Protecting Your Wealth in Pennsylvania
If you have worked hard to build a significant net worth, you want to take all reasonable steps to make certain that the maximum amount goes to your heirs. This blog post provides an overview of the basic strategies to avoid unnecessary loss of value in your estate.
Wills and Trusts
A fundamental tool for protecting your assets and controlling the distribution of your estate is the execution of a dispositive document, such as a will or trust. A will is a legally binding document that specifies how your estate will be distributed, how any debts or obligations will be satisfied and who will have guardianship of minor children. A will gives you control over the distribution of property, but a will also typically must go through probate administration, a process that can reduce the total value of your estate. The property that passes through a will may also be subject to estate or inheritance tax.
A trust, on the other hand, creates a new legal entity (the trust), into which you transfer assets. The trust document identifies how the assets will be invested and distributed. The trust is typically set up to stay in existence even after your death. Because you have transferred property to the trust, you no longer own it at the time of your death, and its distribution does not need to be administered by the probate court. In addition, because you have transferred the property to a trust, it is not subject to estate or inheritance tax.
Another effective tool for protecting assets and avoiding loss of value is the re-titling of property. If property is held jointly, it automatically passes to surviving joint owners upon the death of one owner. For example, if you title your home or investments jointly with a spouse or a child, the property goes to them automatically upon your death, with no need for probate administration or exposure to tax liability.
Another way to distribute wealth without tax or probate implications is through lifetime gifts. Under federal tax laws, you can make annual gifts of up to $10,000 per person without incurring any gift tax liability.
Contact Our Office
At Barnard, Mezzanotte, Pinnie and Seelaus, LLP, we offer experienced and knowledgeable legal counsel to individuals in Pennsylvania and Delaware. To set up an appointment for a free initial consultation, call us at 610-565-4055 or contact us online.
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