Estate Planning is Not Only for the Wealthy

All adults, despite whether they are married, have children, or have a large net worth, will benefit from preparing at least an estate plan. You will want estate planning in place in case you become temporarily or permanently incapacitated, or unable to make these decisions or care for yourself due to various mental and physical issues.

There are a few documents that everyone needs. A basic estate plan includes a Will, Durable Power of Attorney, Health Care Power of Attorney, and Living Will. The Will serves to designate beneficiaries for your property and name guardians for any minor children. The Durable Power of Attorney allows you to assign an agent to handle your finances while you are incapacitated. The Health Care Power of Attorney allows you to assign an agent to make medical decisions on your behalf. Finally, the Living Will provides medical personnel with instructions regarding your end of life decisions. Further, many individuals also include HIPAA authorizations in their plan to give family and friends that are not named in their Health Care Power of Attorney access to medical records. This basic estate planning also serves to remove much of the burden from your surviving family member’s shoulders during already difficult times.

There are several key issues that we all need to consider while we have the capacity to prepare and implement a basic estate plan:

Who is going to handle your financial affairs (e.g., paying your bills, collecting income, selling property, etc.) when you are incapacitated? For example, who is going to make sure your mortgage or rent is paid if you are in the hospital following an automobile accident?

Who is going to be permitted to visit you in the hospital and make medical decisions on your behalf when you are not able to make decisions on your own?
When you pass away, who will receive your property? How and when will they receive this asset?
If you pass away while your child or children are minors, who will be their guardian(s)?

The questions listed above are complex issues and nearly everyone will be impacted by each of them at some point during their life. If you do not plan, the state will make the decisions for you. Often, the state’s decisions will be more expensive than the cost of basic planning. Furthermore, the likelihood that the state will make the same decisions that you would have made for yourself is very slim. The court will choose your fiduciaries based on your state’s law, which may not be the best people to serve as your fiduciary. For example, if you are unmarried and would like a close friend of yours to serve as your fiduciary, the court will not choose this person because it is not in accordance with the law. Instead, your fiduciary may be a sibling who you may believe to be unsuited to fulfill this important role.

Again, you do not need to be wealthy for it to be beneficial to have an estate plan in place. Implementing an estate plan will reduce your family’s stress and ensure that your wishes will be fulfilled.

If you would like to discuss your estate planning needs, contact us. We will be more than happy to schedule an initial meeting with you.

Top Five Reasons to Update Your Will

Top Five Reasons to Update Your Will

When should you update your Will? A Will should be updated when your personal circumstances change, which could be after one month or ten years. The mere passage of time is not a reason to change your Will. Your Will is like your home. If properly maintained, your home will last a very long time. Likewise, if properly updated, your Will can also last a very long time.

The most common reasons for updating your Will include: changes in family, wealth, health, state residence, and tax laws. You should take time to periodically consider each of the update reasons at least once a year. That certainly does not mean that you should update your Will every year. However, an annual checkup will ensure that you monitor the update triggers.

Reason #1: Change in Family

The most common reason for updating a Will is a change in family. Your family could add new members by birth (e.g., children or grandchildren) or lose family members by death. It is important that your Will accurately reflects the actual people that survive you. You certainly don’t want to forget the new baby and you don’t want to make things more complicated by leaving an inheritance to someone that has already passed.

In addition to making sure that you have an updated group of beneficiaries, changes in family circumstances is also likely to impact your previous selections for fiduciaries (e.g., executor, guardian for minors, power of attorney, etc.) that may become unable unwilling or unable to effectively serve. Additionally, your relationship with a beneficiary or a fiduciary may sour over time and that issue would also need to be addressed. Further, at the time of your initial Will, your children may not have been mature enough to serve as back-up fiduciaries. As they mature, many people replace their initial selections with fiduciaries that will likely outlive them.

Reason #2: Change in Wealth

When a client’s wealth changes drastically, the client would benefit from reevaluating the existing Will to reconsider the size or percentage of inheritances. A change in wealth may also lead to tax or charitable issues that were not previously considered based on the previous wealth circumstances.

