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Estate Planning 101 - “Knowledge is King”

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 What is Estate Planning?

Estate Planning is the development of specific steps for managing your wealth and assets while you are alive and distributing your assets in the event of your death.  An effective Estate Plan should accomplish these important goals:

  • Make sure that your wealth reaches your intended heirs in the manner you choose
  • Minimize the erosion of your wealth from unnecessary legal fees, court costs, probate and federal and state taxes.
  • Transfer your estate as quickly as possible
  • Allow for the control of your estate to remain within your family
  • Eliminate the necessity of a court-appointed guardian if you become unable to manage your affairs
  • Transfer your wealth in a private and personal manner

Isn’t Estate Planning Only for the Rich?

Many people believe that only the rich need to plan their estate…and that is not true!  Your home, a modest investment portfolio, and even your life insurance policy should be protected.  In most states, an estate of more than $50,000 will be subject to probate.  In may also be subject to taxes and other liens. (Small or large, your estate should be protected!)

What if I Choose Not to Plan

It is estimated that as much as 70% of the American public chooses to do nothing regarding the proper planning of their estate.  Some believe that such planning is only for the wealthy, while others simply procrastinate until, unfortunately, it is too late!  Don’t fool yourself; a Will does not protect you from probate!


Failure to plan, whether you like it or not, will result in the courts creating an Estate Plan for you and forcing it upon your loved ones!  Do you really want someone else to decide who will receive your wealth?  Your loved ones will bear the burden of added unnecessary legal fees, bonds, appraisal fees, court costs, federal and state taxes and more…

Don’t Let the Perils of Probate Put You Behind the Eight Ball!

Several decades ago, the probate system was designed as an orderly way to transfer your wealth and assets to heirs in the event of your death or disability.  It was supposed to protect your heirs.

Over the years, however, this system has been transformed into an expensive legal nightmare in which lawyers, courts, guardians, administrators, estate appraisers and the bonding companies can help themselves to a substantial portion of your estate.

Probate translates into a heavy burden for your loved ones:

  • Excessive Fees – Attorney Fees, Executor Fees, Appraisal Fees, Court Filing Fees and Bond Premiums.
  • Excessive Delays – Depending upon the complexity of the estate, probate can take an average of 9 months to 18 months to complete.  During this time, your loved ones have virtually no access to your assets. However there maybe  medical bills, long term care expenses, funeral expenses, lawyer fees, the income taxes for the deceased all have to be paid
  • Public Record – Every detail of your family’s financial status is available for public scrutiny.
  • Psychological Impact – Rigid court proceedings are a constant reminder of your death or that of a loved one.
  • Multiple Probate – Probate can occur in every state where assets are located.

How Much Could Probate Cost Me?

In most states, if you own property or assets valued at $50,000 or more, your estate will be subject to probate.  Additionally, if you own property in more than one state, your loved ones can be forced to face probate in each of those states.  Here are some of the costs and fees involved in probate.

  • Costs – Probate fees are usually established by state law.
  • And the Costs go on and on…and on.. and on.
  • Statutory Fees – Some states, such as PA, have established fees based on a percentage of the gross value of the estate.  In PA the statutory fees are 6% but there is NO cap as to what a lawyer can charge.
  • “Reasonable Fees” – Some states allow “reasonable” fees which means that your loved ones will have to negotiate with the attorney and the executor.  Many attorneys consider $250 to $350 per hour to be reasonable, (and that’s in today’s dollars who knows what their fees will be 20 yrs. from now) while others may charge a percentage of the estate worth.
  • Court Costs and Appraisal – Filing fees, travel expenses, inventory and appraisals almost always generate additional expenses.
  • Who Pays?  Your loved ones will pay unless you do something to adequately protect your estate.

Probate Problems – Even While You’re Alive!

The problems and perils of probate can start long before you die.  That’s right!  Your property can be subject to the supervision and control of the Probate Court while you’re still alive!  This process is known as “Conservatorship.”

If you become incapacitated and are unable to manage your affairs, the court can appoint a “Conservator.”  The Conservator then makes decisions concerning your wealth and assets and can entangle you in all the delay and expense associated with probate, even while you’re alive.

Conservatorship can be far more devastating than probate – at least probate must come to an end!  Even though probate is costly and time consuming, eventually your loved ones will receive their inheritance.

Under a Conservatorship, your property is subject to the supervision of the court until you recover and can prove you are capable of managing your own affairs or, if you don’t recover, until your death.

A Will offers absolutely no protection from Conservatorship proceedings!

What are My Options? (link to Chart)

There are several options available to those seeking to properly plan for the future, and some are a lot better than others.

  • Do Nothing – It was mentioned before that nearly 3 out of 4 individuals do not have a plan for managing their estate.  As a result, your state of residence, in effect, writes your Will for you and dictates how your property will be distributed.
  • Create a Will – A Will documents the transfer of your assets to your heirs.  However, a will cannot protect you from the cost and stress associated with probate, taxes and excessive delays.  Additionally, different states allow for differing interpretations of clauses noted in some Wills.  If you move from state-to-state, costly revisions may be required.
  • Joint Tenancy – This occurs when two or more individuals hold title to any asset.  Should one of the individuals die, the surviving owner automatically becomes the sole owner of the property.

Though probate is avoided with passing of the first owner, probate procedures are required upon the death of the final survivor.  Also, you could lose control of your property under Joint Tenancy, due to the passing of the other owner because you cannot sell assets without the consent of that other owner.  Expensive and lengthy court intervention would be required to facilitate dispersal of any property in dispute.  Another concern of this planning option is the significant capital gains tax liability (applies to Community Property States, like PA) associated with Joint Tenancy.

  • Revocable Living Trust – With this trust you can transfer all of your assets from yourself as an individual to yourself as the “Trustee” of the trust.  You can then manage all of your wealth and assets for your own benefit as the beneficiary.  You have absolute control over all assets and actions of your trust – spending, saving, investing, or giving away assets – without restrictions.  Simply amending the terms of the trust can accommodate any changes you desire.  You can also revoke the trust at any time.

This is just a starting point on “Getting Your House In Order”. Find out the rest of the details on what you should be doing right now before it’s too late. Don’t get caught unprepared, as that could cost your family a “family fortune”. Call Today, Don’t Delay!

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Koch Insurance Brokers, LLC
            336 Anvil Dr. | Douglassville, PA 19518 | Ph. 610.370.7268


This firm only conducts business in states where it is properly registered or is excluded from registration requirements. The firm is not engaged in the practice of law or accounting. Content should not be viewed as an offer to buy or sell any of the securities mentioned or as legal or tax advice.

Information presented is believed to be current. All expressions of opinion reflect the judgment of the authors on the date of publication and may change in response to market conditions. All investments have the potential for profit or loss. Different types of investments involve higher and lower levels of risk. There is no guarantee that a specific investment or strategy will be suitable or profitable for an investor’s portfolio.