Where There’s a Will: Estate Planning Benefits You and Yours

senior signing estate planning and will documents with attorney

What do Prince, Michael Jackson, Aretha Franklin, Bob Marley, Jimi Hendrix, Sonny Bono, and Kurt Cobain all have in common – besides the fact that they’re all deceased musicians? None of them had a will.

What was Joan Crawford’s final act of less-than-ideal mothering? She cut two of her four adopted children out of her sizable will, as memorably depicted in the film “Mommie Dearest.”

In 1990, 26-year-old Florida resident Terri Schiavo suffered irreparable brain damage after being resuscitated from cardiac arrest, sparking a 7-year national debate over whether she should have been kept alive or not. She did not have a living will, and while most people her age wouldn’t think to need one, her case highlighted the importance of advance directives.

Whether foolish, cruel or indifferent, these cases demonstrate why it’s paramount to plan ahead. You might even say (wait for it), “where there’s a will, there’s a way” – a way to state definitively and unequivocally one’s intentions after their death or, as with power of attorney (POA) documents and living wills, during incapacity or old age.

In a recent, complimentary video presentation for the Barclay Friends community, attorneys Douglas Kaune and Anylise Crouthamel of the Unruh Turner Burke & Frees law firm in West Chester shared the considerable value of wills, powers of attorney, and trusts.

Let’s take a look at their key points and takeaways.

What is a will and why should you have one?

  • Most people have a basic understanding that a will is a legal document that enables a person, the testator, to make decisions about how their estate will be managed and distributed after his or her death. What may be less understood is why one should have this document, which might explain why less than half of Americans have a will.
  • The key reason one should have a will is that without one, a person dies “intestate.” That means the State will decide who inherits and manages their assets, not the decedent (the person who has died). This is the case in Pennsylvania and several other states. Without a will, assets will be distributed according to the Pennsylvania Intestate Succession law, and whether a person can be an heir depends on his or her relationship to the deceased. “That is not likely to be the best plan for the family,” said Kaune, noting that not everyone wishes for a surviving spouse, children, and possibly other relatives to inherit the portion of their estate dictated by the intestate law.  What’s more, charitable intentions will not be known or honored by the State.

What should a will contain?

  • A will can specify your choice of executor(s) of your estate, one who is responsible for carrying out your wishes and making sure your legal affairs are handled properly.
  • Your will should also contain the preferred beneficiaries of your estate and how they are to receive assets.
  • Trusts underneath your will can provide beneficiaries considerable protections (see How do trusts protect your inherited assets? below).

What makes a will valid in Pennsylvania?

The legal requirements for a will created in Pennsylvania to be valid include the following:

  • A statement that the document is intended to be your last will
  • Your signature at the end of the document
  • Two individuals to appear at the Register of Wills office to verify your signature after your death before an executor can be appointed ONLY IF there is no witness or notary present at the signing of your will (not required in the state of Pennsylvania)
    • A witness and notary are preferred, resulting in a “self-proving will”
  • A hand-written (holographic) will is recognized in the state of Pennsylvania; however, it is highly discouraged, due to potential ambiguity regarding the testator’s true intentions and other issues.

What makes a will more difficult to challenge?

The two main challenges to a will are lack of capacity and undue influence. “Testamentary capacity” is one’s mental ability to understand the mechanisms of creating a will and other legal documents (powers of attorney, trusts and living wills). It may be surprising to learn that someone with early-stage Alzheimer’s or dementia can still have testamentary capacity, as long as the following criteria for the testator are met:

  • Intelligent knowledge of who their relatives are
  • A general understanding of the property they own
  • Intelligent knowledge of to whom they wish to leave assets

If there are questions regarding capacity, a doctor (preferably a neurologist) should examine the creator of the will and provide a written report of their belief that this person has testamentary capacity.

The other main challenge to a will – undue influence from those with interest in your assets – can be avoided by having an attorney prepare your will and meeting with him or her alone, even if you feel certain that no one would try to exercise undue influence. This is especially important if you are excluding beneficiaries or reducing the share they would receive by law in the absence of a will.

How do trusts protect your inherited assets?

