Difference between a Will and a Trust
Wills and trusts are a vital part of estate planning. Although both can be used in planning an estate, they serve different purposes and may be challenging to understand. Seeking the counsel of experienced wills and trusts attorneys can help you and your family rest easy knowing that things will be taken care of in the event of your death.
A last will and testament is a legal document that outlines your wishes as to how your assets will be distributed upon your death. Many wills include the following basic elements:
- How your assets and property are to be distributed.
- Details regarding your possessions.
- Naming of beneficiaries—the people you want to benefit from your assets.
- Naming of an executor—the person who will manage the distribution of your assets.
- Appointing a guardian for your children.
After a person dies, a will often goes through probate, the process by which the court transfers property from the deceased’s estate to his or her beneficiaries. The probate court supervises the process to ensure that property is distributed in accordance with the terms and conditions of the will. If you die without a will, probate court will appoint an administrator, determine your beneficiaries and distribute your estate according to Pennsylvania law.
The court will also name a guardian if you have minor children. If you are in Pennsylvania, you can consult with Carosella & Associates to ensure that your wishes are carried out and help your family avoid the stress of having the courts make these critical decisions.
A trust is a legal document in which one person or qualified entity, the trustee, holds property for the benefit of another, the beneficiary. The property in the trust can be any kind of real or personal property, including money, real estate, stocks, and other personal possessions.
Living trusts are often used in place of a will to avoid probate. Most are revocable, which means that you can terminate the trust or add and remove assets whenever you want. An irrevocable trust cannot be changed or dissolved once it has been set up, and are often used for life insurance planning and setting aside education funds for children. An irrevocable living trust provides your estate with tax advantages and protects it from creditors. Both types of living trusts will allow your beneficiaries to avoid probate.
A testamentary trust is connected to your will and activated after your death. However, it will not allow your beneficiaries to avoid probate. Once the assets you have held for the trust go through probate, they are placed in the trust for your beneficiaries. While you are alive you can revoke or amend any testamentary trust included in your will.
Many parents use testamentary trusts to help provide for their children, especially if they do not want the gifts left to the children to be given as a lump sum. People with sizable estates often use testamentary trusts to minimize estate taxes and help protect property from creditor claims.
Our experienced lawyers in Delaware County and West Chester can help you design an estate plan that is right for you and your family.