family law attorney should know how bankruptcy may affect payments and can advise you on the most effective course of action to reach a fair resolution.

Do Bankruptcy and Child Support Affect Custody?

Although filing bankruptcy or getting behind on child support payments does not affect your right to see your children, finances can play a part in the amount of time each parent spends with their children. When making decisions about custody arrangements, the court’s main concern is always the best interest of the child. If your financial situation renders you unable to provide for your children’s basic needs such as food, clothing and housing, a family court judge may give primary custody to the parent or guardian who can adequately provide these things.

If you have an existing custody agreement, simply filing for bankruptcy cannot alter this arrangement. If you or your child’s other parent wishes to modify a custody or child support agreement, you must file a petition with the court that made the initial determination.

Find a Law Firm that Can Handle all Aspects of Your Case

To ensure your rights are protected, it is important to find a full-service law firm in West Chester that handles bankruptcy cases and issues surrounding child support, alimony, custody and other family law matters. If you are filing for business bankruptcy, having an experienced business lawyer on your team is also a must.

This blog was originally posted at https://carosella.com/heres-how-bankruptcy-can-affect-child-support/

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/