Wills, Trusts and Estate Law Topic
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Changes affecting Commercial Powers of Attorney in Pennsylvania
On October 4, 2016, Governor Wolf signed into law House Bill 665 (Act 103 of 2016) which clarified certain sections of the Pennsylvania power of attorney law that went in effect on January 2, 2015 (Act 95 of 2014). The changes were aimed at correcting issues with commercial powers of attorney. All changes in Act 103 took effect on October 4, 2016 and apply retroactively to January 2, 2015 (i.e., the effective date of Act 95). 1. Commercial Powers of Attorney are not Subject to the Notarization or Acknowledgement Requirement Under Act 95, all powers of attorney executed after January 1, 2015 had to be witnessed by two individuals and be notarized or acknowledged. While commercial powers of attorney were not required to obtain two witnesses, they were subject to the notarization or acknowledgement requirement. The notarization/acknowledgement requirement was a cumbersome requirement in the commercial setting. Act 103 now excludes commercial powers of attorney from the notarization or acknowledgement requirement (unless the document is being recorded). 2. Agent Duties not Applicable to Commercial Powers of Attorney Act 95 made agents of all powers of attorney subject to certain duties. One of those duties required the agent to act in the best interest of the principal. This requirement was difficult for agents under commercial powers of attorney where the agent was authorized to enforce a security agreement or execute a confession of judgment against the principal, particularly in a loan or lease situation. In order to comply with the law, banks and attorneys inserted lengthy waiver language into the documents. Act 103 now exempts agents under commercial powers of attorney from the standard agent duties. 3. Expanded Definition of Commercial Powers of Attorney Under Act 95, the only powers of attorney for entities (i.e., corporations, LLCs, partnerships, etc.) that were exempt from certain statutory requirements were powers of attorney that were “contained in the governing documents” of an entity or powers of attorney in a voting proxy. This definition was limiting and not in-line with other states. Act 103 expands the definition of commercial powers of attorney that are exempt from the statutory requirements to also include any power of attorney that is “authorized by the law that governs the internal affairs of a legal entity” or “which a director, shareholder, partner, member or manager authorizes others to do things on behalf of the entity.” 4. Attorneys may Acknowledge Powers of Attorney Under Act 95 it was not clear if an attorney could acknowledge a power of attorney. Act 103 confirms that an attorney may acknowledge the execution of a power of attorney provided the attorney was not a witness to the power of attorney and such acknowledgement was in a manner that is authorized by law. Conclusion The changes in Act 103 correct the issues that Act 95 created for powers of attorney used in commercial transactions and provide some much needed clarity for attorneys and commercial institutions. If you have questions or would like additional information regarding the impact of Act 103 on commercial powers of attorney, please contact David Workman, David Mandel or Daniel Levine.
New Jersey Estate Tax Repeal
On October 14, 2016, Governor Christie signed a new law that will eliminate the New Jersey estate tax. Currently, decedents residing in New Jersey with taxable estates exceeding $675,000 may be subject to New Jersey estate tax. With the new law, New Jersey residents who die during 2017 will not be subject to the New Jersey Estate tax unless their taxable estate is greater than $2,000,000. Starting January 1, 2018, the New Jersey Estate tax is repealed. This law does not impact the New Jersey inheritance tax. The New Jersey inheritance tax is based on the relationship between the decedent and the beneficiary receiving the assets from the decedent. Qualifying charities and Class “A” beneficiaries such as a spouse, lineal ancestors, descendants and stepchildren are exempt from the New Jersey inheritance tax. The rate of tax imposed on transfers to other individuals is based on the individual’s assigned “Class.” As a result of this new law, you may want to review your current estate plan in order to confirm that the documents in place will continue to accomplish your goals in a tax efficient manner.
