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Essential Estate Planning Documents in Pennsylvania

When planning your estate in Pennsylvania, there are a few essential documents that everyone needs, as well as some planning tools that may be useful for certain individuals or families.

Have a Solid Estate Plan in Place

Estate planning documents are legal instruments that declare your choices regarding your assets and care. They include wills, powers of attorney, advance health care directives, and trusts, among other considerations.

Why do I need a Will?

Far too many people put off preparing their will, but it is important to prioritize this crucial estate planning task.

A will can accomplish several things, including dictating how your property should be distributed after your death. A person who dies without a will is said to die “intestate,” and their property is distributed to their closest family members according to the intestacy laws of the state of Pennsylvania. A will allows you to control the distribution of your wealth and possessions.

How a Will Helps You

In addition to laying out your wishes, a will is a critical planning tool for individuals who need special consideration, such as your minor children. You can use a will to name a guardian to care for your children if both you and your spouse should die before they reach the age of majority. You can also designate a person to manage property that you leave to your children. If any of your beneficiaries are adults with disabilities, they may also need special consideration, and you may wish to create a special needs trust to provide for them.

Pennsylvania inheritance tax is a crucial consideration for any resident preparing their will. Although the federal estate tax applies only to estates with values above a certain amount ($5.49 million in 2017), Pennsylvania’s inheritance tax applies regardless of the size of the estate. The tax rate is 4.5 percent for direct lineal descendants, 12 percent for transfers to siblings, and 15 percent for other heirs. Charitable organizations and certain other institutions are exempt, and there is a zero percent rate for the decedent’s spouse and children age 21 or younger. There are important exemptions that may be available, so consulting with an estate planning attorney is of paramount importance.

Another reason why it is essential to have a will is that it allows you to choose your executor. The executor is the person charged with carrying out the instructions in your will. In order to facilitate the necessary transactions, the executor will have title to your property, and will have a fiduciary duty to both the estate and the beneficiaries. The executor is responsible for taking an inventory of the estate’s assets, paying off debts, and distributing the assets to the beneficiaries. It is important to choose someone who is capable of handling these tasks and who can act in the interests of all the beneficiaries. Hazen Law Group can help you with this important decision.

Powers of Attorney

A power of attorney is a document that designates another person as your agent and gives them the power to make decisions on your behalf. General powers of attorney are used to appoint an agent for financial and legal matters, and are distinguished from health care powers of attorney.

The person giving the power is called the principal, and the person they give power to is called the agent. General powers of attorney give the agent the authority to buy or sell property and handle other financial transactions on behalf of the principal. The agent has a fiduciary duty to the principal and is required to act in their best interest. A power of attorney can also designate an alternate agent in the event that the original agent is unable to perform their duties.

A “durable” power of attorney simply means that the authority continues even if the principal becomes incapacitated, so the agent is still able to make decisions on behalf of the principal, who is no longer capable. In Pennsylvania, a power of attorney is presumed durable unless otherwise specified.

A power of attorney can also be “springing,” which means that it does not go into effect unless and until some specified event occurs, usually the principal’s incapacity. In this way, an individual who is still capable of managing their own affairs can set up a power of attorney that designates the person they would want to take over their financial decisions if they become incapacitated. Because a principal who is not incapacitated can revoke a power of attorney, in most cases, springing powers are not necessary and can limit the effectiveness of the document.

Changing Laws in Pennsylvania

Pennsylvania law regarding powers of attorney has undergone changes in recent years, and it is critical that you have a qualified estate planning attorney draft such a document for you.

Why do I need an attorney?

There are certain so-called “hot powers” which must be expressly granted to your agent in the document, in order for them to have the authority to handle those matters. Hot powers include making gifts, creating or changing beneficiary designations, creating or changing rights of survivorship, disclaiming property, delegating power granted under a power of attorney and other powers.

In many cases, it may be necessary for your agent to have these powers in order to properly manage your affairs, especially with regard to tax planning and protecting your assets from long-term care expenses, so this authority must be expressly granted in the language of the document.


Trusts, while not necessary or beneficial for everyone, can be powerful tools to accomplish certain estate planning goals.

A trust is an entity created by a person – known as the trustor, grantor or settlor – to hold assets for the benefit of the trust beneficiaries. Another person or entity, called the trustee, is responsible for managing and distributing the assets of the trust for the benefit of the beneficiaries. The trustee could be an individual, such as a family member, or a corporate entity, such as a bank. There are many different reasons why someone may want to set up a trust, and trusts can take a variety of forms.

