McClellan Legal LLC Estate Planning & Tax Assessment Blog

Tuesday, December 10, 2013

No Will... Big Problems

What happens if you die without a will in Pennsylvania?  Like all other states, Pennsylvania has “intestate” laws that govern the distribution of your assets to your closest family members.  While most of us know that, few know what specific assets pass via the intestate laws and in what ratios to our family members. 

Before we discuss who will receive your assets, we first must determine which assets will pass through the probate process via PA intestate laws.  Probate is an administrative process of inventorying your assets, paying your debts/taxes, and then distributing your assets.  Many assets will pass directly to your beneficiaries via a beneficiary or Pay on Death  (POD) designation outside of the probate process. 

Assets Passing Outside of Probate

Non-probate assets include: most retirement accounts (e.g., 401k, IRA, etc.), life insurance, pay on death accounts (e.g., bank accounts), transfer on death accounts (e.g., securities), and real property that you own with someone else in joint tenancy or tenancy by the entirety (e.g., typically how a married couple owns their home).  These non-probate assets will pass directly to the beneficiary or co-owner without going through the probate process.  If fact, even if you had a will, these assets would also pass outside of the will.

Who Gets Your Assets

So here’s where we run into potential problems.  Do the default intestate laws regarding the distribution of your assets to your family members align with your wishes.  In almost every situation, my clients say No.  Here are the mostly likely intestate succession scenarios:

  • If you leave with children, but no spouse, then your children inherit everything (4.5% tax). 
  • If you leave a spouse, but no children or parents, then your spouse inherits everything (tax free).
  • If you leave a spouse and children, then your surviving spouse inherits the first $30,000 of your probate property and half of everything else; your children receive the balance.
  • If you leave a spouse and no children, then your then your surviving spouse inherits the first $30,000 of your probate property and half of everything else; your parents receive the balance (4.5% tax).
  • If you leave parents and no spouse or children, then your parents inherit everything.
  • If you leave siblings and no parents, spouse, or children, then your siblings inherit everything (12% tax).

Only in very rare situations when you leave no family members, will the Commonwealth receive your estate.

The Potential Problems

Here are a few issues that many people have with PA’s intestate laws:

  • Do you want your parents to inherit nearly half of your estate if your spouse is still living?
  • Do you want your children to inherit nearly half your estate if your spouse is still living?
  • Do you want your children to receive their inheritance outright as soon as they reach the age of majority?
  • Would you like to provide to a non-family member (e.g., a charity or close friend)?
  • What happens if you are in long-term committed relationship, but not married?

There are many additional reasons why PA’s default intestate laws are ripe with potential problems.  It will be our pleasure at the Law Offices of James S. McClellan to discuss your specific circumstances and design/implement an estate plan that aligns exactly with your goals.

Monday, August 5, 2013

Estate Planning for Same-Sex Couples in Pennsylvania

On May 20th, a federal judge struck down Pennsylvania’s law prohibiting same-sex marriage, saying it violates the U.S. Constitution.  We are closely monitoring this news and will update this page once we have additional clarity.   Please call our office if you have any questions.  

Unlike many of our neighboring states, Pennsylvania does not allow for same-sex marriage, civil unions, or domestic partnerships.  Further, Pennsylvania does not acknowledge same-sex marriages that were legally entered into in other states when they move to the Commonwealth.   

It is critical for people within the LGBT community to realize that despite the legal hurdles set forth by Pennsylvania in defining your relationships, many rights can be created via properly drafting and executing effective legal documents. The following are just some of the legal documents that are needed by same-sex couples to clearly define their desires (and any non-“married” couple for that matter): Wills, Trusts, Durable Powers of Attorney for Finances, and Healthcare Powers of Attorney.


A Will allows a person to define the distribution of their assets and define the people that will be responsible for administering their estate (e.g., executor or personal representative) at the time of their death.  For those that pass away without a Will, the distribution of assets will be set forth by state intestate laws.  In Pennsylvania, the intestate laws will exclude your partner from receiving from your estate despite any intentions that you had previously expressed.  A properly drafted and executed Will permits you, not the state, to define who and how will receive your assets.  While all Wills are subject to contest by family members, it is often a very difficult task to successfully challenge a Will it is professionally drafted.


Trusts (both revocable and irrevocable) are powerful tools to help same-sex couples control their assets and better plan for incapacity.  For example, since the trust legally owns the assets, it is much easier for your partner (if named as a trustee or co-trustee) to access the assets in times of need.  Trusts are not a replacement for wills, but serve as another tool in the toolbox to handle certain challenging situations.

