FIVE COSTLY ESTATE PLANNING MISTAKES
Who will take care of my child when I’m gone?
Understandably, many people are busy with day-to-day life and may find it difficult to engage in estate planning. However, when your disabled child is involved, failing to be aware of your options can result in the loss of income paid to that child and, possibly, loss of Medicaid benefits. One option available to preserve income and assets is to establish a Special Needs Trust (SNT). Under a SNT, you appoint a Trustee who manages funds for the benefit of your child.
I’m from the government, and I’m here to help!
Many parents have asked the question, “Should I transfer my home to my child for $1.00?” Transferring full ownership of your home to your child for $1.00 removes your legal right to your home and subjects the equity in your home to any financial difficulties your child may have. Moreover, transferring your home may ultimately be more costly than probate and inheritance tax combined. Depending on the circumstances, when your child sells your home, your child may pay capital gains tax of 15% on the increase in value of your home from the time of your purchase to the time of sell. In contrast, inheritance tax is 4.5% for children, and probate costs are relatively nominal.
A lawyer’s best short answer to most questions is: “It depends.”
You may have heard that a Living Trust can be the one document to answer all of your planning needs. You may also have heard that your Trustee will handle your affairs if you become incapacitated and after you die “everything can be handled privately and simply” by your family. A Living Trust may be the answer to your estate planning needs; however, “It depends.” It is important to understand three points: First, probate in Pennsylvania is not onerous. More to the point, if you create a trust, all trust property will require administration just as a probate estate would. Second, everything is not private; the existence of a trust must be advertised after your death if there is no probate estate advertising. And third, a Durable Power of Attorney may meet your needs for planning for incapacity. Please see below.
4. Failing to Plan for Incapacity
No one wants to consider that there may come a time when they cannot manage their life. Unfortunately, many of us will become unable to manage our affairs, even if only at the very end of our lives. If you become incapacitated, and you have not executed a Durable Power of Attorney, it is likely that one of your family members will be forced to engage in an expensive, formal court proceeding known as a Guardianship. Executing a Durable Power of Attorney will allow you to name your agent who will manage your affairs privately.
Will I lose my home to nursing home costs?
During an initial consultation, I am able to inform you regarding what options may be available to you to protect your home and the basics of long-term planning for your particular circumstance.
Copyright © October 2011 All Rights Reserved
Terry Lee Farber, Esq., is a former nurse who cared for patients in critical care units, nursing homes and residential facilities for developmentally-challenged adults. Office location: 1200 Bustelton Pike, Suite 16-B, Feasterville, PA 19053, 215.887.0250
Disclaimer The information provided is offered only as a general informational guide and does not create an attorney-client relationship. Due to unique individual circumstances and changing laws/regulations, it is recommended that you consult with an attorney before engaging in planning. Copyright © October 2011 All Rights Reserved
We are proud to serve Northeast Philadelphia, Bucks County including Feasterville-Trevose, Newtown, Richboro, Bristol, Bensalem, Levittown, Morrisville, Croydon, Oxford Valley, Warminster, Warrington, and more!
Terry Lee Farber, Esq
1200 Bustleton Pike, Suite 16-B
Feasterville, PA 19053