Reason #3: Change in Health

As a client’s health changes for the better or worse, it is critical that we review the existing Will to ensure that the Will remains optimal. Also, you must consider the health of your fiduciaries (e.g., executor, guardian, trustee, agents for power of attorney, etc.). For example, your initial appointee for executor may no longer be the best selection if his/her health has deteriorated.

Reason #4: Change in State Residence

If your Will was validly executed in a first state (e.g., Delaware), then it will likely be valid when you move to a different state (e.g., Pennsylvania). Each state has different laws regarding administering a Will. Often these differences are minor, but sometimes they can drastically impact your planning. For example, states vary regarding the required residence of an executor, inheritance tax laws, and whether a child can be disinherited by omission. Therefore, if your existing estate plan was executed in a different state then your state residence, it would be worthwhile to have a local estate planning attorney review it.

Reason #5: Change in Tax Laws

Even if there are no changes in a client circumstances (e.g., family, wealth, health, & state residence), it is important for a Will to be reviewed for changes in tax and legal strategies. Periodic meetings with your attorney will increase the likelihood that your estate planning documents remain optimal.

If your Will is over five years old, we recommend a professional review because it is likely that one or more life changes could necessitate an update to your Will. Also, your incapacity planning documents (Powers of Attorney and Living Will) should also be updated periodically. Please contact us if you would like to review your existing estate plan.

Estate Planning with Minor Children

Estate planning for minor children is critical for young families. However, must people don’t know where to start to ensure that their family is protected. There are four major issues that need to be addressed: 1.) select a guardian, 2.) select a trustee to manage the child’s inheritance, 3.) design the child’s trust, 4.) ensure that all beneficiary designations for your assets are correctly listed (e.g., retirement accounts, life insurance, etc.).

Guardianship

The most important planning aspect for minor children is designating a guardian. A guardian’s duty is to raise the children when the parents are incapacitated or deceased. Parent’s often struggle with selecting a guardian because they are trying to find someone that can raise their children as well as they could. Once they realize that no one can raise their children nearly as well as they can, parents then refocus and select the best option. Other times, parents struggle with naming a guardian because they simply disagree. This is a much more difficult issue to address, but when faced with the pros and cons of each prospective guardian, the best option usually surfaces. Here are a few factors to consider while you are going through this process:

Who would maintain the most consistency in the child’s life? Including staying in the same geographic area, school, etc.?
Who reflects your parenting style the most, including values and religion?
Does your child already share a relationship with the prospective guardians?
Who has the capacity to handle raising your children? Do they already have their hands full with their own children? Are they youthful enough to keep up with children?

Trusteeship

In addition to naming a guardian, parents must also decide who is the best choice to manage the children’s inheritance. That is, the trustee is responsible for managing the money and determining how the money is spent. Often, parents will select the same person to be trustee that is serving as guardian. However, some guardians are simply not very strong with managing money. In that case, it makes sense to select a separate trustee. If the guardian and trustee are different, then it’s important to ensure that the guardian and trustee can effectively communicate.

Child’s Trust

A child trust is the preferred tool to manage a minor’s inheritance. Using a child trust allows for highly customizable withdrawal rights, including tiered withdrawals. In lieu of allowing a minor to fully withdrawal all the money when the child is 21, many people prefer to gradually grant their children withdrawal rights as they mature. Holding inherited assets in a child trust is meant to protect the assets from creditors, failed marriages, and the child’s own financial immaturity.

A reasonable indicator of financial maturity is the child’s age. For example, it is common for parents to set up tiered withdrawal rights for their children as follows: one-third of the assets at 25 years old, one-third at 30, and the remaining balance at 35. Since age alone is not always a good indicator of maturity, the trustee may be instructed via the child trust to delay or fast-forward the tiered withdrawal rights dependent on other factors (e.g., recent history of drug/alcohol abuse, credit history, mental/medical conditions, marriage issues, continued higher education, etc.), which may serve as a better indicator of the child’s financial maturity.

