Timothy J. Duckworth, Jr.

What Happens if I Die Without a Will in Pennsylvania?

/in /by

If you fail to create an estate plan and die without a will, the Commonwealth of Pennsylvania will, in essence, prepare one for you based on the law of “intestate” succession.

Briefly stated, the Pennsylvania intestacy statutes set forth the persons to whom your property will pass and the division of your estate among those persons. The distribution scheme set forth in the statute is inflexible and may not be in accord with your wishes. Additionally, any amounts passing to your children will require a cumbersome and costly legal guardianship if the children are minors at the time of your death.

So how does the Pennsylvania intestate law work?

In general, it is quite simple. Your “intestate estate” is made up of all property that is not disposed of by will or otherwise. Certain property, due to its nature or form of ownership, will not be included in your intestate estate and will be transferred outside of the intestacy statutory scheme.

For example, any property you own as a “joint tenant” or as a “tenant by the entireties” – including real estate, bank accounts, and savings bonds – will pass automatically at your death to the remaining joint owner(s).

Additionally, contractual arrangements with a designated beneficiary – such as life insurance proceeds or retirement accounts – will also pass outside of the intestacy statutes. Any remaining property will then pass to the persons and in the amounts provided for by law. If you are survived by a spouse, the share he or she will receive varies depending on who else survives you. The results are summarized as follows:

No Children or Parents Survive. In this scenario, your surviving spouse will receive the entire intestate estate.

Children Survive. If you are survived by children (all of whom are also the children of your spouse), then your spouse will receive the first $30,000, plus one-half (1/2) of the balance. Alternatively, if one or more of your surviving children are not the issue of your spouse, then your spouse will receive just one-half (1/2) of the intestate estate. For example, if you die with a $100,000 intestate estate and all surviving children are issue of your spouse, he or she will receive $65,000 (i.e., the first $30,000, plus ½ of the remaining $70,000). If, however, one or more of your children are not the issue of your spouse, he or she will receive only $50,000 (i.e., one-half of the intestate estate). Your children will receive the remainder.

One or Both Parents Survive. If you are survived by one or both of your parents, but no issue, then your spouse will receive the first $30,000, plus one-half (1/2) of the balance of the intestate estate. For example, if you die with a $100,000 intestate estate, your spouse will receive $65,000 (i.e., $30,000, plus ½ of the remaining $70,000). Your parent(s) will receive the remaining $35,000.

What happens if there is no surviving spouse? In that case, your estate will pass in the following order:

  • To your issue (i.e., your children and grandchildren).
  • If no issue survive you, then to your parents (or the surviving parent).
  • If no parent survives you, then to the issue of your parents (e.g., your siblings, nieces, and nephews).
  • If no sibling, niece, or nephew survives you, then to your grandparents – half to your paternal grandparents and half to your maternal grandparents.
  • If no grandparent survives you, then to your uncles, aunts, and cousins.
  • Finally, if none of your family survives you, then your estate will pass to the Commonwealth of Pennsylvania.

Because the above scheme is inflexible, it is essential that you prepare a will if you desire for your estate to pass in a manner different then that set forth above. However, even if Pennsylvania’s distribution scheme accurately reflects your wishes, other problems may arise if you die before preparing a will.

For example, if you are survived by minor children but not a spouse, a judge will decide with whom your children will live and who will be responsible for managing their property. The judge will also choose the person who will administer your estate. By preparing a will, you, rather than a judge, will make these important decisions, saving your heirs from expensive (and preventable) litigation.

Additionally, the problems of dying without a will are aggravated if, for example, a married couple with children owns a family business with 50% owned by each spouse as separate property. If one spouse dies without a will, his/her ownership interest may pass to the surviving spouse and minor children, and a legal guardianship would be required to manage the portion of the business interest that passes to the children. The surviving spouse would have the guardianship for the minor children as a “partner” in the family business.

This is a highly undesirable result; in accordance with the requirements of a guardianship, the guardian may be required to post a bond and file detailed periodic accountings with the court, needlessly increasing costs.

Finally, if you die without a will, any property passing to your adult children will be distributed outright and free of any restrictions. This can be especially problematic if any of your children are in debt at the time of your death. Funds that otherwise would be used for their benefit will now be subject to the claims of their creditors. This situation could easily be avoided with simple prospective planning.

The attorneys at Mosebach, Funt, Dayton & Duckworth can help you understand how your estate would be distributed if you die without a will and explain the reasons a will might benefit you and your family. We can provide the peace of mind that comes from knowing your estate plan is in place and your property will be distributed according to your wishes. If you have any questions, please contact MFDD today.

