When Pennsylvania residents decide to start planning their estates, they have options. A will and a trust are two common choices. Knowing how these estate planning documents differ can help when deciding whether you should have one, the other or both.
Understanding wills
A will is a legal tool that allows you to clearly state how your assets should be distributed upon your death. You can name beneficiaries, guardians for your minor children, and an executor or personal administrator who will oversee your estate and ensure that your final wishes are carried out. A will also lets you specify how you want your funeral and burial to be handled. Your will can also instruct an executor to create a trust for the benefit of your minor children until they reach a certain age.
In order for a will to be legal, it must be signed and witnessed. It goes into effect once the individual passes away. Occasionally, wills are contested but are generally straightforward.
Understanding trusts
A trust is a different estate planning tool into which you can place assets to hold for beneficiaries. Those assets can bypass probate once the trust creator is gone. In most cases, a revocable trust is often the preferred option as it allows you to periodically add or remove assets and property as you see fit.
With an irrevocable trust, you cannot make changes or remove assets held within it. There may be tax advantages, and disadvantages, to using trusts, which should be examined carefully.
A trust is legally binding as soon as it’s signed and funded with assets. They are commonly more complex than a will but also not usually contested.
A will can explain your wishes after you’re gone. Trusts cannot do that but can hold assets and property promised to beneficiaries. Many people choose to have both in their estate plans. You should consult with an experienced estate planning attorney to discuss your goals, so that together you can determine an overall estate plan which fits your needs.