Beneficiary Designations

A child’s inheritance may come from outside of the Will via beneficiary designations for retirement accounts and life insurance. It is critical that parents confirm that their children are listed as the contingent beneficiaries (after your spouse, if you are married) on the beneficiary designation forms. Listing your children by name is especially important for retirements accounts (e.g., 401k, 403b, and IRAs) because of potential income tax pitfalls.

If parents have planned for guardianship, trusteeship, the child’s trust, and for beneficiary designations, then they can be confident that they have taken the first steps to protect their family.

Five Estate Planning Myths

There are numerous myths associated with estate planning that we commonly see in our practice.

Myth #1

I do not need estate planning because I’m not wealthy, sick, or old. This is by far the most common estate planning myth and it is simply not true. If you have people in your life that you care about, then you need estate planning. Most of the time estate planning is not about the money. It’s about people. Everyone old enough to sign estate planning documents should highly consider executing an estate plan. Part of the problem is that people that believe this myth do not realize that they already have an “estate plan.” If you don’t draft a plan, then your state has one for you. Only after I summarize the state’s default estate plan, do people suddenly realize a sense of urgency related to estate planning.

Myth #2

All I need is a simple Will. This is usually a myth for several reasons. First, nearly every family that I have encountered in my practice has at least one complex issue that should be addressed with proper planning. Examples of some complicating issues include: minor children, children from a prior relationship, tax planning, and disinheriting a family member. An estate attorney’s responsibility is to discuss each of the issues with the client. Ultimately, it’s the client’s decision to implement a “simple” Will or to implement a more comprehensive plan. Second, in addition to a Will (whether simple or more complex), it is also important to plan for incapacity with a Durable Power of Attorney, a Health Care Power of Attorney, and a Living Will. Third, a Will is not the default mechanism to directly distribute every type of asset. For example, some assets may be distributed by a title (e.g., your residence) or via a beneficiary designation (e.g., your retirement account and life insurance). Every estate plan should address these additional assets.

Myth #3

Since I’m not ultra-wealthy, I do not need to worry about estate tax. Even if you are under the federal estate tax exemption amount (currently over $12M in 2022), there are several other ways that your estate or your beneficiaries may be subject to a tax following your death. Pennsylvania has an inheritance tax that often starts at the first dollar. PA’s inheritance tax is 0% to spouses and charities, 4.5% to children and grandchildren, 12% to siblings, and 15% to all other people. Also, if you leave a tax-deferred retirement account to a beneficiary, the beneficiary will have to pay income tax on the withdrawals. I refer to this issue as a hidden estate tax. If those retirement account withdrawals are large, the beneficiaries should also prepare for an equally large income tax obligation.

Myth #4

Everyone should have a Revocable Living Trust (RLT). In stark contrast to some earlier listed myths where people do not think they need estate planning, people believing this myth often think they need more complex planning because someone told them they need it. While some states have very costly and time consuming probate administration processes, Pennsylvania’s probate administration process is not overly burdensome. Some valid reasons for PA residents to execute an RLT is to avoid probate in other states where they own property (e.g., a vacation property), for additional incapacity planning, and/or to preserve privacy. An RLT will not hurt you, but the burden and cost required to properly implement them may not be necessary.

Myth #5

I should leave my assets outright to my beneficiaries. In some situations, leaving property outright to beneficiaries may be the simplest plan. However, as I mentioned in Myth #2, not all family circumstances are simple. Instead of an outright distribution, it is often desirable (and sometimes required) to add asset protection to your estate plan by distributing assets to beneficiaries via a testamentary trust (a trust that is triggered in your Will upon your death). It is common to implement testamentary trusts for children and young adults, as well as, for spouses when you have children from a prior relationship. An outright distribution is simple, but provides no asset protection.

Please call our office at (610) 444-4555 to discuss your estate planning questions and concerns.

