Case Studies: Everything You Need to Know

The Klenk Law litigation team recently handled a contested Guardianship case where our clients successfully petitioned a Pennsylvania Orphans’ Court to become Co-Guardians of their sister’s estate and person.

Background

A woman with a severe case of Down Syndrome had been living with her mother since birth. As the mother approached her eightieth birthday, it became clear she was no longer capable of providing the daughter adequate care. The woman’s two sisters approached the Klenk Law team to determine whether they could be appointed Co-Guardians of the woman in order to appropriately manage the woman’s finances and have her moved into a more appropriate living situation.

The Case

Our goal in all guardianship cases is to achieve the best result for the incapacitated person. Typically, this begins with contacting all family members to ensure everyone is in agreement with that goal and as to who should be appointed guardian. In this situation, the mother simply was unwilling to cede control over the woman despite her failing faculties.

Knowing that the mother would contest the appointment of the sisters as Co-Guardians, the Klenk Law team gathered medical histories and other relevant evidence. The team then filed a Petition with the Orphans’ Court requesting our clients, the sisters, be appointed Co-Guardians of the Estate (finances) and Person (personal decisions) over the woman. After serving all interested parties with the Guardianship Petition, it was time to present our argument to the Orphans’ Court.

The Outcome

Based on the evidence submitted at the hearing, the Orphans’ Court was convinced, despite the mother’s objections, that the sisters were best suited to make decisions for the woman. They were appointed plenary Co-Guardians of the woman – meaning without condition. The sisters were able to move the woman into an assisted living facility with other Down syndrome patients that provided twenty-four hour care. Further, they were able to gain control of the woman’s finances in such a way that allowed this care to be affordable.

Removing a child from their parents care is never a desirable task. However, with the goal of achieving the best result for the incapacitated person in mind, we knew the sisters needed to be appointed Co-Guardians. Ultimately, if someone’s livelihood is at stake you will want a team that regularly handles contested and uncontested Guardianship proceedings to guide you through the emotional and complex process.

A little Estate Planning can go a long way in reducing inheritance taxes. This case study is an example of how the Estate Planning Lawyers at Klenk Law can help LGBT couples.

Background

Bucks County, Pennsylvania resident Mr. Smith was a single man without children. Mr. Smith wanted to leave his partner $500,000 at his death for his partner’s care and use. At his partner’s death, Mr. Smith wanted any remaining money to pass to his nieces and nephews.

The Case

Basic Planning: Mr. Smith came to us with a typical Will. This Will gave his Partner $500,000 outright, which would have been subject to 15% Pennsylvania Inheritance Tax of $75,000.00. Further, this outright gift is subject to the Partner’s creditors, lawsuits and gives the Partner the discretion to leave any remaining money to whomever he wishes at his death; potentially completely ignoring Mr. Smith’s wishes about the nieces and nephews. Further, even if his partner did respect Joe’s wish, a gift from his partner to his nieces and nephews is subject to another 15% Pennsylvania Inheritance Tax. Potentially, this could have been an additional $425,000 x 15% = $63,750.00 tax.

Our Advanced Estate Planning Option: After brainstorming various options, Mr. Smith decided to have us create an Irrevocable Trust for his partner during his lifetime. Mr. Smith gave the trust $500,000. The Trust terms allowed his partner’s use of trust funds after Mr. Smiths’ death. Mr. Smith died two years later; avoiding the $75,000.00 Pennsylvania Inheritance Tax.

His partner later married and then died five years later. At his partner’s death, the trust contained $300,000, but his partner had no right to give the $300,000 to his new husband, which he likely would have if the funds were in his name. Further, the $300,000 passed to Mr. Smith’s nieces and nephews free of the $45,000 Pennsylvania Inheritance Tax due had his partner given the money to them in his Will.

The Outcome

A $120,000 tax savings. Plus, his partner had the use of the funds during his life sheltered from creditors, and possible divorce and the money passed to Mr. Smith’s family rather than his partner’s new spouse.

If you are part of an LGBT relationship, do not limit yourself to the old fashioned “I love you” Will, instead, examine the many options presented by Irrevocable Trusts. If you have any questions about LGBT Estate Planning, don’t hesitate to contact us to request a free consultation.

The Klenk Law estate administration and litigation teams recently handled a case in which our client who was set to inherit a home in Philadelphia subject to two mortgages. The client’s main question before accepting the inheritance was, “If I receive the gift do I need to pay off the mortgage to sell the home?” The team was able to successfully Petition the Philadelphia County Orphans’ Court to have the mortgages satisfied of record without payment. This satisfaction enabled our client to sell the home without paying off the mortgages with a title that was free and clear to the buyer.

Background

A man died survived by his son and mother. In the man’s will, he left all of his real property in trust for his mother and all other property in trust for his son. At the mother’s death, the real estate held in the mother’s trust was to pass into the trust for the son. When the mother passed, the son received notice that the mother has taken out two mortgages on the property during her life. Before accepting the home, the son was concerned about whether or not he was responsible for paying off the mortgages and how they might affect his ability to sell the home.

The Case

After reviewing the mortgage documentation, we discovered that the mother had taken out both mortgages as an individual. The mother and the banks had not required the paperwork to be signed appropriately as trustee. As the mother did not individually own the home, she could not independently mortgage the home.

Appreciating this distinction, the Klenk Law administration and litigation teams got to work. They put together a trust accounting and petition for the Philadelphia Orphans’ Court requesting that the banks be required to record a satisfaction of the mortgages with the Philadelphia Recorder of Deeds.

The Outcome

The team prepared a thorough trust accounting, notified the banks that our client did not intend to satisfy the mortgages, and served a copy of our petition on the banks, which outlined our reasoning. The Philadelphia Orphans’ Court agreed with the Klenk Law team’s argument. The Court ordered that the banks record a satisfaction of mortgage of record on the property. This satisfaction of mortgage allowed our client to sell the real estate without paying off the mortgage, free and clear of all liens. A big success and savings to our client!