Unfortunately, there is a common misconception that only the ultra-wealthy should create an estate plan, which is far from the truth. In reality, anyone with any assets should consider establishing the necessary estate planning documents to protect themselves and their loved ones in the event they become incapacitated or pass away. As such, understanding the different options available to you is critical. One thing that creates confusion for many looking to set up an estate plan is the difference between a living trust and a will. If you’re unsure which one you need or how they differ, you’ll want to keep reading. The following blog and Pennsylvania estate planning attorneys can help you make the right decision for your needs.
What is a living trust?
A living trust is one of the most common estate planning documents. This allows you to create a trust to hold your assets and gives you the ability to distribute assets to beneficiaries before you pass away.
One of the main benefits of creating a living trust is that it allows you flexibility about how your assets are distributed. This lets you determine exactly when and how a beneficiary receives an asset intended for them. For example, you may leave your child a considerable amount of funds that they can only receive in small increments after they graduate college. This ensures they don’t spend irresponsibly.
What’s the difference between a living trust and a will?
Though a living trust may seem similar to a will in that both options help protect assets and distribute them to beneficiaries, there are many differences. One of the most considerable is that a living trust can distribute assets before you pass away, unlike a will which only takes effect after your death. This grants you greater control over how and when your beneficiaries receive the assets held in the trust.
Another difference is that assets held in a living trust do not have to go through the probate process. When you pass away with a will, the courts must validate the will and oversee the distribution of these assets in a complex process known as probate. A trust, on the other hand, can avoid the probate process if it is irrevocable. This means the courts cannot interfere with the distribution of the assets held in the fund.
Which one is right for me?
If you’re still unsure whether or not you would benefit more from creating a will or living trust, it’s important to understand that you should still create both. A will is the primary estate planning document to protect any assets not held in the trust. For example, while you may leave funds and some property to beneficiaries in your living trust, the rest of your property may not be protected. If you pass away without putting these assets in your will, the state will assume full control over the assets and distribute them according to the Pennsylvania law of intestate succession, which means certain individuals you may not want to receive assets could be entitled to them.
At Friedman Schuman Layser , our team will examine your circumstances to help you achieve peace of mind that your assets will be protected. Connect with us today to learn how we can guide you through these matters.