Irrevocable Trusts

Irrevocable trusts can be effective tools to protect and preserve your estate for your beneficiaries. In some circumstances, trusts can be used as a tax planning tool. If you place assets in an irrevocable trust, the assets are no longer legally yours, you have no control over them, and the trust cannot be revoked by you without the consent of all beneficiaries. By giving up control of these assets, you may gain tax advantages like minimizing or eliminating inheritance or estate tax liability, while still being able to preserve the assets for the benefit of your heirs.

Because irrevocable trusts place funds outside the trustor’s reach, they also can be useful in nursing home planning. Since the trustor surrenders ownership of the assets, they would not be counted by Medicaid as resources. Irrevocable trusts can be used to minimize inheritance and estate taxes, to protect assets from nursing home expenses, or as part of a plan to qualify for Veterans benefits, but this planning must be done carefully. It is important to identify the goals of planning, and to review the specific tax considerations based on the assets that will be transferred to the trust so it can be drafted in a way that is most favorable to the beneficiaries.

The Limited Power of Revocable Living Trusts

Revocable living trusts are a specific tool that can be used in estate planning, but that have limited benefits in Pennsylvania. This type of trust is created while the trustor is living, and can be revoked during their lifetime. The trustor may also be a trustee during their lifetime, with a successor trustee to manage the assets after the trustor’s death. This may be useful in certain states where it is desirable to avoid the probate process, because much of the person’s assets can be placed in the revocable living trust instead of being left in the estate (which is subject to probate). However, in Pennsylvania, the probate process and the trust administration process are very similar, so there are limited benefits to revocable living trusts. They are sometimes useful in second-marriage situations or if you own property in another state and want to avoid probate in that state.

Special Needs Trusts

A specific tool known as a special needs trust is very useful for people with disabilities.

An individual with special needs often depends on public benefits from programs such as Supplemental Security Income (SSI), which have strict income and resource limits. With proper planning, it is possible to provide for loved ones with disabilities in your estate plan without negatively affecting their eligibility for public benefits.

In many cases, funds can be set aside in a special needs trust – also known as a supplemental needs trust – to supplement, not replace, the basic support provided by benefits such as SSI. The funds held in the trust are not owned by the individual with special needs, so they do not count as a resource for SSI purposes, but the trustee can use the funds to provide for the person’s supplemental needs, including caregiving, education, entertainment and travel. When the beneficiary dies, any funds remaining in the trust can be distributed as you direct in the trust terms.

Trusts for the Benefit of Minors

Trusts also are used frequently to set funds aside for the benefit of minors, until they reach a specified age. In Pennsylvania, if a minor inherits or is given money or property, the court may control the inheritance until the minor becomes an adult, or it may be put in a custodial account under Pennsylvania’s Uniform Transfers to Minors Act. In either case, the property will be transferred to the minor when they reach the age of majority. An alternative is setting up a trust for the minor’s benefit, which has the advantage of more control. The trustor can specify exactly how the trustee may use the funds for the beneficiary, such as for health, education, maintenance and support. In addition, the trustor may stipulate that some or all of the funds are not available until the beneficiary reaches a certain age or event, such as age 25 or graduation from college.

Designating Beneficiaries

In addition to the major considerations of wills, trusts, powers of attorney and advance health care directives, there are other essential details that cannot be overlooked in your estate plan.

Beneficiary designations

Beneficiary designations are crucially important and your estate plan is not complete until these designations have been coordinated with your will. Retirement accounts such as IRAs and 401(k)s, and other qualified, tax-advantaged accounts, allow the owner to designate a beneficiary.

This is significant because accounts with a designated beneficiary typically do not pass through your will or estate when you die, but pass directly to the beneficiary. These designations must be coordinated with your estate plan in a way that protects the interests of your beneficiaries while also minimizing tax liability.

Why an Estate Planning Attorney Should Assist with Beneficiary Designations

Your beneficiary designations should be considered in the context of your whole estate plan.

When you prepare your will, and whenever you update it, is essential that you update your beneficiary designations. You also need to consider how any estate or inheritance tax liability should be allocated between your beneficiaries. Additionally, there are important tax considerations regarding qualified accounts such as IRAs and 401(k)s, which need to be examined in the context of your entire estate plan. You should review your planning periodically to make sure it is up to date and coordinated, especially when you open new accounts or have major life events like a death or birth in the family, new job, divorce or remarriage.

Talk to a Lawyer

In preparing these essential documents, the advice of an experienced estate planning attorney is of vital importance. Contact Hazen Law Group today so we can discuss how our comprehensive estate planning services can meet your needs.

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