What Is the Difference Between a Will and a Trust?
While both wills and trusts are estate planning tools, they play very different roles in the process. Your will directs how assets that are not held in trust or that are not beneficiary-based will pass to your heirs when the time comes. A trust, on the other hand, holds assets, which means they bypass the probate process and, therefore, flow more directly to your loved ones in accordance with the terms established by the trust. Having solid estate plans in place can afford you the peace of mind you’re looking for, and our experienced Pennsylvania estate planning attorneys at Schaffranek & Foster are standing by to help.
Your Will Must Go through the Probate Process
A primary distinction between wills and trusts is that your will must go through the probate process within a specific timeline, and this includes all the following:
- Filing the will
- Appointing a personal representative
- Notifying heirs and creditors
- Inventorying and appraising the assets included
- Paying all pending debts and final taxes
- Distributing the remaining assets to the named beneficiaries
- Closing the estate
A fully funded trust, however, avoids the probate process, which expedites the transfer of assets. Turn to a seasoned estate planning attorney for the help you need.
The Matter of Minor Guardianship
Only your will can address the matter of guardianship of your minor children in the event they lose both parents prior to reaching adulthood. In your will, you can name the person or couple whom you’ve chosen to serve in this key role, and you can also set specific conditions that apply to your children’s inheritance.
The Matter of Privacy
Ultimately, your last will and testament will become a matter of public record, which means it won’t afford you any privacy. In contrast, a trust is private, which many people consider advantageous.
The Cost
It generally costs more up-front to set up a solid trust that functions the way you want it to than it does to draft a standard will. Even with a trust in place, however, you’re advised to have what’s known as a pour-over will. Its purpose is to address any assets that may have slipped through the cracks or that you didn’t have the opportunity to include prior to your death.
An Irrevocable Trust Can Limit the Tax Burden
Pennsylvania has an inheritance tax, and it applies to every transfer of property upon death. This includes transfer via will or revocable trust, which is a trust you have the authority to change at any time.
An irrevocable trust, when properly structured and funded more than one year before death, can remove assets from your estate and help minimize inheritance tax owed. To qualify for this treatment, you generally must give up any retained right to income, control, or benefit from the trust assets. An irrevocable trust created shortly before death, or one where the grantor retains any of these interests, may still be fully subject to Pennsylvania inheritance tax.
It’s important to note that you give up the right to make changes to an irrevocable trust.
Our Experienced Pennsylvania Estate Planning Lawyers Are Here to Help
Our trusted Pennsylvania estate planning attorneys at Schaffranek & Foster have the experience and legal insight to help you establish estate plans that bolster your peace of mind, and we welcome the opportunity to do so. Learn more by contacting us online or giving our firm a call at 412-643-3848 today.