If you are like most folks here in Pennsylvania, you are going to want to be able to provide for your loved ones when you are gone. This is why it is crucial that you work with an experienced attorney to help you with your estate planning. It doesn’t matter if you have a great deal of assets or you are a person of modest means. If you don’t properly prepare for the future with an estate planning attorney, then you are leaving many things to chance and could end up in a situation where you aren’t able to accomplish the things you desired. If you don’t have estate planning, then your assets will pass according to the Pennsylvania intestacy law, which could end up leaving your loved ones empty-handed if they aren’t covered by the law. This is why it is crucial to have a will or a trust to avoid this situation.
What Is the Difference Between a Will and a Trust?
A will is a legal document that controls how your assets will be handled upon your death, including naming heirs who will receive a portion of them. The will also appoints a person to take control of your assets upon your death and may also name people to act as guardians if you leave behind any minors. You can even make provisions for children with special needs. Wills usually do not take effect until a person passes away, with the will going through a legal process called probate. The advantage of a will is that the person can use the assets during his or her lifetime without any restriction.
In contrast, a trust is an agreement that creates an entity to hold all or most of a person’s assets. The person who controls the trust is called a trustee. Depending on the type of trust, the trustee may not distribute them until the person who contributed them passes away, with the beneficiaries named in the trust receiving them. Trusts begin operating as soon as they are formed and funded by the grantor (the person whose assets will be held by the trust). The benefit of a trust is that it avoids the probate process.
What Are the Different Types of Wills?
The most common form of a will in Pennsylvania is a standard will. This sets forth how your assets will be distributed upon your death. If you are married, then you and your spouse will most likely sign a joint will. This provides for the surviving spouse to receive all of the assets listed in the will, and upon his or her death, to pass them to the surviving heirs. Joint wills cannot be amended once one of the spouses has died. There are also pour-over wills, which are used if you have a trust. This will put any assets you own that are outside of your trust into your trust upon your death.
A type of will that does not have to do with your assets is a living will. This will govern how you are treated if you are incapacitated and on life support. It will cover things like resuscitation, feeding tubes, and organ donations.
What Are the Different Types of Trusts?
There are two basic types of trusts. Living trusts are created while you are alive and funded by you during your lifetime. There are two types of living trusts, revocable trusts and irrevocable trusts. In a revocable trust, you maintain control of the assets during your lifetime, so you can take money out if you need it without having to get permission from a trustee. However, any assets that pass to the beneficiaries are subject to taxation. Irrevocable trusts have a third-party trustee who manages the assets during a person’s lifetime and has the power to refuse any spending requests made by the grantor. The advantage to irrevocable trusts is that the beneficiaries can avoid paying taxes, and any assets held in an irrevocable trust will not count against Medicaid eligibility.
The other general type of trust is testamentary trusts. As its name implies, this goes into effect upon a person’s death. These can be funded by assets from a will, as well as things like retirement accounts and life insurance death benefits. If you have a child of special needs, you can also create a special needs trust. This uses the funds from a trust or estate to provide for the needs of the disabled person, with a trustee controlling the funds in the best interests of this special needs person.
Contact Our Pittsburgh Attorneys for Estate Planning Assistance
Proper estate planning requires the assistance of an experienced attorney who will draft the will or trust that works best for your personal situation. The estate planning attorneys at Jones Gregg Creehan & Gerace, LLP look forward to guiding you through the process so your needs will be properly addressed. Contact us for an initial consultation.