Planning for the future includes making important decisions about your assets and how you want them distributed after you’re gone. In Pennsylvania, you have two primary tools at your disposal: Wills and Revocable Living Trusts. (RLT) But which one is right for you? This blog post will explore the key differences between Wills and RLT’s to help you navigate this essential aspect of estate planning.
The Power of the Will: Simplicity and Distribution
A Will is a fundamental legal document that outlines your wishes for your assets after you pass away. It allows you to designate beneficiaries who will inherit your property, appoint a guardian for minor children, and name an executor to oversee the distribution of your estate. Wills are generally less expensive and easier to set up compared to RLT’s.
However, there are limitations to consider. Wills go through probate, a court process that can be time-consuming, public and expensive. During probate, the validity of the Will is verified, and assets are distributed according to your instructions. This process takes at least a year, and it can delay your beneficiaries from receiving their inheritance. Additionally, a Will has no control over assets held jointly with another person, or assets with beneficiary designations (like retirement accounts).
Revocable Living Trusts: Avoiding Probate and Maintaining Control
A Living Trust is a legal arrangement where you transfer ownership of assets to a trustee (often yourself initially) to manage them for your benefit during your lifetime and then distribute them according to your wishes after you pass away. The key advantage of a living trust is that it allows you to avoid probate for assets held within the trust. This can save your beneficiaries time and money, and it keeps the distribution process private.
Living trusts also offer the benefit of continuity. If you become incapacitated, the designated successor trustee can seamlessly manage the assets in the trust for your benefit. This can be especially helpful if you have concerns about future health issues. However, it’s important to remember that assets titled in the trust’s name need to be properly funded for the trust to avoid probate.
Also, the administration of a RLT is less time consuming and about half as expensive as a probate proceeding.
So, Will or Living Trust? Consider These Factors
Choosing between a will and a living trust depends on your specific situation. Here are some key factors to consider:
- Size and Complexity of Your Estate: For smaller estates with straightforward assets, a will may be sufficient. For larger or more complex estates, a living trust can offer greater control and efficiency.
- Probate Avoidance: If avoiding probate is a priority, a living trust is the better option.
- Incapacity Planning: If you’re concerned about the possibility of future incapacity, a living trust can ensure a smooth transition in managing your assets.
- Cost: Wills are generally less expensive to create and maintain than living trusts but, as above, the administration of a Trust is much less expensive.
- Location of assets: if you own property in more than one state, you are facing a probate proceeding in each state. With a RLT, you have one proceeding, rather than several, which is a big time money saver!
We Recommend Consulting an Elder Law Attorney
The decision between a Will and a RLT is not a one-size-fits-all situation. An experienced elder law attorney can assess your individual needs and circumstances and recommend the most appropriate estate planning strategy for you. They can also help you draft a Will, create a Living Trust, or even recommend a combination of both to ensure your wishes are carried out effectively.
Contact our office today to schedule a consultation and discuss your estate planning options. www.pecorielderlaw.com
