FAQ: My dad passed with $5,000 in a checking account. Can I get these funds to pay for the funeral?

Answer:  Yes.  Pennsylvania has a statute that allows a bank, credit union, and other savings institutions to pay the amount on deposit to the spouse, any child, the father or mother or any sister or brother of the decedent (in that order of preference) if the total amount on deposit does not exceed $10,000.

You must provide a funeral bill receipt or an affidavit of a licensed funeral director that states that satisfactory arrangements for payment of funeral services have been made.

Bank personnel generally do not know about this law, so it might take a little extra effort to make this happen.  Here is what you could do: 1) have an original death certificate to give to the bank; 2) have the funeral bill receipt or the affidavit of the funeral director as mentioned above to give to the bank; 3) have a photo ID ready and if there is no surviving spouse, have a death certificate for the other deceased spouse; 4) call the bank where the funds are held and discuss your intentions and set a time to visit the branch; 5) be prepared to present the bank with all the information listed above and take this citation to the PA law 20 P.a.C.S. § 3101 with you because an inexperienced customer service rep at a bank might need to send it to their legal counsel for approval.

The process above is a pretty straightforward one.  For many people, this is the first question they have when calling or emailing our office.  If this is the only issue in an estate that you are handling, then hopefully this is all the answer you will need.  But, it’s important to remember that probate and estate administration is a legal process and the representative of the estate can run into liability if he or she mishandles the administration to the detriment of the beneficiaries.  And, the estate administration process can be emotional, complex, and time consuming.  We help families sort out all the legal issues involved in estate administration and protect the representative from liability.  We handle all types of estate administrations from simple to quite complex.  If you are handling the estate of a loved one and are questioning how best to get it done, contact Baroni Estate Planning & Elder Law.  We can help.

How to Make Your Inheritance Last

A 2012 study by Ohio State researcher Jay Zagorsky found that about one-third of Americans who receive an inheritance have negative savings within two years of getting their money, and of those who receive $100,000 or more, nearly one in five spend, donate or simply lose it all.  If you are about to receive an inheritance, there are several steps you can take to insure your funds will last longer than a few years.

Don’t Make Any Hasty Decisions.  Once you receive your money, don’t make any hasty decisions about what to do with it.  Instead, park the funds in a safe place such as a savings account, money market, or CD until you have had enough time to put together a long term financial plan.  If you don’t already have one, set up an emergency fund that will cover six months of expenses.  If you already have an emergency fund, consider adding to it to cover one year of expenses.  If you are married, you will need to decide early on if you want to keep your inheritance in your separate name or place the funds in joint names with your spouse.  If you are considering giving some of your inheritance to your children, you could invoke a gift tax or negative income tax consequences and should only proceed with gifting once you understand all of the consequences.

Still Working?  Put Away More Towards Your Retirement.  If you are working and are not contributing the maximum to your 401(k), bump up your withholding, particularly if you are not meeting your employer’s match.  If your employer does not offer a 401(k), start funding an IRA.  Note that if you have inherited a traditional IRA, any withdrawals you make will be included in your taxable income.  You can minimize the income tax consequences by only taking required distributions and leaving the balance invested inside of the inherited IRA.

Hire a Team of Professional Advisors.  You will need a team of professionals to help you develop long term plans for your inheritance.  A financial advisor will help analyze your current finances and build a solid financial foundation to include investment advice, insurance (life, long term care, and liability), credit and debt management, college savings, and retirement planning.  Your advisor can also help you look into the future and plan for long term financial goals, such as purchasing a first or second home or starting a charitable foundation.  An accountant will help you determine cash flow and minimize capital gains and other income taxes.  An estate planning attorney will help you create or update your estate plan (everyone needs a will, revocable trust, advance medical directive and durable power of attorney), decrease or eliminate estate taxes (federal and/or state), set up a gifting strategy, meet your charitable goals, create a family legacy, and protect your inheritance from creditors, predators, and lawsuits.

If your inheritance is large enough, it has the potential to last your lifetime.  Don’t go it alone.  We are here to answer any questions you have about receiving, growing, donating, protecting and ultimately passing on your inheritance to your loved ones.

Surprise! You Can’t Easily Disinherit Your Spouse in the U.S.

Believe it or not, in the U.S. it isn’t easy to disinherit your spouse.  But the same is not true for other family members – generally, you can use your estate plan to disinherit your brothers and sisters, your nieces and nephews, or even your very own children and grandchildren.

However, in the majority of states and the District of Columbia, you can’t intentionally disinherit your spouse unless your spouse actually agrees to receive nothing from your estate in a Prenuptial or Postnuptial Agreement.

Beware:  Spousal Disinheritance Laws Vary Widely From State to State

Unfortunately there isn’t one set of rules that govern what a surviving spouse is entitled to inherit.  Instead, the laws governing spousal inheritance rights, referred to as “community property laws” or “elective share laws” depending on the state where you live or own property. These laws vary widely:

  • In some states the surviving spouse’s right to inherit is based on how long the couple was married.
  • In some states the surviving spouse’s right to inherit is based on whether or not children were born of the marriage.
  • In some states the surviving spouse’s right to inherit is based on the value of assets included in the deceased spouse’s probate estate.
  • In some states the surviving spouse’s right to inherit is based on an “augmented estate” which includes the deceased spouse’s probate estate and non-probate assets.

