Sometimes it takes a great tragedy to remind us to take care of ourselves and our loved ones. Last month, America lost a global icon when a helicopter carrying Kobe Bryant, his 13-year-old daughter Gianna, and seven others crashed near Los Angeles. Kobe was only 41 and had retired from the NBA less than four years ago.
These kinds of tragedies happen every single day. When family members pass away suddenly, they often leave behind no will or any plan for transferring wealth to family members or others.
Even before becoming Philadelphia’s Register of Wills in 2019, I saw many members of my community, neighbors, and friends struggle through long legal battles due to inadequate end-of-life planning. Thousands of Philadelphians face the very real possibility of losing their home due to so-called “tangled titles,” which can result in foreclosures. Over the next quarter-century, this country will see the largest wealth transfer in its history, as Baby Boomers transfer upwards of $68 trillion in wealth to younger generations. With so much wealth changing hands, it is absolutely imperative to invest in proper estate planning to protect your most valuable assets, like properties, retirement funds, and more.
In a city with a poverty rate hovering around 25%, property ownership is likely the most valuable and — in some cases — the only asset that you have to pass on to your relatives. But, without proper planning, collectors could come along and take that property away, leaving your relatives with nothing.
This is where the Office of the Register of Wills comes in. The Register of Wills is responsible for receiving wills for probate, issuing letters of administration in absence of a will, collecting inheritance taxes, issuing marriage licenses, and more. Unfortunately, many Philadelphians are unaware of the Register of Wills, what the office does, or even where it is located. Part of the reason I ran for this position was to change the narrative and help my fellow Philadelphians avoid unnecessary stress after losing a loved one. I don’t want to see any more of my neighbors and friends struggling through the legal system and fighting to keep ownership of the family home. Probate court costs can total $10,000 or more, which is enough to bankrupt many families. Issues with deeds can leave relatives fighting for months for the right to a home they have lived in for decades without issue.
There seems to be a myth that estate planning is only for wealthy citizens with large homes, multimillion-dollar companies, and priceless artwork collections to pass on to their heirs. Many hear “estate tax” and think of mega-mansions with large tax bills in the tens of thousands of dollars. This is simply not the case. Estate planning puts safeguards in place to protect your children, partner, and other family members from high taxes, ugly legal battles, delays in court, and potential loss of assets. Estate planning is not bound by income levels or tax brackets.
Believe it or not, there is a possibility your family could owe hundreds or even thousands of dollars to the government on your grantor’s hard-earned money and possessions. The unfortunate truth is that federal, state estate, and state inheritance tax collectors can all come knocking to collect their money. Early and thorough estate planning can go a long way in reducing or eliminating these tax burdens, while also ensuring financial security for your family, should you pass away earlier than expected.
Besides the obvious benefits of estate planning, like ensuring the smooth transfer of your assets to beneficiaries, there are still some benefits that you might be unaware of, like the federal gift tax exclusion, which could allow you to gift assets tax-free up to a certain limit each year before your passing. In 2018, that maximum amount was $15,000.
If you own assets of any kind — a home, a retirement fund or a car — I strongly urge you to call or visit the Office of the Register of Wills to ensure that you are thoroughly and accurately conducting your end-of-life planning. These are crucial decisions. There is too much at stake financially for your family to take estate planning lightly. A lengthy battle can take a toll on the mental well-being and relationships within your family. Choosing an estate plan means choosing a secure future for your loved ones.
Tracey Gordon is the Register of Wills for the City of Philadelphia. She can be reached at Tracey.Gordon@Phila.gov.