Though they are both estate planning tools, wills and trusts are not the same. A will goes into effect after someone passes away, while a trust is in effect while the person is still alive. There are also a few other differences.
Wills
A will dictates who shall receive a testator’s property upon their death and appoints a legal representative to carry out those wishes. It covers the property only in the testator’s name, not property held in a trust or in joint tenancy. This is not always an automatic process because wills often have to go through the probate process.
During this time, a court has to ensure that the will is valid, manage its administration, and oversee the property distribution according to the testator’s instructions. Probate court proceedings are usually required when the testator owned assets in their name only. The process is handled by a county surrogate court, and it usually takes less than a year.
A will also lets you specify funeral arrangements and name a guardian for your children. In addition, a will can be designed to name an executor, direct that individual to create a trust, and choose a trustee to administer the assets for named beneficiaries. In Pennsylvania, you must be 18 years old to create a will, and you do not have to have any witnesses unless you cannot sign the will yourself. It does not need to be notarized.
Trusts
Trusts are created to manage the transfer of assets from a trustor to a trustee. There will be terms for the trust’s administration, including distribution of assets to beneficiaries. Living trusts go into effect as soon as the assets are transferred, and testamentary trusts are created upon a trustor’s death. These legal documents do not have to go through probate. Unlike wills, trusts do not become part of the public record. They can also be used to save money on taxes. The assets can be distributed before the trustor dies, upon their death, or afterwards.
A living trust can be revocable, meaning that the trustor is free to change the terms or end the trust while they are still alive. Since the trustor maintains control during this time, they will be responsible for paying taxes. An irrevocable trust cannot be changed; the trustor gives up ownership rights to the assets once they are transferred. When set up correctly, irrevocable trusts can protect assets from creditors and some taxes.
Special needs trusts are set up for people who want to provide for the financial needs of individuals with disabilities. These arrangements enable an individual to receive benefits from the trust for certain purposes while still allowing them to qualify for federal and state public assistance programs. They are more complex to set up, as are charitable trusts. The latter are irrevocable, while benefiting chosen charities and offering financial benefits to trustors.
Delaware County Wills and Estates Lawyers at Eckell Sparks Will Help You With All of Your Estate Planning Needs
Creating a will and trust to carry out your wishes is not always an easy process, but one of our knowledgeable Delaware County wills and estates lawyers at Eckell, Sparks, Levy, Auerbach, Monte, Sloane, Matthews & Auslander, P.C. can handle the hard work for you. To schedule an initial consultation, call us at 610-565-3701 or contact us online. Located in Media and West Chester, Pennsylvania, we serve clients in Delaware County, Chester County, and Montgomery County.