For example, in Florida a surviving spouse has the option to receive a portion of their deceased spouse’s estate called the “elective share.”   This share is equal to 30% of the deceased spouse’s “elective estate,” which includes the value of the deceased spouse’s probate estate and certain non-probate assets such as payable on death and transfer on death accounts, joint accounts, the net cash surrender value of life insurance, property held in a revocable living trust, and annuities and other types of retirement accounts, reduced by the deceased spouse’s debts (this is an example of the last category described above).

Aside from this, state laws also vary widely regarding the time limit a surviving spouse has to seek their inheritance rights, which can range anywhere from a few months to a few years.

Disinherited Spouses Need to Act Quickly!

If your spouse has attempted to disinherit you, you must seek legal advice as soon as possible before state law bars you from enforcing your rights.  Only an experienced estate planning attorney can help you weigh all of your options and protect your interests as a surviving spouse.

 

The New Facebook Legacy Contact Feature & Estate Planning For Digital Assets and Social Media

It wasn’t very long ago that we had only paper for financial and tax records. We could simply point to a file cabinet or drawer and tell someone, “Everything is in there when the time comes.” But now we have computers and the internet, and so much of our lives is online. Unless we include our digital assets and social media in our estate planning, our family or administrator may not be able to find critical documents.

For example, if you scan documents or receive financial statements electronically, someone else may not even know these exist. If you use a program like Quicken or Quickbooks and tax preparation software, those records are on your computer. Facebook pages, blogs, email accounts and photos stored digitally on a computer or an online account would certainly have special meaning to your family.

Much of this information is password protected. Unless we make arrangements in advance, family members or administrators may not be able to access these and the information could be lost forever.

Hopefully, more social media platforms and institutions that generate digital content will follow the recent action that Facebook has taken.

Facebook just rolled out its Facebook Legacy Contact feature – it allows any Facebook user to designate a family member or friend to manage his or her account if he or she should pass away.

Below is how Facebook describes this new feature:

What is a legacy contact?

A legacy contact is someone you choose to look after your account if it’s memorialized. Once your account is memorialized, your legacy contact will have the option to do things like:

  • Write a pinned post for your profile (ex: to share a final message on your behalf or provide information about a memorial service)
  • Respond to new friend requests (ex: old friends or family members who weren’t yet on Facebook)
  • Update your profile picture and cover photo

You also have the option to allow your legacy contact to download a copy of what you’ve shared on Facebook, and we may add additional capabilities for legacy contacts in the future.

Your legacy contact can’t:

  • Log into your account
  • Remove or change past posts, photos and other things shared on your Timeline
  • Read messages you’ve sent to other friends
  • Remove any of your friends

This is a very responsible action by Facebook. In the past, family members and friends struggled with the Facebook accounts of deceased users because the social media giant would not allow anyone but the user to access the account. This caused lots of heartache and grief for loved ones.

Estate planning for digital assets and social media accounts is similar to estate planning for other assets. You need to make a list of what you have and where it is located, name someone (with computer and social media know-how) to step in for you, provide that person with access, and provide some direction for what you want to happen to these assets.

Listing your digital assets by category (hardware, software, social media/online presence, online accounts) will help make the task less daunting. Next to each one, add user names, passwords, PIN numbers and the site’s domain name. Keep this list in a safe place and tell your successor where it is. (Do not store it unprotected on your computer; if it is stolen, the thief would have all of your passwords. If you store it on your computer, password protect the file and give that information to your successor.)

Think about what you want to happen to these assets. For example, if you have a website or blog and you want it to continue, you need to leave instructions for keeping it up or having someone take it over and continue it. If a site is currently producing or could produce income (e-books, photography, videos, blogs), make sure your successor knows this. If there are things on your computer or hard drive that you want to pass on (scanned family photos, ancestry research, a book you have been writing), put them in a “Do Not Delete” folder and include it on your inventory list.

Closing down accounts that are no longer needed will help to protect your family from identity theft after you are gone. The person you name as your successor will need a death certificate to do this. Consider naming this person as a co-trustee or co-executor with responsibilities limited to this area to give them legal authority to act for you.

Yes, this will take some time and thought. But, just like “other” estate planning, the more we can do now to put things in order, the easier it will be for our families later.

 

The recent decision striking down PA’s ban on same-sex marriage gives same-sex married couples new estate planning opportunities.

Pennsylvania now recognizes same-sex marriages.  This is a game changer.

Until now, same-sex married couples were not afforded the same favorable estate planning opportunities as hetero-sexual couples when it comes to state inheritance tax.

The rates for Pennsylvania inheritance tax are as follows:

  • 0 percent on transfers to a surviving spouse or to a parent from a child aged 21 or younger;
  • 4.5 percent on transfers to direct descendants and lineal heirs;
  • 12 percent on transfers to siblings; and
  • 15 percent on transfers to other heirs, except charitable organizations, exempt institutions and government entities exempt from tax.

While hetero couples could plan around a 0% tax rate, same-sex couples, although married (in another state) and living their entire lives in PA as a married couple, were taxed at the 15% rate enacted for “other heirs.”  This was patently unfair, but until the recent decision, it was the law.

Now, thanks to the landmark decision in Whitewood v. Wolf, same-sex couples have the same planning opportunities as hetero couples regarding PA’s inheritance tax.

For same-sex couples, the time to update your estate plans is right now.