Kristie L. Beitler, Esquire, named a partner at Lehigh Valley law firm of Mosebach, Funt, Dayton & Duckworth, P.C.

/in

Kristie L. Beitler, Esquire, who concentrates her practice in the areas of divorce, general family law, adoption and civil litigation, was recently named a partner/shareholder at the Lehigh Valley law firm of Mosebach, Funt, Dayton & Duckworth, P.C. which maintains offices in Bethlehem and Allentown.

Attorney Beitler practices primarily in the areas of divorce, custody, child and spousal support, alimony, adoption and civil litigation law in the Lehigh Valley and has been associated with MFDD for over seven (7) years. In addition to divorce, adoption and civil litigation, MFDD provides services in other areas of civil law including estate planning, corporate law, elder law, taxation, and real estate.

Timothy J. Duckworth, Jr.

Pennsylvania Eliminates Inheritance Tax on Transfers of Family-Owned Small Businesses

/in /by

Pennsylvania remains as one of the few states to impose an inheritance, or so-called “death tax,” on the heirs of its deceased residents.

With a maximum rate of 15%, the inheritance tax was especially burdensome on family-owned businesses. Often, the surviving family members were forced to liquidate essential business resources to create enough cash to pay the tax bill. As a result, many of these businesses shut down.

Effective immediately, however, Pennsylvania’s inheritance tax no longer applies to family-owned small business interests.

Act 52 of 2013, signed into law by Governor Corbett on July 9, 2013, provides that a transfer of a qualified family-owned business interest to one or more qualified transferees is exempt from inheritance tax, if that interest: (i) continues to be owned by a qualified transferee for a minimum of 7 years after the decedent’s date of death; and (ii) is reported on a timely filed inheritance tax return.

What is a “Qualified Family-Owned Business Interest?

According to the Act, a “qualified family-owned business interest” means either:

An interest as a proprietorship in a trade or business carried on as a proprietorship, if the proprietorship has fewer than 50 full-time equivalent employees as of the decedent’s death, the proprietorship has a net book value of assets totaling less than $5 million as of the decedent’s death, and has been in existence for 5 years prior to the decedent’s death; or

An interest in an entity carrying on a trade or business, if:

  • The entity has fewer than 50 full-time equivalent employees as of the decedent’s death;
  • The entity has a net book value of assets of less than $5 million as of the decedent’s death;
  • The entity is wholly owned by the decedent or by the decedent and members of the decedent’s family that meet the definition of a qualified transferee, as of the decedent’s death;
  • The entity is engaged in a trade or business the principal purpose of which is not the management of investments or income-producing assets owned by the entity; and
  • The entity has been in existence for 5 years prior to the decedent’s death.

Who is a “Qualified Transferee?”

The Act specifies that a “qualified transferee” is a decedent’s: (i) husband or wife; (ii) lineal descendants; (iii) siblings and the sibling’s lineal descendants; and (iv) ancestors and the ancestor’s siblings.

Losing the Exemption:

If a qualified business interest that was exempt from inheritance tax under this provision is no longer owned by a qualified transferee at any time within 7 years after the decedent’s death, inheritance tax, plus interest, will be due at that time.

For each of the 7 years following the decedent’s death, the owners of business interests exempted by this provision must certify to the PA Department of Revenue that the interest continues to be owned by a qualified transferee.

The owners also have a duty to notify the Department within 30 days of any transaction or occurrence that would disqualify the business interest from the exemption.

The Department of Revenue will create forms for these purposes, and a failure to file the appropriate certification or notification form will result in a loss of the exemption.

This legislation offers welcome relief to Pennsylvania business owners and should go a long way toward keeping these enterprises in business for generations.

To speak with one of our experienced tax attorneys, fill out the form on the right.

Timothy J. Duckworth, Jr.

Affordable Care Act “Pay or Play” Provisions Delayed Until 2015

/in /by

On July 2nd, the Obama Administration announced, via posts on the Whitehouse Blog and the Department of Treasury’s Treasury Notes Blog, that implementation of the Affordable Care Act’s employer mandate provisions will be delayed until 2015.

Under the Affordable Care Act, “large employers,” defined as those employing 50 or more full-time employees, are required to offer affordable health insurance coverage to all full-time employees and their dependents or pay one of two “shared responsibility” penalties.

Some Important Things to Consider

If an employer subject to the “Pay or Play” provisions does not offer health insurance coverage to its full-time employees, it will be subject to a penalty equal to $2,000/year for each full-time employee it employs in excess of the first 30, if at least one full-time employee obtains subsidized coverage through an ACA Health Insurance Exchange.