Durable Powers of Attorney for Finances

Unless your assets are jointly titled, same-sex partners are unable to exercise control over each other’s assets.  A Durable Power of Attorney will provide authorization for your partner to manage your financial matters on your behalf in situations when you are incapacitated.  

Healthcare Power of Attorney

If you need medical aid and are unable to consent, your partner will not be authorized to access your medical records or make healthcare decisions on your behalf.  A Healthcare Power of Attorney will allow you to appoint your partner as your agent to make medical decisions for your care and obtain information about your condition.  

The above listed documents are just the bare essentials that same-sex couples should consider (along with Cohabitation Agreements) in order to ensure that their desires are expressed in a manner that is legally recognized in Pennsylvania.  James S. McClellan, Esq. is Pennsylvania licensed attorney focused on estate planning and is available to discuss the process of drafting and executing your legal documents.  Please call our office at (610) 444-5552 to set up a no-fee initial meeting.  

Tuesday, January 29, 2013

Save Property Taxes via the PA Homestead Exclusion

The Homeowner Tax Relief Act of 2004 provided Pennsylvania property owners with another mechanism at their disposal to potentially lower their property tax burden.  If your property is used as a personal residence, you are likely eligible to receive an assessment reduction called the Homestead Exclusion.  The reduction that you receive based on the Homestead Exclusion will vary from year to year depending on the amount of money funded into the tax savings program.  The Homestead Exclusion will supplement any other reduction you receive, for example, via an annual property assessment appeal.

In most cases, your school district will mail you an application for Homestead Exclusion several months prior to the March 1st deadline.  There is no cost to file the application.  If you do not receive an application, I recommend that you call your local school district office or your County Board of Assessment Appeals. 

It would be my pleasure to discuss any questions that you may have regarding reducing your property tax burden by filing one of the following applications: a Homestead Exclusion, “Clean and Green” (Act 319), and/or Annual or Interim Assessment Appeal

I can be reached at (610) 444-5552 or

Wednesday, January 16, 2013

Estate Planning After the Fiscal Cliff

The recent fiscal cliff legislation did very little to change the previous federal estate tax.  The only substantive change was to raise the estate tax rate from 35% to 40%, while maintaining all other 2012 rules. 

Therefore, the federal estate tax exclusion amount remains at $5,000,000 (adjusted for inflation to $5.25M) for 2013.  While many thought the federal estate tax exclusion amount would drop from $5M to $3.5M, nearly everyone expected the federal gift tax exclusion amount to drop drastically from $5M down to $1M.  This fear caused many planners to recommend making large gifts at the end of 2012.  However, the federal gift tax exclusion amount also stayed at $5M (adjusted for inflation to $5.25M).  

The only other change of note for 2013 occurred prior to the end of 2012, wherein the annual tax-free gift amount was increased from $13,000 to $14,000.  Therefore, in 2013, you can give $14,000 to any individual tax free. 

If you have any additional questions regarding federal tax planning, please call my office at 610.444.5552. 

Sunday, December 9, 2012

Am I Over-Assessed?

How do you know if your property is currently over-assessed?  I talk with property owners that call my office and they often say, “I think I pay too much property tax.”  They often tell me that they think their neighbors that have similar homes are paying much less.  However, due to the seemingly complex ratios and formulas that the taxing authorities use (with very little or no explanation in your property tax bills), a typical property owner simply is unable to accurately evaluate whether their current assessment is fair.

Read more . . .

Saturday, December 8, 2012

Isn't Estate Planning Only For The Wealthy?

Many people believe that estate planning is only for the wealthy.  The fact is that everyone over 18 years old, despite whether they are married, have children, or have a large net worth, will benefit from preparing at least a basic estate plan.  So if estate planning is beneficial for everyone, what is estate planning?

Read more . . .

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McClellan Legal LLC is located in Kennett Square and serves clients throughout the areas of Avondale, Chadds Ford, Coatesville, Downingtown, Landenberg, Oxford, Phoenixville, Pottstown, West Chester, & West Grove. We also serve the following towns in Lancaster County: Lancaster, Lititz, Strasburg,Millersville, Ephrata, Leola, Manheim, New Holland, Willow Street, Quarryville, Elizabethtown and Mountville.

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113 South Broad Street, Kennett Square, PA 19348
| Phone: 610-444-5552

Estate Planning | Assessment Appeals

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