Everything Pennsylvania Families Need To Know About Revocable Living Trusts
Most people know what a will is, but many don’t know the advantages of a revocable living trust. Both helps parents pass on their assets on their children or heirs when they pass away. Revocable living trusts are becoming more and more popular these days because living trusts address important issues that wills do not.
For example, a living trust helps you avoid probate administration, while wills do not. Heirs can save hundreds of thousands of dollars by avoiding probate.
If you’re thinking whether a living trust is right for you, you need to consider a few factors. This article will give you the information you need to answer that important question, and whether you need to consult with an experienced estate planning attorney.
What’s a revocable living trust?
A revocable living trust is a legal document that you create when you’re alive. It expressly states who will manage your assets if you become disabled or die. As long as you’re alive and mentally fit, you can revoke, change, add, or alter any terms of the living trust. Usually, a living trust becomes irrevocable (meaning it cannot be changed or revoked) when you pass away.
A trust has a grantor (you, the person who created the trust), a trustee (the person you want to manage your assets) and beneficiaries (the persons who you want to benefit from your assets).
While you’re alive, you and your spouse will be the trustees of your living trust. You will continue to manage, add, sell, or transfer the assets freely. You retain the keys and rights to all your properties.
How is a revocable living trust different from a will?
To understand the difference between a revocable living trust and a will, you need to know the similarities. They are similar because both write down specific instructions of how you want your assets to be managed and how you want to distribute your assets when you die.
Here are the major differences. A trust also instructs how your properties should be managed when you’re mentally or physically disabled, while a will is effective only after you die. Without a trust, your family will need to go to conservatorship court to obtain the power to manage your assets while you’re disabled.
Second, putting your assets into your living trust protects your privacy and avoids probate. A will does neither. With a trust, your family can avoid the costs and prolonged process of probate administration. Also, your private information, such as your net worth and who you want to leave your assets to, are private and do not become public record because a trust helps you avoid probate.
What if I don’t have either one?
If you don’t have a will or a living trust, your assets will be managed or distributed according to the laws of your state. That means your assets might be transferred to someone you didn’t intend to receive your assets. Also, your assets might be managed by someone you wouldn’t want managing them. Particularly, your minor children may be raised by someone you didn’t choose.
If a person lives and dies in King of Prussia, Pennsylvania, their assets would be handled by the Register of Wills of Montgomery County.
What’s the biggest advantages of a living trust?
With a living trust, you’ll have the peace of mind to know that your belongings and your children will be taken care of when you die or if you become disabled. You’ll be able to neatly pass on your assets to those you love and help them avoid the expense and headache of probate.
You can also dictate how your heirs receive your assets. For example, if you believe one of your children will waste and spend all of your money within months of receiving it, you can schedule a payment plan to limit the amount of money your child can withdraw from your trust account. You can also appoint the trustee of your choice to manage and distribute the money.
Who do I appoint as my trustees?
You can choose any adult with mental capacity to be your trustee. The initial trustees will be you and your spouse, and the successor trustees are generally those you trust with your money and assets. If you don’t trust your children, friends or relatives to administer your trust, you can appoint a professional trustee, such as a private fiduciary like an attorney or CPA, a bank, or a trust company.
How much do I need to put in my trust in the beginning?
You can “fund” your trust with just a dollar. However, it is recommended that you transfer most of your bigger assets to your trust, like your home, investment accounts, and other valuables. The reason is assets you place in your trust will be managed according to the terms of your trust and will avoid probate. Assets that you leave out of your trust will not be governed by your trust, will be distributed according to state law, and will be subject to probate.
How hard is it to manage a living trust and how much does it cost to maintain it?
While you’re alive, you manage your trust as you would manage your assets without a trust. There are no maintenance fees to manage a trust. You don’t need to hire an attorney to transfer assets out or into your trust.
Can I write a will myself, or do I need a lawyer?
Do you diagnose and treat yourself when you have a serious illness? No. The same goes with estate planning. You have no knowledge about the law and you don’t know how to draft legal documents, so you need an attorney to do it for you. Estate planning is one of the most important and technical things you will do in your life. It is used to secure your future and the future of your kids. Hire an attorney to do it right.
Watch out for do-it-yourself websites that sell you trusts and other estate planning documents. Those are generic documents that do not address your individual situation. Every family has different needs when it comes to their living trusts and estate planning goals.
How much will it cost to create a living trust?
The investment depends on the complexity of your assets, financial arrangements, and family relations.
So do I need a living trust?
Not everyone needs a living trust, but most families do. Schedule your free consultation with our experienced Pennsylvania estate planning attorney Joe Frabizzio to determine which estate planning tools you need to protect yourself, your assets, and your family.
2200 Renaissance Boulevard, Suite 270
King of Prussia, Pennsylvania 19406
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