June 2021 —
The MLO Minute: By Danielle Friedman, Esq. —
Happy Pride Month! While estate planning is important for everyone regardless of gender, relationship or family status, with this month’s celebration of the LGBTQ community, we want to highlight how an estate plan can ensure that the individuals you choose will be the ones to make decisions on your behalf and inherit your property.
If you are not married and do not have an estate plan in place, state law will likely grant decision-making authority to your immediate relatives if you cannot make decisions for yourself. These laws will also determine who will receive your assets after your death. Usually, that means a parent or other relative will receive your property, but if that is not the desired result, you can take control of these choices through estate planning.
The core documents that make up your estate plan consist of:
- Your Will: Specifies your wishes for who will manage your estate after your death and how and to whom your assets will be distributed. You can also name who you want to act as guardian of your children.
- Powers of Attorney: Name someone to act on your behalf for financial/legal matters and healthcare decisions if you are unable to perform these functions yourself.
- Advanced Medical Directive (Living Will): Instructions to your doctor and your healthcare agent for end-of-life care.
There are also significant tax considerations when preparing an estate plan. Inheritance taxes are based on who inherits your property and estate taxes are calculated based on the total value of your property regardless of the recipient. These taxes vary from state to state. There is also a federal estate tax.
Pennsylvania does not have an estate tax and there is no inheritance tax on assets passing to a surviving spouse, however assets inherited by an unmarried partner or friend will be taxed at a rate of 15%. Proper planning can help reduce or avoid this tax.
Fortunately, federal estate tax laws now benefit same-sex marriages, however federal estate tax planning is still a critical part of planning for many couples. Now is a great time to consult with an estate planning professional to create an appropriate estate plan. Call us today at 610-648-9300 or click here to contact us!