Should You Decide On A Trust or a Will?

Sometimes we receive calls at the office requesting a Will with estate documents (Financial Power of Attorney, Health Care Power and Living Will also referred to as Advanced Directives). In that case a potential client might say “I don’t want anything complicated. Just the basics.” Sometimes, often after having heard a speaker either in person or on television or online, a potential client will call and emphatically state that he or she needs a Trust. What kind of trust might be hazy but he or she strongly believes only a trust will do. In either case the next question is often “How much does a Will (or a Trust) cost?”
As might be imagined there are many different types of Wills and Trusts and the answer can depend on what the caller wants to accomplish and the complexity of the facts. In one situation a person I knew from years back called to ask “If I put all my assets in a Trust does my daughter/son still have to pay Pennsylvania Inheritance Tax when I die? I answered “yes” and she quickly hung up.
It is true that some issues lend themselves to the use of trusts. However, there are states like Pennsylvania, where a trust is not generally necessary and a simple Will will often do but not always So, in the individual circumstance, how can you tell which makes sense for you? Here are some considerations.
  • Do you have a special needs beneficiary who might be denied government benefits if he or she were to inherit directly? This is a special kind of trust referred to as a Special Needs or Supplemental Needs Trust. One of the most common reasons to consider trust planning has been the concern that, without such a trust when assets are inherited directly by a special needs beneficiary that person could lose government benefits. A Supplemental Needs Trust can be established during the lifetime of the person who wants to benefit the special needs individual, often a family member, in a standalone document or in a Will. It might even be established by a special needs individual himself/herself later if he/she is competent and able. The source of the benefits – whether, for instance through SSD (Social Security Disability) or SSI (Supplemental Security Income) can make a difference in decision making. The planning is complicated and requires advice from an elder law or estate planning attorney or other professional experienced in these fields.
  • Does your estate require money management that goes beyond the abilities of anyone you might designate to serve as executor or agent under power of attorney? If you are concerned that anyone you might appoint as Executor or Trustee might not have the experience or ability to handle your assets you might establish a trust in order to place management under the care of a professional advisor or organization experienced in handling the type of assets you currently own. You could still have a family member or other person close to you involved in joint decision making, if desired.
  • Do you own real estate in other states? If you own real estate or other complicated property in other states you might want to pull all of your assets “under the same umbrella” so to speak to contribute to ease of management. You might establish provisions for your vacation property to remain with the family.
  • Do you want to establish a trust to take advantage of tax provisions? There are multiple provisions of the Internal Revenue Code that lend themselves to trusts and trust planning is frequently consulted to accomplish tax goals.
  • Do you want to establish a trust to manage your funds during your lifetime that would continue on your passing? A revocable living trust can pull together your assets during life and then pass them on at your death. Note however that assets placed in a living trust continue to use your Social Security number purposes and to be taxed as yours.
  • Consider types of trusts. Trusts may be irrevocable or revocable. They might be so-called grantor trusts or non-grantor trusts. They might be established only to provide more detailed instructions than might or might not be contained in a typical Will. Ask yourself what you want to accomplish and then meet with a professional advisor, elder law or estates attorney and/or financial advisor to decide how to accomplish those goals.

About the Author Janet Colliton

Esquire, Colliton Law Associates, P.C. Janet Colliton has practiced law for over 38 years, 37 of them in Chester County, Pennsylvania, a suburb of Philadelphia. Her practice, Colliton Law Associates, PC, is limited to elder law, Medicaid, including advice, applications and appeals, and other benefits planning including Veterans benefits, life care and special needs planning, guardianships, retirement, and estate planning and administration.

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