You work hard for your family and your assets. Yet many people in Pennsylvania do not have a formal estate plan. Without a plan, you risk leaving the future of your property and loved ones to chance.
An estate plan is a thoughtful way to ensure that others follow your wishes for distributing your assets. A strategy that best fits your needs may combine a will and a trust, creating a robust financial plan that offers you flexibility and security.
Overview of a will
A will is a legal document that provides instructions for what happens to your property after you pass away. It takes effect only after you die. A will lets you appoint an executor to manage your estate, and it allows you to name guardians for your minor children.
Wills are straightforward documents to set up, which you can create using online tools. However, it’s advisable to get help from a legal professional to ensure it’s valid and protects you and your beneficiaries. The cost can be as little as a few hundred dollars to more than a thousand, depending on the complexity of your estate.
A will may be enough for you if:
- You have a small estate with easily transferable assets.
- You need to designate a guardian for minor children.
- Your main goal is to specify who gets your property and personal belongings.
In these cases, a will provides a simple and effective way to ensure your wishes are carried out. However, a will must go through a public court process called probate, making details of your estate available to the public. If you die without a will, the state of Pennsylvania determines how your property is distributed, which may go against your wishes and the best interests of your heirs.
Planning your will, trust, or power of attorney in Southeastern Pennsylvania? Put Bellwoar Kelly, LLP on your side. Our attorneys create clear, customized estate plans that protect your assets and provide for your family, including wills, trusts, powers of attorney, and advance health care directives. We also guide executors through probate and estate administration. Call 610-314-7066 anytime, day or night, for a free consultation. Se habla español.
Overview of a trust
A trust is a formal agreement where a trustee manages assets for you. The trustee manages the assets for the benefit of your chosen beneficiaries. Unlike a will, a trust can be effective during your lifetime and can provide privacy because the assets held in the trust do not go through probate.
Trusts can be more complex to set up and more expensive than a will. Costs typically range from a few hundred dollars to several thousand dollars for a complex trust.
Trusts come in two basic forms:
- Revocable: You can change or cancel a revocable trust at any time. You can still use the assets in the trust, but this type does not protect you from estate taxes or creditors.
- Irrevocable: Once you create an irrevocable trust, you cannot change it, providing strong protection from creditors and can help reduce estate taxes. However, you give up control over the assets in trust.
Your choice between these two types depends on your goals for control and asset protection.
When is adding a trust beneficial?
Many people believe a will and a trust are two different things. But they can work together to ensure a swift and private transfer of your property. A trust can work alongside your will, allowing you to bypass probate for certain assets while your will handles others, saving time and money for your loved ones. It also keeps your financial matters confidential.
Potential benefits of adding a trust to your plan include:
- Trusts can bypass the public probate process, protecting your privacy.
- They can help avoid or reduce Pennsylvania’s inheritance tax for specific beneficiaries.
- You can use a trust to manage assets if you become incapacitated.
- Trusts can provide more control over how and when beneficiaries receive their inheritance.
- They can be used to care for a family member with a disability without affecting their government benefits.
These benefits work together to provide you and your loved ones with greater security and peace of mind.
Questions to ask yourself
Deciding if a trust is right for you is a personal decision. Think about what matters most to you and your family. Answering these questions before contacting a lawyer can help you find clarity and expedite the process:
- How much is your total estate worth?
- Are you concerned about your privacy and the public nature of probate?
- Do you have minor children or other dependents who may need long-term financial management?
- Do you want to reduce potential estate taxes?
- Do you own property in another state that would require a separate probate process?
A skilled estate planning and administration attorney can help you find a comprehensive plan that best suits your goals, protects your legacy and reduces the possibility of conflict and stress for your loved ones.