Changes to the Power of Attorney Law
Granting a Financial Power Of Attorney (“POA”) gives an individual (the “Agent”) the ability to manage your assets (the “Principal”) and make decisions on your behalf during your lifetime. As soon as the POA documents are signed, they are active immediately, which makes choosing someone you trust essential. In Pennsylvania, a new POA law was passed in 2014 that changed may aspects of the old POA laws. Some of the major changes are explained below by our estate lawyers in Philadelphia at Astor Weiss Kaplan & Mandel, LLP. (more…)
Estate Planning for Same Sex Couples
Same-sex marriages are now recognized in Pennsylvania. As a result of this recent development, same-sex couples now have more opportunity within the area of estate planning. Any individual that signed documents with an estate planning attorney in Philadelphia prior to the change in legislation should revisit their wills and other estate documents in order to make sure that their documents are still effective and produce the required results. (more…)
Estate Planning After Divorce
When it comes to estate planning, it is important to enlist the services of a trusted professional that can guide you in the right direction. Planning what happens to your estate is crucial to ensuring that your family is supported and that your estate successfully passes to the intended beneficiaries. (more…)
Dying Without a Will
If you die without a will in the Commonwealth of Pennsylvania, certain assets, including property, will be distributed based on the laws Interstate Succession. It is important to note that not all property is passed down by will. Certain assets, such as assets held in joint tenancy or tenancy by the entirety, policies of life insurance, Individual Retirements Accounts (IRAs) or other contractual agreements, are passed down by different methods. The laws of Interstate Succession in Pennsylvania oversee the distribution of an individual’s assets if the individual dies without a will. The first person in line to receive the deceased’s assets is the spouse, followed by children, parents, siblings and other relatives. If there is no fit substitute then the person’s estate is left to the Commonwealth of Pennsylvania. Spouse & Children The Interstate Succession laws in Pennsylvania state that if an individual is married at the time of their death and is not survived by any children then the spouse will receive the entire estate. However, if the deceased is survived by a spouse as well as children, who were also the surviving spouse’s children, the surviving spouse receives the first $30,000 and one-half of the rest of the estate. If one of the existing children is not the surviving spouses’ child, the spouse receives only half of the estate. Spouse & Parents – No Children If the deceased’s spouse and parents survive and there were no existing children, the surviving spouse would be entitled to the first $30,000 plus half of the rest of the estate. No Spouse When there is no surviving spouse the distribution of the deceased individual’s assets and property are distributed as follows: (1) Children, Parents, Siblings & their Children If there are still living children, the estate is split between them. If there are no children, parents of the deceased are next in line to split property and assets amongst themselves. If there are no living children or parents, the estate goes directly to the children of the deceased’s parents (aka their siblings and their children). (2) Grandparents & Other Relatives No spouse, children, parents, or siblings means that the estate goes to the grandparents of the deceased. Assets and property are split between maternal grandparents and their children and paternal grandparents and their children, each receiving half. If there are currently no surviving grandparents, the estate is distributed between other relatives, such as uncles and aunts and their children and grandchildren. (3) Pennsylvania If none of the above-mentioned individuals survive, the estate is given directly to the Commonwealth of Pennsylvania. … As one can see, these rules are not tailored to an individual’s specific situation and may not accomplish the individual’s goals. For example, you may want to give some of your estate to a charity or to a good family friend. More importantly, you will want to select the person or persons who will care for your minor children if you and your spouse die. These are just two important reasons why it makes sense to draft a will. The estate planning attorneys at Astor Weiss Kaplan & Mandel, LLP have over 40 years of experience advising clients on their estate plans. For additional information on why a will is beneficial for your estate plan, feel free to contact David Workman or Daniel Levine.
Letter of Last Instructions
It is recommended that you prepare this and give copies to your Executor and next of kin in a sealed envelope labeled “To be opened in the event of my death or incompetency.” It is not necessary to sign it, or to have it witnessed or notarized, but you certainly may sign it. You may also give those people an idea of the contents. 1. Will, Trust, Power of Attorney, Advance Health Care Declaration — location of documents, name and telephone number of attorney recommended to handle estate; 2. Funeral and burial — location of plot and certificate(s), preferences; 3. Insurance policies (life, health, disability, accident, long term care, auto) — location, names and telephone numbers of agents; 4. Automobile information — location of vehicles, titles, keys; 5. Safe deposit box — location of box and keys, summary of contents; 6. Personal property off premises if any — office, storage, in custody of third party; 7. Division of personal property among beneficiaries; 8. Employee benefits — summary, name and telephone number of representative; 9. Account information — bank accounts, IRA accounts and other retirement plans, security and brokerage accounts, loans, credit cards (destroy all that are not joint), and other debts; 10. Tax returns — location, name and telephone number of accountant; 11. Your social security number; 12. Birth, death, naturalization and marriage certificates, divorce decrees, adoption, support and custody orders; 13. Deeds, leases, mortgages, home improvement records 14. Business and partnership agreements; 15. Receipts, guarantees and warranties for major purchases; 16. Usernames, passwords and answers to security questions for each digital account on site.
Why Draft a Will
Wills, Trusts, Estates and Taxes – Why draft a will when the Commonwealth of Pennsylvania already provides one? What happens if you die without a will? In Pennsylvania, your assets* that are in your name will be distributed based on the intestate succession laws of Pennsylvania. Specifically, your property will be distributed in the following manner: If you are only survived by a spouse, your entire estate would be distributed to your surviving spouse. If you are survived by a spouse and children, all of whom were also the surviving spouse’s children, your spouse would receive the first $30,000 of your estate plus one-half of the balance of the estate. However, if you were survived by a spouse and children, at least one of whom was not also the surviving spouse’s child, the surviving spouse will only receive one-half of the estate and the children would share the other half. There are special rules if a child predeceases you and is survived by children (your grandchildren). If you have no surviving spouse, your estate would be distributed in the following order: Children Parents Brother, Sister, or their Children Grandparents Uncles, Aunts, and their Children and Grandchildren Commonwealth of Pennsylvania As you can see, these rules are not tailored to an individual’s specific situation and may not accomplish your goals. For example, you may want to give some of your estate to a charity or to a good family friend. More importantly, you will want to select the person or persons who will care for your minor children if you and your spouse die. These are just two important reasons why it makes sense to draft a will. The estate planning attorneys at Astor Weiss Kaplan & Mandel have over 40 years of experience advising clients on their estate plans. For additional information on why a will is beneficial for your estate plan, or other estate planning inquires, feel free to contact us. *Note that not all property passes by will (e.g., assets held in joint tenancy or tenancy by the entirety, policies of life insurance, Individual Retirement Accounts (“IRAs”) or other contractual agreements). By: Daniel Levine