Protect Your Family’s Future: The Truth About Wills & Trusts
Statistics show that a majority of Americans die without a Will or some other safeguard of estate planning in place. If a loved one dies without an estate plan, the surviving family members may face unnecessary headaches and hardship at a difficult time.
No matter how large or small your estate and assets are, you need to have a plan … one that protects and provides for your loved ones. You should explore every option and cosider the type of estate planning that is right for you. Although a Will should be considered a necessity and is a good start, in some cases you may want to consider such things as a trust. This brochure provides information about Wills, trusts and living wills.
As always, you can – and should – make your best choices about estate planning by consulting with us. You should ask us if documents such as a Will, a Durable Power of Attorney and an Advance Health Care Directive (Living Will) fit into your individual estate plan.
Why do I need a Will? A Will is a legal document that helps you put your affairs in order when you die. Every adult should have a Will to outline his or her intentions regarding home, finances and other assets and possessions upon death. Your Will should identify who will handle your estate, how your assets will be divided and who will server as guardian for your minor children. If you die without a Will, your money and possessions will be distributed according to a formula fixed by law, which means that your spouse may have to share assets with other family members not of your choosing. It also could create lengthy delays in the final distribution of assets.
Additionally, dying without a Will could result in your minor children being placed in the care of a court-appointed guardian rather than with people you would have chosen to care for them.
What if I change my mind about the contents of my Will? In Pennsylvania, a Will is not filed (or probated) until after a person dies. As a result, you can change or update your Will at any time throughout your life, as circumstances require.
Is it expensive to have a Will prepared? There is no set price attached to the preparation of a Will. The fee to prepare a Will that addresses your specific needs will depend upon the complexity of your situation and intentions. We offer a free initial consultation through which we are able to review your needs and then estimate the cost of your Will.
What is a trust? A trust is a legal entity to which your assets (bank accounts, securities, house etc.) can be transferred and managed by a Trustee. Trusts can be created while you are living to manage your assets while you are alive or to help your heirs manage their inheritance after your death. There are a number of types of trusts, each with its own set of benefits. As such, trusts can be complicated, so it is important that you contact us to make sure that you understand all of the issues about trusts.
One form of trust that has been aggressively marketed by some financial planners and lawyers is a “living trust”. Be aware that although a “living trust” could be right for you, you should review any trust with a lawyer experienced in estate planning before making a commitment. Trusts can ensure flexibility in your asset management and may have tax benefits, but you should be sure that you really need one and it fits your needs.
Common Myths about Living Trusts
If I have a living trust…
- I don’t need a Will. False. Even if a living trust is right for you, you still should have a Will. If some of your property is left out of the trust, or if any portion of the trust is invalid, a Will can ensure your assets are transferred consistent with your wishes.
- My estate won’t pay attorney’s fees. False. Because transferring assets under a living trust will require accumulating assets and distributing them (and since taxes may be due), it is usually necessary to hire a lawyer to help administer the living trust after death. In addition, there are legal fees associated with preparing the trust document.
- The assets will not be considered mine if I need to go to a nursing home. False. Because living trusts usually are revocable (meaning you can alter them during your lifetime), they will be considered your assets if you apply for nursing home benefits.
- My estate won’t pay inheritance or estate taxes since my estate won’t need to “go through probate.” False. Generally speaking, any transfer of assets as a result of death will result in inheritance and possibly estate taxes being due. Thus, in most cases, property passing by a living trust will be subject to tax. Certain trusts, referred to as irrevocable trusts, may have tax advantages that other trusts can’t provide.
- My assets automatically will be part of it and my Will won’t have to be probated. False. Only property that you specifically list as part of the trust will be part of it. If you own property individually and do not include it in the trust, your Will still must be probated.
Why Shouldn’t You Prepare Your Own Estate Plan?
Estate planning involves judgment and skills acquired only through professional training and experience. Standardized Wills and trusts, such as those produced using kits or computer software programs, may not be drafted to comply with Pennsylvania laws. A Will or trust that is not properly drafted could result in your estate being distributed in a manner contrary to your wishes. Your family also may incur unnecessary legal costs should the Will or trust be challenged.
Remember… The only way to be certain that your specific needs and desires in estate planning are being met is by consulting a knowledgeable lawyer or a lawyer referred to you by a trusted source. High-pressure sales by mail or in person and do-it-yourself kits should be viewed with skepticism.