It is important to recognize the differences between wills and trusts in Pennsylvania. Keep in mind that both are important components in any comprehensive estate plan. Reach out to our skilled PA wills, trusts & estates attorneys.
What is a trust?
Trusts can be useful in many circumstances. The purpose of a trust is to control distributions to beneficiaries. They can also be used for tax planning or probate purposes. The terms of the trust will depend on the intent for which it is being formed.
What are the different types of trusts?
There are two different categories that trusts fall into. The first is referred to as an inter vivos trust. An inter vivos trust is a trust that, when constructed, is fully functional. This type of trust is typically financed throughout the donor’s lifetime. The second category of trust is testamentary trust. This category of trust is usually appointed after the donor’s death and is generally in agreement with the decedent’s will. The two most common types of trusts include the following:
- Irrevocable trusts: An irrevocable trust is a trust that is constructed during the life of a donor and cannot be modified or amended. Any assets in the trust can only be allocated by the trustee as indicated by the terms of the trust instrument. Irrevocable trusts are typically used for federal estate tax planning and/or Medicaid planning.
- Revocable trusts: Generally known as inter vivos or living trust, a revocable trust is created during a donor’s lifetime and can be amended or revoked at the donor’s discretion. A revocable trust can be an appealing option to a donor because he or she can enjoy the benefits of the trust arrangement while still retaining control over the assets in the trust.
What is a will?
Drafting and executing a valid Will is arguably one of the most important steps in the estate planning process. A Will is drafted by a testator, usually with the help of an attorney. A testator names an executor of the estate within the Will. The executor’s role is to administer the estate upon the testator’s death. The Will can outline how the testator wishes to have his or her estate distributed and to which beneficiaries the assets will go upon the testator’s death. A will allows an individual to determine the distribution of their assets to loved ones upon passing. This can eliminate or reduce uncertainty upon your death.
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