Pennsylvanians undoubtedly understand the value of having a comprehensive estate plan to address their property, goals and protect their loved ones in the future. This is a fundamental necessity for everyone whether they have significant assets or are of modest means. However, while simply creating a will, a trust or listing beneficiaries on policies and retirement accounts might seem sufficient, in many cases it is not. A common mistake is failing to update certain documents when life changes occur. Legal assistance throughout the process can avoid this.
Inheritance laws in Pennsylvania should be understood
Frequently, people have issues with needing to pay taxes on money they inherited because the life insurance policy beneficiary was not updated. The law says that people who are named as beneficiaries do not need to pay tax on this. Failing to update it means those who are the legal beneficiaries and have not been listed as such will result in tax obligations. The inheritance tax in the commonwealth is 4% for a relative and 15% for a non-relative if they are not named. It can add up to a substantial amount. This can happen if a spouse dies and children are not placed on the policy as beneficiaries.
Other problems can be even more difficult such as if there is a divorce and the ex-spouse was still listed as the beneficiary when he or she otherwise would not have received anything had the decedent remembered to change the policy. Updating a will is important, but it does not cover all the possible challenges with designating a beneficiary. Potential problems can emanate from dividing assets among children, divorces, the death of a spouse, ensuring retirement accounts go to the desired person and more. Failure to address this properly can spark myriad disputes.
Having legal assistance may be essential for estate planning
Beneficiary designations, protecting loved ones from taxes and making certain the property goes where the testator wants are all part of estate planning. When preparing any part of an estate plan from a will to a trust to an advance directive or updating documents to address life changes, having legal help can be essential. Consulting with experienced estate planning professionals can provide guidance and help throughout the process.