Estate Planning Lawyer
There are two primary options for anyone planning his or her estate: wills and trusts. Wills are the more traditional option, but they do not appeal to everyone. This guide will explain the benefits of a trust, and why you may want to
How a Trust Works
If you set up a trust for your estate, you will essentially transfer your estate to a trustee. Then, you set conditions for when the trust will be transferred to whomever you designate. For estate planning, the condition for this happening is usually your death. Trusts can be set up for any number of different reasons, with different conditions set to trigger the transfer.
Benefits of a Trust
There are many different benefits that trusts have over wills:
- Trusts are simpler to set up and execute. Wills require an executor and the courts may get involved with their execution.
- Trusts avoid probate. Wills often enter a period called probate, which is like a short waiting period. Probate is only very long in unusual cases, but some people do not like the idea of loved ones waiting at all.
- Trusts avoid estate taxes. While wills are subject to estate taxes, the amount that is taxed is usually not very high. In some cases, however, the taxes can be quite large, which makes trusts a more appealing option.
- Trusts allow conditions to be set. You could, for instance, designate that your granddaughter receives your car if she has graduated or is still in college. There is basically no limit to how many and what kinds of conditions you can set.
There are two major downsides to trusts. First, trusts tend to be more expensive. Unless you are expecting to have very high estate taxes, the trustee fee will likely outweigh the cost of setting up a will. Second, you cannot access your estate after putting it in a trust. However, there is a special kind of trust that combats this second downside called a revocable trust.
Revocable trusts allow the person who set it up to access whatever was put in the trust. Revocable trusts are distinct from irrevocable trusts, which are the opposite. In irrevocable trusts, no one may access the contents of the trust until the conditions that were initially set are met. This makes the contents more secure and immune from debtors in most cases. If you are considering setting up a trust for your estate, you should speak with an estate planning lawyer in Allentown, PA.
Thanks to Klenk Law for their insight into estate planning and the advantages of trusts.
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