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3 common estate planning complications for those with significant assets

On Behalf of | Feb 3, 2024 | Probate & Estate Planning |

Estate planning is a smart decision for people in almost any circumstance. Of course, those with more significant resources typically have more reason to think about what happens to their property when they die than those with negligible amounts of property.

Someone who has a sizable estate to pass on to others may need to address unique challenges that may not be of much concern for those with fewer resources.

Estate and inheritance taxes

Taxes can persist even after someone dies. Someone’s estate may be responsible for federal taxes if someone has more than $13,610,000 to pass to their loved ones. While Pennsylvania does not collect an estate tax like the federal government does, it does levy an inheritance tax.

Neither spouses nor parents of minors who die have to pay an inheritance tax, but many other family members do. Pennsylvania assesses a 4.5% inheritance tax on assets inherited by direct descendants, like children and grandchildren. Siblings who inherit have to pay a 12% tax, and any other heir is subject to a 15% tax unless the assets transfer to a charitable organization. Testators may need to think carefully about who will inherit from their estate and engage in tax minimization planning as a result.

The risk of fighting among beneficiaries

The more property someone has when they die, the more reason their loved ones have to fight over their legacy. Even when someone creates a very clear estate plan, estate administration could potentially cause massive damage to the relationships between their family members and beneficiaries. Careful estate planning can reduce the likelihood of familial conflict. Those with more resources may also need to plan carefully to avoid contests or challenges against their documents after their passing.

Fiduciary misconduct

The individual named as the personal representative of an estate or the trustee who administers a trust has a lot of financial power. Some people would abuse that authority for personal gain. The chances of someone embezzling, engaging in self-dealing or otherwise misusing their role as the fiduciary administering an estate plan increase with the overall value of the estate. Testators with larger estates may need to consider appointing multiple people as fiduciaries or even bringing in a professional fiduciary to limit the possibility of misconduct.

Understanding how personal wealth can complicate estate planning may benefit those hoping to leave a positive legacy after their passing.