Property and asset holders in Pennsylvania who do not yet have an estate plan may be wondering if they should put their assets into a trust fund or a will. A will must go through probate court before the assets listed therein can be distributed, and the probate process can take months or even years to complete. In probate court, a judge will preside over the transfer of a decedent’s estate, which could include the appointment of a guardian. If a guardian is not designated in a will, the judge will have to decide who to name as a guardian.
Another drawback of wills is that they can be contested through probate litigation. Even without litigation, the probate process can cost as much as 2 to 4% in attorneys’ fees and court costs. The flip side of having a will is that it is easier to set and forget than trust funds, most of which must be actively managed. For instance, the trustee who manages a trust has to file annual tax returns on behalf of the trust.
There are different types of trusts that someone can create, each of which can offer different benefits. Living trusts, which can be either revocable or irrevocable, avoid going through probate. A living revocable trust can be amended or changed during the trustor’s life; an irrevocable one cannot. Assets in a trust fund may earn interest before the assets are distributed, and the interest can be used for the benefit of someone other than the beneficiaries.
Someone who is just starting to think about estate planning may want to consult with an estate planning attorney. Having a discussion with a professional about the type of assets a person has and how that person wants them distributed may help determine what type of estate plan to create.