Wills Vs. Trusts Which One Is Right for You
Oct. 24, 2024
Don't put off estate planning because you think it is only for the wealthy or elderly. Estate planning is important for individuals of all ages and income levels. It is important to establish a plan for the distribution of assets after passing, make decisions about medical care, and appoint guardians for minor children.
At Richard L. Vanderslice, P.C., we know how complicated estate planning can be and are here to guide you through the process. Based in Philadelphia, Pennsylvania, our firm serves Philadelphia County, Montgomery County, and Delaware County. We have helped countless individuals and families make informed decisions about their estate. If you need help deciding whether a will or a trust is the right choice for you, give us a call today.
The Basics of Wills and Trusts
Before you make this momentous decision, you should understand the differences between wills and trusts.
A will is a legal document that specifies how your assets will be distributed after death. If you have minor children, you can appoint guardians for them and spell out your wishes.
A trust, on the other hand, is a fiduciary arrangement that allows a third party, or trustee, to hold assets on behalf of beneficiaries. Trusts can be established during a person's lifetime and help manage assets before and after passing.
Wills and trusts serve different purposes and offer unique benefits. Many people prefer wills because they are generally easier and less expensive to set up. Trusts, however, can provide more control over assets and may offer tax advantages.
Wills Vs. Trusts
Here are five key differences between wills and trusts:
Probate: Wills must go through probate, a lengthy and costly legal process to authenticate the will and distribute assets. Trusts, particularly revocable living trusts, typically bypass probate, allowing for quicker distribution to beneficiaries.
Privacy: Wills are public documents once they enter probate, meaning anyone can access the details. On the other hand, trusts are private, and their contents remain confidential.
Control: Trusts can offer more control over the timing and conditions of asset distribution. For example, you can stipulate that beneficiaries only receive funds at a certain age or upon meeting specific conditions.
Cost and complexity: Establishing a trust can be more complex and costly than drafting a will. Trusts often require the ongoing administration of appointing and managing trustees.
Flexibility: While trusts often allow for more detailed financial planning, wills are generally easier to update for changes in your life or asset portfolio. They typically require only a codicil rather than a complete reformation.
Advantages of Wills
Wills are a fundamental part of estate planning and offer several advantages.
Simplicity: A will is typically straightforward and requires fewer legal formalities than trust, making it an attractive option for many.
Affordability: Drafting a will is often less costly than establishing a trust, making it more accessible for people with smaller estates or limited resources.
Guardianship designation: A will allows you to designate guardians for your minor children.
Advantages of Trusts
Trusts offer distinct advantages that make them an appealing option for some individuals.
Avoiding probate: A trust enables beneficiaries to avoid the time-consuming and costly probate process, facilitating a smoother and quicker transfer of assets.
Estate tax benefits: Trusts can be structured to minimize estate taxes, thereby preserving more of your wealth for your beneficiaries by reducing the taxable estate.
Asset protection: Trusts can protect your assets from creditors and legal challenges, preserving your assets for your beneficiaries according to the terms you have established.
Pennsylvania Laws on Wills and Trusts
Pennsylvania has several laws governing the creation and execution of wills and trusts. You must be at least 18 years old and of sound mind to create a valid will. The will must be in writing, signed by you or someone at your direction and in your presence, and witnessed by two individuals if you cannot sign it yourself.
Pennsylvania law provides flexibility in terms of the creation and administration of trusts. Trusts can be revocable or irrevocable and may include provisions for asset management during your lifetime.
Determining Which Option is Right for You
Choosing between a will and a trust depends on your unique circumstances and goals. If you value simplicity and have a relatively straightforward estate, a will may be the right choice for you. However, a trust may be more appropriate if you’re concerned about privacy, wish to avoid probate, or have specific distribution instructions.
When making your decision, consider factors such as the size of your estate, family dynamics, and any special needs of beneficiaries.
When to Update Your Estate Plan
Estate plans should be revisited and updated regularly to reflect changes in your life and circumstances. Major life events, such as marriage, divorce, the birth of a child, or the acquisition of significant assets, may require a review of your estate plan.
It is also important to stay informed about changes in estate planning laws that may impact the effectiveness of your plan. Regularly reviewing your will or trust ensures that your wishes are always accurately represented and your loved ones are protected.
Common Misconceptions About Wills and Trusts
Several misconceptions about wills and trusts can lead to confusion in the estate planning process. One common misconception is that trusts are only for the wealthy. In reality, trusts can benefit individuals with varying levels of wealth by providing control and flexibility over asset distribution.
Another misconception is that wills and trusts are mutually exclusive. In fact, many estate plans incorporate both tools to fulfill their client's wishes and requirements.
Richard L. Vanderslice, P.C. Serving Philadelphia, Pennsylvania
Our estate planning attorney at Richard L. Vanderslice, P.C. provides experienced legal advice and practical strategies that fit your needs. Whether you choose to create a will, a trust, or both, we are ready to help. Contact us today to see how we can assist with your situation. We serve clients in Philadelphia County, Montgomery County, and Delaware County.