What is the Difference Between a Will and a Trust in Pennsylvania?Sponsored Answer
Everybody needs a will. A will is a legal document that determines what happens to your property and possessions when you die. It allows you to leave your home to your granddaughter, your bank accounts to your son, and your car to your favorite charity. It also allows you to make arrangements for the care of any dependent children. If you don’t have a will, the state will determine what happens to your children, your money and your other assets.
A trust is a legal arrangement that allows a third party (the trustee) to hold assets for another (the beneficiary). Trusts are generally used to control and protect assets, reduce taxes, and avoid probate. There are several types of trusts and they serve different purposes.
Marital Trust (A Trust): A marital trust is used to transfer assets to a surviving spouse.
Bypass Trust (B Trust or credit shelter trust): A bypass trust is also used to pass assets to the surviving spouse. It allows the survivor to use both spouses’ tax exemptions so there is more money to pass on after the second spouse dies. There may be limitations on how the surviving spouse uses the money.
Spendthrift Trust: You want to leave your money to your child, but he’s been unemployed and is having trouble paying his bills. A spendthrift trust can protect your assets from most of his creditors.
“Third Party” Special Needs Trust: Special needs trusts are created to help provide for the needs and care of a beneficiary who suffers a disability, such as a disabled adult child. If your child is incapacitated, you may appoint a guardian to handle the trust.
Revocable living trust: This type of trust can be revoked at any time by the person who created the trust. This means that the money that you put in a trust for your granddaughter can be given to her sister if she elopes with her unemployed boyfriend.
Irrevocable trusts: The terms of an irrevocable trust cannot be changed.
There are many other types of trusts. A Philadelphia family law attorney will be able to advise you on how to best protect your assets now and after your death. To discuss your estate planning needs, please contact Petrelli Previtera, LLC at 215-523-6900.
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