Trusts are legal arrangements that guard assets and control their use in harmony with their owners’ intentions. On the other hand, wills take effect upon death, trusts may be used both during life and after the death of their creators. Individually or together, wills and trusts can provide effective estate planning. To learn more, reach out to our skilled Butler County estate planning & probate attorneys. Here are some questions you may have:
How is a will used in Pennsylvania?
A will is a document that governs the allocation of your assets after your death to your designated heirs and beneficiaries. It also can contain instructions for issues that need decisions after your death, like the appointment of an executor of the will and guardians for minor children, or guidance for your funeral and burial. A will can require an executor to create a trust and assign a trustee to hold assets for the benefit of certain individuals, for instance, for minor children until they reach majority or a defined age.
It is required by state law that a will is signed and witnessed. Its execution needs a legal process. It must be filed with the probate court in your jurisdiction and carried out by your designated executor. The document is publicly available in the records of the probate court which supervises its execution and has jurisdiction over any disputes.
What are trusts?
Trusts are legal agreements that supply the transfer of assets from their owner, known as the grantor or trustor, to a trustee. They establish the terms for the trustee’s management of the assets, for distributions to one or more specified beneficiaries, and for the highest disposition of the assets. The trustee is a fiduciary obliged to manage the trust assets in conformity with the terms of the trust document and only in the best interests of the beneficiaries.
Unlike wills which take impact upon death, trusts become useful upon the transfer of assets to them. A “living trust” can be completed during a grantor’s lifetime. Or a trust may be a “testamentary trust” created after death in agreement with directives in the decedent-grantor’s will. Trusts are often used in estate planning to help, and supply for the distribution of assets to, the heirs of the grantor.
Is a will or trust better?
It is important to acknowledge that choosing a trust or a will depends heavily on the family and financial circumstances. In most cases, wills are less expensive to write and easier to execute, although they can be contested in probate court. Wealthy individuals aiming to evade probate and lower estate tax exposure could be better off with an irrevocable trust. An irrevocable trust essentially transfers assets out of one’s name, but these are more costly to draw up and implement, require naming a trustee, and cannot be changed after going into effect.