Managing Your Family Legal Matters During COVID-19

Anita D’Amico April 1, 2020

We are now a week into Governor Wolf’s stay-at-home Order, and although we are all abiding by the Order, and the courts are closed with the exception of emergency filings, it is likely that your divorce and custody matters have not gone away.

You may be wondering how the court’s temporary closure to non-emergency matters may impact your case. The impact is that you may experience some delays in the resolution of your legal matter. If you were previously scheduled for a matter before a Judge or Master during the court’s current closure, by now you have been notified that the matter is postponed, or you may have received a new date for your matter.

You may also be wondering whether your case can move forward while the courts are closed to non-emergency matters. If this is a priority to you, you should consider mediation in order to resolve or move your domestic legal matters forward

Mediation, when possible, is the best way to proceed. By choosing to mediate, you are making the decision about your case for yourself, rather than having the outcome ordered by a Judge or Master. You are also choosing the most cost-effective way to resolve your matter, which is more important than ever during this challenging time.

The Attorneys at D’Amico Law are certified mediators, handling both private and court-appointed mediations. We are currently set up to provide remote mediations through video conferencing or phone conferencing, depending on your preference. If you have a dispute that cannot wait for the courts to reopen, or if you simply want to move your case forward in the wake of the court’s closure, please call us at 610-444-4555 to discuss your mediation options.

Estate Planning

Anita D’Amico March 27, 2020

During this difficult time, our firm has had several inquiries from new clients seeking to get their estate plans in order as well as calls from some of our current clients requesting a review of their estate planning documents in order to assure the documents are still appropriate. If you have been putting off making or revisiting your estate plan, and now find time to make this a priority, let us help you!

We recommend that you take a moment to consider if you have a Will? If so, is it up-to-date? Do you have the right Executor and/or Trustees designated? Do you have Guardians appointed for your children under the age of 18? Do you have a Durable Power of Attorney appointing the right person to handle your financial affairs in the event you become incapacitated? Likewise, do you have a Health Care Directive (Living Will) outlining your wishes if you became ill and appointing an appropriate person to make your healthcare decisions for you?

There is no charge for initial consultation and review of your options, and we offer affordable flat fee options. Our lawyers are now offering telephone conference services at discounted rates to assist you.

Please contact our office to schedule an appointment 610-444-4555 or visit our .

Liability

How you may be Liable if a Trespasser Slips and Falls on your Property

Anita D’Amico November 13, 2018

Many of us are home today enjoying the snow day. Some of us may shovel the
walkways or snow blow the driveway. However, with this wintery weather comes
an additional liability that many landowners do not know they owe other people.

Generally, landowners do not owe a duty to trespassers other than to avoid
“affliction of willful and wanton harm.” Still, there are exceptions to this general
rule. One exception to this rule is when there is snow or icy weather conditions.
Landowners in Pennsylvania typically have up to 24 hours or a reasonable time
period (depending on local laws) after the snow stops falling to begin to remove
it, clear it, make the property safe or provide a warning about the dangerous
conditions on the property.

A long-standing doctrine in Pennsylvania is known as the “Hills and Ridges”
Rule. A landowner may be liable for injuries caused on his property if he
unreasonably allowed ice and snow to accumulate naturally to dangerous
elevations, resulting in small, uneven hills and ridges of snow and ice. The hills
and ridges must unreasonably obstruct travel or create a danger to pedestrians
on the land. The landowner must have known or had reason to know that the
snow or ice was accumulating to such a dangerous amount. Additionally, for a
plaintiff to have a claim against a landowner, the hills and ridges of snow or ice
must have caused the plaintiff to slip and fall and cause injuries to the plaintiff.
Under this rule, landowners are not liable for injuries of another person if the
person slips and falls due to generally icy conditions, such black ice or freshly
fallen snow. Moreover, this rule only applies to natural accumulation of snow and
ice to unreasonably dangerous elevations. It does not apply if the accumulation
was caused by an artificial source.