  • Divorce, creditors, and lawsuits are potential threats to your inherited assets. You can ensure protection against these incidents in your beneficiaries’ personal lives by creating separate trusts underneath your will or a revocable trust for each beneficiary, in which they can serve as their own trustee once they reach an appointed age. This type of trust planning is known as Beneficiary Controlled Trust (BCT) planning.  
  • Because the trust owns the assets, not the beneficiaries outright, they are significantly protected from divorce, creditors and lawsuits. A trust can also protect against high federal taxes on large estates, currently a historically high 40 percent after $11.7 million. While many people don’t have this level of wealth, this threshold is expected to be reduced by at least half within the next few years.
  • As their own trustee, each beneficiary can buy and sell stocks, bonds, mutual funds, business interests, and real estate. They can also take out a loan from the trust to buy a home, for example (when the home sells, the proceeds go back into the protected trust), and, depending on the terms that the testator dictates, they can receive liberal distributions for health, education, maintenance and support.
  • For disabled beneficiaries, a special needs trust can be established to ensure they are not disqualified from government benefits.
  • Particular types of trust planning may also have benefits for posterity, as it is possible to draft trusts that keep and/or move assets out of the taxable estate and facilitate multi-generational estate tax free transfers.

What is probate and how can you avoid it?

  • Probate is the often expensive, time-consuming court administrative process that an executor (if there is a will) or administrator (if there is no will) must follow after someone dies. In the case of a married couple, probate is generally not necessary upon the death of a first spouse because everything transfers to the surviving spouse.
  • Assets that are in the name of one person alone become part of the probate process. This process is particularly exhausting if one owns property in another state(s), as this may require the need to probate in multiple states. 
  • Assets that do not go through probate are jointly owned bank accounts, real estate, and assets like an IRA or 401(k) account in which beneficiaries are designated directly on them.
    • IRA and 401(k) designations will take precedence over the contents of your will, so be sure beneficiaries are synchronized across retirement accounts and your will.
  • According to Kaune, more and more clients are choosing to establish a revocable trust during their lifetime, to which assets that would normally go through probate can be re-titled and, thus, avoid the expense and headache of probate for their beneficiaries. While there is some expense and effort upfront in creating a revocable trust, the backend benefit to heirs is immense.
  • Kaune warns against trying to avoid probate by creating joint ownership of assets with beneficiaries during your lifetime. Joint ownership will bring all the creditors and potential legal actions that might be brought against your heirs to your door.

In addition to a will and revocable trust, there are other legal documents that are extremely beneficial to have before you pass away. They include:

  • Financial POA, also known as a general durable power of attorney, is a document that allows you to designate someone to manage your financial affairs during your lifetime. You may be perfectly capable of doing this yourself, but you may just wish to pass the responsibility on to someone else and enjoy life!
  • Medical POA allows you to name someone to confer with medical professionals and healthcare facilities on your behalf.
  • The POA documents can be drafted to not require incompetence or incapacity on your part because this would impose upon your designated POA repeated, ongoing proof of your condition to various financial institutions, etc.
  • A living will, also known as an advance directive, informs your family and medical community of how you would like to be treated if two doctors determine that you have no hope of recovery and you have no ability to express your own wishes at the time. A living will is a true blessing to your loved ones, as it relieves them from having to make very difficult decisions regarding your life on their own.
    • A living will is NOT a DNR (Do Not Resuscitate)!  While both of these documents are advance medical directives, they serve different purposes. A living will gives instruction regarding withholding or withdrawing treatment if you become terminally ill or are in a persistent vegetative state. A DNR specifies that the patient does not want to be resuscitated. For practical clarity, it might be helpful to think no CPR or defibrillator paddles in the case of a DNR and no feeding tube or ventilator in the case of a living will.

To be sure, comprehensive estate planning can seem daunting and confusing. But, with proper counsel from scrupulous, experienced lawyers, the process can ultimately save hundreds of thousands of dollars (if not millions) and give you peace of mind knowing that your estate is protected and directed as you desire, and your wishes during your lifetime and afterward are legally documented and binding. 

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