Estate Planning Options

Your estate plan is unique. What is right for one individual or couple may not be ideal for another. What you wish to do with your estate now and upon your death is up to you. There are many options when it comes to planning your estate. Some of the more common options are creating a will for the disposition of your assets upon your death and creating a durable power of attorney which appoints an agent to act on your behalf in the event of your incapacity during your lifetime.

However, there are other estate planning options that may be used in combination with these documents that you may not have considered and which may, in the long run, help simplify your estate plan. They are: the living trust, the family love letter, the disclaimer and the use of transfer on death securities registration.

Living Trust.

A Living Trust is a legal document that, unlike a Will, takes effect during your lifetime and much like a Will states how you would like your assets distributed, names your beneficiaries and appoints a Trustee to oversee the transfer and management of your assets.

A Living Trust can be set up and funded during your lifetime by transferring currently owned assets into the Trust, such as real estate, checking/savings accounts and investments including stocks, bonds and mutual funds to name a few. Assets that are not owned by or designated for the Trust will need to be distributed under the terms of a Will. In that regard, your Will may leave such assets to the Trust.

Just like a life insurance policy that designates a beneficiary, a Living Trust also designates a beneficiary, and therefore, is not considered part of your probate assets. Probate is a court supervised legal process that inventories your assets, validates your Will, distributes your assets in accordance with your Will and provides for the payment of any inheritance taxes that are due. Probate avoidance is one of the reasons many people find the Living Trust appealing.

You may wish to consider a Living Trust if you have the following needs or desires:

  • You own volatile assets needing constant attention that a Trustee can provide.
  • You own real estate in two states. You can avoid ancillary probate in the state in which you own real property but are not domiciled.
  • You want a contingency plan in the event of incapacity. As a Living Trust survives your incapacity, your named Trustee can manage the Trust assets in accordance with the terms of the Living Trust which you established prior to your incapacity.

Much to many people’s surprise, the creation of a Living Trust does not eliminate the payment of taxes that are owed by the estate. The assets in a Living Trust are considered both in determining if there is any Federal estate tax liability to the estate and for determining the amount of inheritance tax owed to the Commonwealth. Thus, a Living Trust should never be created with the intent of avoiding taxes.

The Family Love Letter.

So often in the event of death or incapacity the family does not know the location of needed documents or even where to begin looking for them. The “Family Love Letter” is a non-legal document that provides family members with the needed basic information in the event of your death or incapacity. It may include the following information and any other information that you feel would be of assistance to your family: names of your doctors, accountant, attorney, financial advisor, mortgage holder, employer; a listing of your assets such as checking and savings accounts, stocks, bonds and other investments with a contact person and telephone number for each and a statement as to where they are located; a listing of your liabilities, insurance policies with policy numbers and contact person; and the location of your original legal documents, such as your Will, Power of Attorney, Living Will and Living Trust. You may also wish to include information regarding your burial preference and any other special requests.

The letter is designed to act as a supplement and guide to your family members to help make a very difficult time, less burdensome. Therefore, your letter should be given to a responsible family member or you may tell that person where you have placed it for use when needed.

The Disclaimer.

A disclaimer is a written refusal to accept property that is to be transferred from one estate to another. By disclaiming property that has been left to you, you can reduce estate taxes. Disclaimers generally benefit older persons to whom an inheritance has little to no use. By disclaiming your interest in the property bequeathed to you, you can pass it on to a younger generation.

Disclaimers are also a valuable tool which can be used by a surviving spouse who is given the entire estate of their deceased spouse. The surviving spouse can elect to disclaim a portion or all of the estate so that the amount disclaimed, provided the deceased spouse’s Will is drafted properly, is not taxed in the surviving spouse’s estate upon his or her death.

IRS Disclaimer Requirements:

In order for a disclaimer to be valid, it must comply with Section 2518 of the Internal Revenue Code which sets forth the following requirements for a successful disclaimer:

  • The disclaimer must be in writing and must be irrevocable and unqualified.
  • It must be made within nine months after the date of death or nine months after disclaimant’s 21st birthday, which ever is later.
  • The disclaimant cannot accept any of the interest or benefits of the disclaimed property.
  • The disclaimed property must pass to the spouse of the decedent or to some person other than the disclaimant, the choice of whom may not be determined by the disclaimant.

Your Will can include language in the event a disclaimer is made. By specifying in your Will a succession of alternate beneficiaries or a Trust, you provide further control over the final disposition of your property and possible substantial tax savings. The value of utilizing disclaimers as an estate planning option should not be underestimated.

Transfer on Death Securities Registration.

Under the Pennsylvania Transfer on Death Securities Registration Act, an owner of securities can register your investment in beneficiary form, just like naming a beneficiary on a life insurance policy or retirement account. In other words, you can designate during your lifetime who is to receive the security by registering the desired person as the beneficiary of such security with a “registering entity” such as a broker, transfer agent or other person acting for or as an issuer of securities.

The transfer-on-death registration may be canceled or changed at any time by the owner, without the consent of the beneficiary. Upon the death of the owner, ownership of a security registered in beneficiary form passes to the named beneficiary. If there is no beneficiary that survives the owner then the security belongs to the estate of the deceased owner. Registering securities in beneficiary form can help ease the administration of a decedent’s estate and can relieve the estate’s executor from additional work in finalizing the estate. It will not however, result in any tax savings.

These are just a few of the many estate planning options that are available. None, some or all may benefit you. Too often people are guided by what their friends or family members have selected for their estate planning options and not because they meet their own needs. Therefore, it is important to remember that your estate plan should be created in order to meet your specific needs only.

Susan H. Confair, who is part of Reager & Adler’s Transaction Group contributed this article. She holds a B.S. in Business Administration from West Virginia University and a J.D. from West Virginia University College of Law. Susan’s practice focuses on all aspects of real estate law, estate planning and elder law. She may be reached by calling (717) 763-1383 or via email at

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