An estate plan is a collection of legal tools, such as wills and trusts, that can determine what will happen to your assets and your family members, both now and in the event of your death and/or incapacitation. Your estate plan needs to have at the minimum a will and trust included, in order to clarify your wishes and avoid probate court, but there are many types of wills and trusts to choose from! Understanding how these different types of estate planning instruments work and the benefits that each offers can help you and your family assemble an estate plan that meets your unique needs and that provides maximum protection for your future. Here are some of the most popular will and trust types, and what you need to know about each!
Last Wills And Testaments
A last will and testament is also known commonly simply as a “will,” and it is a legal document in writing that sets forth a decedent’s intentions regarding how they want their property distributed upon their death. Every estate plan under Pennsylvania law should have a will as one of its components.
Having a valid will executed in Pennsylvania provides the testator (creator) with confidence that their intent regarding their property is honored upon their death. You may want specific assets distributed in a particular manner. Specific bequests can also be included in your last will and testament. A will executed under the laws of Pennsylvania can be altered as many times as you want. Sometimes, you can create a codicil, which is an amendment to an existing last will and testament that explains, modifies, or revokes a will or a part of a will.
Dying without a valid will and testament means that Pennsylvania’s laws of intestate succession will determine how your assets are distributed upon your death. The laws of intestacy may be contrary to your intent; for example, Pennsylvania may appoint a guardian for your minor children based on the closest living relative if you die without a valid will and testament, and it may not be who you would have chosen. However, with a properly executed will, you can name the individual who will be the guardian of your minor children and ensure your wishes will be honored.
It’s important to note that last wills and testaments do not prevent the probate administration process from occurring, and only go into effect at the time of your death.
Living wills in Pennsylvania permit you to make decisions regarding your medical care and medical treatment in the event that you become incapacitated and can’t make those decisions for yourself. By having a living will, you already have a predetermined set of instructions regarding what decisions should be made for you – for example, if you want to be on a ventilator, and for how long, etc.. Family members do not have to take on the responsibility of making medical decisions for you that may be contrary to the intent you had before they lost mental capacity, and they won’t have to fight over what you would have wanted!
Joint wills are signed by two individuals. Typically signed by spouses, a joint will allows a surviving spouse to take the assets listed in the will provisions. Joint wills typically state that the surviving spouse will receive the couple’s property. Also, joint wills may contain provisions specifying that the remaining property will pass to the couple’s offspring. It is difficult to amend the terms of a joint will after one party’s death, and joint wills will likely have to go through probate.
Pour-over wills are only used in estate plans featuring a trust. A pour-over will ensures that all property in your will be transferred to your trust upon your death. The property in the will is “poured over” from your will into the trust. The property is then distributed to the beneficiaries named in the trust. Pour-over wills are often appropriate for single individuals or married couples. Creators can avoid probate and keep their assets private by using a pour-over will with a revocable or irrevocable trust.
Revocable Living Trusts
One frequently used estate planning instrument in Pennsylvania is the revocable living trust. A revocable living trust is drafted and executed during your lifetime. The revocable living trust keeps assets outside your name, but that are still accessible to you. Trusts are created by a grantor (you) for the benefit of named beneficiaries. The trustee is the party who oversees the trust (this can also be you, as long as you designate a backup or someone to take over the duties of managing the trust after your death). The trust assets can pass directly to the beneficiaries upon the grantor’s death, which avoids probate. You can alter the terms of this type of trust at any point during your lifetime!
An irrevocable trust is drafted and executed while you are living, but it cannot be terminated, revoked, amended, or altered, unlike a revocable living trust. An irrevocable trust helps grantors transfer wealth, protect assets, and reduce their overall tax burden; it provides more protection than a revocable trust.
Special Needs Trusts
A special needs trust features language and mechanisms intended to protect assets for disabled beneficiaries. You may want to leave assets to an individual, such as a child, who is developmentally or physically disabled or otherwise incapacitated. Many people who have children who suffer from an emotional or mental disorder create special needs trusts. Parents do not want to leave their disabled children with no financial resources, because these children are incapable of gaining financial independence; it’s important that you be able to ensure a good future for them if anything were to happen to you, and a special needs trust allows you to do that in the most secure way possible.
Charitable trusts provide tax benefits; they are trusts where the assets are designed to be disbursed to designated charities over a specific period of time. Once the period of time is complete, the remaining charitable trust assets pass to the beneficiaries with substantial taxation benefits. Many different types of legal entities, as well as individuals, can benefit from using charitable trusts.
Let Daly Law Offices Help You Get The Right Personalized Will And Trust Strategy In Place
Even after reading a brief summary of what each type of will and trust does, it can be hard to know which ones you need in your estate plan, which is where having an attorney’s help comes in! An estate planning attorney can answer all of your questions and explain your options as they pertain to your specific needs and goals. At Daly Law Offices, we have 14 years of experience guiding Pennsylvania residents through this process and ensuring that they have peace of mind for the future. No one is guaranteed tomorrow – don’t wait to get started! Call us today to book a free consultation and learn more about how we can serve you!