Alternatively, if such an employer does offer health insurance coverage, but that coverage is not “affordable” or does not provide “minimum value,” it will be subject to a penalty equal to $3,000/year for each full-time employee who purchases subsidized coverage through an Exchange; limited, however, to the maximum penalty imposed for not offering coverage.

To ensure compliance with the “Pay or Play” provisions, the ACA requires certain information reporting by insurers, “large employers,” self-insuring employers, and other parties that provide health coverage. Since the enactment of the ACA, the business community has voiced concerns regarding the complexities and uncertainties of these requirements.

Why the Delay?

Thus, the delay in implementation – which is the Administration’s response to those concerns – is intended to accomplish two goals. First, it will give the implementing agencies additional time to consider methods to simplify the reporting requirements. Second, it will provide employers with time to adapt health coverage and reporting systems to comply with the law.

Because it would be impractical to determine which employers owe “shared responsibility” penalties without the required information reporting, the provisions imposing such penalties are delayed as well. The Administration has promised additional guidance regarding this delay in the near future.

What the Future Holds

Going forward, employers that may be subject to the ACA’s employer mandate provisions should continue to develop and test systems to establish which employees are required to be covered by the employer’s health plan under the law.

This includes electing and implementing the measurement, stability, and administrative periods for determining which employees the law deems as “full-time.”

Additionally, these employers should analyze whether the plan currently offered is “affordable” and provides “minimum value,” as those terms are defined by the ACA. And of course, such employers should continue to monitor the ongoing developments concerning the ACA’s implementation.

Have questions about the Affordable Care Act? The attorneys at MFD&D can help. Fill out the form on the right to contact us today.

Mosebach, Funt, Dayton & Duckworth, P.C. supports Allentown School District Foundation Gala

/in

The Lehigh Valley law firm of Mosebach, Funt, Dayton & Duckworth, P.C. was a table sponsor at the Allentown School District Foundation Gala held on March 23, 2013 at Symphony Hall, Allentown, Pennsylvania. Harold J. Funt, Esquire and William H. Dayton, Jr., Esquire, both shareholders of the law firm, attended the event with their respective spouses and guests, Bernadette Holland, CPA and Walter Finnegan, MD., J.D., and their respective spouses.

Mosebach, Funt, Dayton & Duckworth, P.C. maintains offices located in Bethlehem and Allentown and provides a full range of legal services including estate planning and administration, elder law, business law, divorce, general family law, civil litigation, adoptions, taxation, bankruptcy and real estate.

William H. Dayton, Jr. and Timothy J. Duckworth participate in Equi-librium, Inc. Charity Golf Outing

/in

William H. Dayton, Jr. and Timothy J. Duckworth, both partners/shareholders of the Lehigh Valley law firm of Mosebach, Funt, Dayton & Duckworth, P.C., which has offices located in Bethlehem and Allentown, participated in the 11th Annual Equi-librium Golf Classic at White Tail Golf Club on May 23, 2012 with guests Matthew B. Searles, CPA and Christopher Gray, Esquire. The group posted a 9 under score of 63 to be champions of the outing, in addition to supporting a worthy charitable endeavor.

Timothy J. Duckworth elected Vice President of Catholic Charities, Diocese of Allentown

/in

Timothy J. Duckworth, Esquire a partner/shareholder at the Lehigh Valley law firm of Mosebach, Funt, Dayton and Duckworth, P.C, which has offices located in Bethlehem and Allentown was recently elected Vice President of Catholic Charities, Diocese of Allentown.

Attorney Duckworth who has practiced law in the Lehigh Valley for more than twenty (20) years, concentrates his practice in the areas of estate planning, wills and trusts, elder law, business and corporations, and taxation. MFDD also provides services in the areas of divorce, custody, child and spousal support, alimony, adoption, employer/employee, civil litigation, personal injury and real estate.

Harold J. Funt, Esquire, Lehigh Valley divorce lawyer speaks at NBI Seminar

/in

Harold J. Funt, Esquire, who concentrates his practice in the areas of divorce, general family law, and civil litigation, and who is a shareholder in the Lehigh Valley law firm of Mosebach, Funt, Dayton & Duckworth, P.C., recently spoke at an NBI educational seminar on the topic of using accounting and financial records as evidence in divorce litigation and general civil litigation.

Attorney Funt has practiced divorce law in the Lehigh Valley for more than twenty-five (25) years and has been attorney of record in many divorce cases involving the equitable distribution of substantial marital assets. Mosebach, Funt, Dayton and Duckworth, P.C. maintains offices located in Bethlehem and Allentown and provides a full range of legal services including estate planning, elder law, business law, taxation, and real estate.