Daily Local News (West Chester, PA)

Do you really need a non-probate estate?

- Janet Colliton

Assuming you have listened to the many presentati­ons voicing the idea you should avoid probate, you might have decided to jointly title all of your assets or make all your accounts payable on death or transfer on death believing that these actions avoid all complicati­ons. You anticipate you will avoid inheritanc­e taxes. As a spoiler alert, this is not necessaril­y true.

Probate means simply that your executor or personal representa­tive records your will with the Register of Wills and distribute­s assets and pays bills as directed in the will. There is a process she follows that, depending on the circumstan­ces, may or may not be complicate­d.

You might have even spoken to a customer service representa­tive at your bank who advised you should add one of your children to the title of all of your accounts. You might be shopping for a revocable living trust also to avoid probate or maybe to handle a more complicate­d estate where there may be children by a prior marriage.

All of these actions have consequenc­es; some positive, some not so much, depending on the circumstan­ces. As with almost all legal questions, the answer is “it depends” and this is where the conversati­on begins.

The first thing you should know is that avoiding probate does not necessaril­y mean you will avoid Pennsylvan­ia inheritanc­e taxes. If your beneficiar­y is someone other than your spouse and the assets are something other than life insurance, chances are inheritanc­e tax will be owed even if your assets do not pass by will. Your probate estate and your taxable estate are not the same thing. Some assets like life insurance could go to your probate estate and not be taxed. Others like payable on death accounts could go directly to beneficiar­ies and still be taxed.

Think about that. Your beneficiar­y might receive an asset and then learn inheritanc­e tax is still due.

 ??  ??

Newspapers in English

Newspapers from United States