Non-tax Reasons For Estate Planning

With the recent changes and the uncertainty surrounding the Federal Estate Tax laws it may seem that estate planning is obsolete and unnecessary. However, not having a Will can produce some unexpected results. State intestacy laws do not necessarily follow a “logical” scheme. For example, in Pennsylvania, if you pass away without at Will and:

1. You are a married person, without any children, the first $30,000 of your estate passes to your spouse and the remainder is then divided so that 50% passes to you spouse, but the second 50% passes to your parents (if living);

2. You are a married person and have children with your surviving spouse, the first $30,000 of your estate passes to your spouse and the remainder is then divided so that 50% passes to your spouse and 50% passes to your children;

3. You are a married person and have children from a prior relationship, your estate (from the first dollar) is divided so that 50% passes to your spouse and 50% passes to your children.

If your hope had been to leave all of your assets to your spouse, this can only be guaranteed by creating a Will.

If your parents are older and they are receiving health care benefits from the State, inheriting money (or other assets) from you could result in their losing their benefits and having to requalify. By creating a Will, you could either confirm that your parents would not receive any assets from your estate or you could create a specific needs trust, for their benefit, which would not disqualify them from State benefits.

If your children are minors their inheritance will have to be held in a custodial account, but they would be entitled to receive 100% of their share at age 21 (in Pennsylvania; the age is 18 in many other states). By creating a Will you can designate the terms under which your children would receive their inheritance and the person who would be “in charge” of the assets until a designated age or event.

Of course if you want anyone other than a “legal” family member to be a beneficiary of your estate (or if you wish to exclude anyone who would otherwise be a beneficiary ) you need to have a Will.