As a young couple, you have many new milestones to achieve together throughout your lifetime. From moving in together, having children, getting married, or having children, it is easy to worry about the present and not the future. Having an estate plan in place to protect you and your partner if the unexpected should happen is a critical step in your relationship that should not be procrastinated.
The Basics of Estate Planning
Setting up an estate can be overwhelming if you are not familiar with the basics of the process. Working with an attorney familiar with probate processes and the types of documentation you need will prove invaluable. Below are just a few of the common aspects of estate planning your chosen attorney will educate you about and help you decide if incorporating into your estate plan is wise.
Probate is a court-supervised process that will determine how your assets get passed on to your beneficiaries if you die with assets in your name, die without a will (intestate) or your will is deemed invalid. This process can be complicated and requires an estate representative to be appointed either by your will or the court. Once assigned, the representative will have to complete several duties to distribute assets and close the estate. It can be wise to try to avoid probate court whenever possible due to the related costs, creditor rights, and estate taxes that can further burden your surviving family members.
A will is a document that you draw up with an attorney, which states who you want to represent your estate, how your assets should get distributed, and appoints a guardian to your minor children, if necessary. Wills typically only cover probate property and must go through the probate process after you have passed away.
In Pennsylvania, an inheritance tax gets imposed on the percentage of an estate value based on the heir receiving it. This applies to property that is probated and non-probated. In addition to this state-level tax, there is also a federal estate tax on estates whose value exceeds $11.7 million for individuals and $21.4 million for married couples as of 2021.
These legal entities are held by the “trustee”, the holder of the property intended for designated beneficiaries. There are many types of trusts, the most popular being revocable and irrevocable trusts. A revocable trust allows for modification and complete revocation at any point during the trustee’s lifetime, while an irrevocable trust does the opposite, stripping ownership of the property held within it. Trusts are frequently a popular choice for estate plans because they can shield assets from creditors and preserve long-term care facility eligibility.
Durable Power of Attorney
These documents are invaluable for young couples who have not yet married but wish their partner to make important financial decisions if incapacitated. This incapacitation could be due to injury, severe illness, or disability, and with this authority, they must act in your best interests and make choices that you would if you could.
Health Care Power of Attorney
Much like a durable power of attorney, a healthcare power of attorney allows you to designate someone to act on your behalf when it comes to your medical care. This authority does not take effect until your attending physician declares you unable to make decisions on your own behalf. You can also include parameters for how they should make decisions for you, including life or death circumstances.
The Importance of Estate Planning for Unmarried Couples
When couples think about estate planning, they think it is for those who get married or older. The reality is unmarried couples benefit from estate planning more so than these previously mentioned two groups because they do not inherently have the same rights as those who have solemnized their union. Laws are already in place to protect the rights of spouses when it comes to asset distribution, but unmarried partners do not share in this protection.
Without a health care proxy, your loved one cannot make decisions about your health on your behalf, and instead, other family members, like your parents, would take over this responsibility. Durable power of attorneys are also crucial for these relationships because if you should become incapacitated and the bank accounts are in your name, how will they access the funds to pay the mortgage or car payment?
The best way to ensure your family and assets have the necessary protections under the law should you die unexpectedly or become incapacitated, a comprehensive estate plan is essential. Contact Antanavage Farbiarz, PLLC, to set up a consultation and learn how our services can help create a legacy that benefits your family for generations to come.