D’Amico Law, PC is a general law firm situated in Kennett Square, Pennsylvania.
We offer a wide variety of services including estate planning administration,
divorce, mediation, custody, corporate law, personal injury and minor criminal
matters. If you have questions about this article or any questions regarding your
legal needs contact us at 610-444- 4555.

Taxes

How the 2018 Tax Laws Affect your Family Matters

Anita D’Amico November 13, 2018

As February comes to an end, many of us have heard or read that there are new tax laws that have been enacted for 2018. You may be busy preparing your 2017 tax returns and wondering if the new tax laws will affect you this year, next year or at all. If you have children that you claim as dependents or if you claim your spouse as a dependent on your tax returns, the new tax laws may affect you. The good news is that if you normally have a tax credit for listing a child as a dependent, the amount of the credit has increased from $1,000.00 to $2,000.00. If you claim any other person as a dependent who is over the age of seventeen (17) years old, you can take a $500.00 tax credit.

If you are confused as to who the IRS considers to be a “child” for purposes of claiming the child tax credit, the “child” must be your biological child, adopted child, foster child, step child or grandchild. The “child” could even be your brother, sister, step-brother, step-sister, nephew or niece. The “child” must also be under the age of seventeen (17) years old and must live with your for more than half of the tax year that you are claiming him or her as your dependent. Additionally, the IRS requires that the “child” actually be your dependent, meaning he or she cannot provide more than half of his or her own support.

The bad news with this new tax law is that you can no longer take exemptions for claiming dependents on your tax returns. This law is set to go into effect in 2018, so you will still be able to take exemptions for your dependents when you file your 2017 tax returns.

Another family law area that the 2018 tax law affects is alimony. Many men and women who have gotten a divorce are obligated to pay their former spouse alimony payments. An advantage of being the payor spouse was that you were allowed to deduct alimony payments from your tax returns. The spouse who received the alimony payments was obligated to report the alimony payments as part of his or her gross income, which was taxable. With the new tax law going into effect on December 31, 2018, the payor spouse will be unable to claim alimony payments as deductions on his or her tax returns.

Additionally, the new law eliminates alimony recapture. If you are unsure as to what alimony recapture is or if it affects you, alimony recapture is a procedure involving spouses who make alimony payments to their former spouses. If alimony payments decreased or terminated during the first three (3) years that a payor spouse was obligated to pay alimony, the payor spouse was required to include in his or her income for the third year, any alimony payments he or she previously deducted.

Another change that the new tax law brings is how support payments are allocated. In prior years, support payments had to be designated as alimony payments only or child support payments only. The new tax law eliminates this allocation requirement so that support payments are simply “support payments.”

If you would like more information on the new tax laws and how they affect your current family matters, or if you have questions or concerns regarding the new tax laws, contact D’Amico Law, P.C. We are happy to assist you and answer any questions that you may have.

Estate Planning

Please contact our office to schedule an appointment 610-444-4555 or visit our .

Estate Planning

One of the biggest gifts you can give to heirs is an orderly estate. Keep your estate documents current. Review every three to five years and/or when there is a big change in your personal circumstances or preferences. Leave a roadmap for heirs to locate important documents, passwords, account log-ons, and your safe deposit box. Create a list of friends and colleagues you want notified. Remember to include information about care for your home, and pets and disposition of valuables, collections and heirlooms.

Communicate your preferences regarding end-of-life decisions and pre-plan final arrangements. It’s hard to make decisions for someone else. Do as much ahead of time as you can. Heirs will be grateful.

Excellent estate planning focuses not just on what you have but on who you are. Each of us has a personal history that shapes our values and habits with respect to money, how we decide when to save and when to spend, the importance of financial security, maintaining personal independence, and communicating with family. Your legacy plan provides a unique opportunity to reflect and communicate your personal views on family, work, giving, and inheriting.

D’Amico Law, PC offers estate planning services. Contact us today at 610-444-4555 or 610-932-4555 to learn more about our estate planning services.