Blog & Resources

From our “Ask a Question” mailbag: < strong>My estate is worth about $4,000,000, which includes a $1,000,000 life insurance policy. At my death, my estate passes to my two children. Now that the Federal Estate Tax Exemption is at $5,000,000.00, what good is an Irrevocable Life Insurance Trust for me?

In rough terms, as long as your estate stays under $5,000,000.00 (adjusted for inflation) at your death your estate will not owe any Federal Estate Tax, but you are a resident of Camden County, New Jersey, so you are forgetting about the New Jersey Inheritance Tax and the New Jersey Estate Tax. If your assets pass to your children, the New Jersey Inheritance Tax will be zero, but the New Jersey Estate Tax taxes all assets over $675,000.00.

From our “Ask a Question” mailbag: Does the Pennsylvania Inheritance Tax include my mother’s antiques?

If your mother died a Pennsylvania resident, then the estate must pay the Pennsylvania Inheritance Tax on the fair market value of all of her taxable assets, including her antiques.

If these antiques are passing to you, the tax rate will be 4.5%, due within nine months of her death.

From our “Ask a Question” mailbag: One of four siblings is now deceased since death of our parents. Do the deceased sibling’s three children or his surviving spouse inherit his share of the estate?

There are two different answers depending on the order of the deaths.

If your sibling died first, and then the surviving parent died without a will, then that parent’s probate estate is divided up under the New Jersey intestacy rules which give 1/4th share to each surviving child and a 1/4th share to be split among the deceased child’s children. Your sibling’s spouse receives nothing.

From our “Ask a Question” mailbag: My son is getting married this fall and his fiancé refuses to sign a prenuptial agreement. I am worried that if I die, his share of my estate will end up going to her in a divorce. What can I do?

As part of your estate plan, we could incorporate in your will a trust to hold your son’s share of the estate. Simply put, if your money pours into a properly drafted trust rather than into your son’s hands, then your future daughter-in-law will have no claims to the assets in a divorce.

From our “Ask a Question” mailbag: I am named as the executor in my mother’s will, but my family does not get along at all. Already, disagreements about the sale of land have become heated. If I agreed to serve as executor, can I be sued if my family has disagreements?

As the executor, you are a fiduciary, owing the beneficiaries a duty to act in their best interests. You will be given broad powers. To counter these powers, the beneficiaries are given the right to Petition the Orphan’s Court to review your actions and, if the court would find that any action of yours diminished their inheritance, to surcharge you (fine you) to make them whole.

From our “Ask a Question” mailbag: My mother died and left us her house. We got two appraisals, which were near the value listed for real estate taxes. Then, we received a cash offer for a higher amount. Do we pay taxes on the appraisal amount, or the amount we will now sell the house for?

You have an argument for both values, but be careful! The Pennsylvania Inheritance Tax is based on the value of the house on the date your mother died. So, you could argue that the appraised value is correct and that the house simply went up in value after her death. This would mean listing a smaller number on the Pennsylvania Inheritance Tax Return, which you would think means less tax.

Not necessarily so!

From our “Ask a Question” mailbag: I am the executor of my father’s estate and it is pretty straightforward, but I need some help completing the Pennsylvania Inheritance Tax return. Can you just help me finish that return?

From our “Ask a Question” mailbag: The lawyer serving as the executor for my mom’s Montgomery County estate has sent me documents called an Informal Account and a Receipt, Release, Refunding and Indemnification Agreement. If I sign this, do I waive my rights to ask any questions?

As a beneficiary of your mom’s estate, you have the legal right to have a Probate Attorney ask the executor to file an accounting with the Montgomery County Orphans’ Court. But, the cost of compiling the accounting will be paid out of estate funds. Which will reduce the pool available for distribution to the estate’s beneficiaries.

From our “Ask a Question” mailbag: I am married to my second wife and live in Chester County, Pennsylvania. We have been married for many years and everything we own is in joint names. I don’t have a will. If I die first, don’t my children from my first marriage get part of my estate?

If everything you own is held jointly with your wife and she survives you, then she has the right to take all of your assets. Your children will get nothing. Your second wife has no obligation to give your children anything, so she could disinherit them at her death.

From our “Ask a Question” mailbag: I live in Chester County, PA and currently my will names my two brothers as co-executors. I thought this was a smart thing to do, but my brothers have not been getting along recently. What are my options?

Naming your brothers as co-executors when they do not get along is a bad idea. Co-executors have to work well together and cooperate, or else the estate will stall. Brothers who are having a dispute can make what is a small family dispute into a family feud that lasts generations.