Trusts

Trusts are one of the most flexible and effective tools available in estate planning. They allow you to not only manage your assets during your lifetime but also streamline the process of distributing your estate after you pass away. While many people think of trust funds as a tool of the wealthy, the reality is that most people could benefit from having one in their estate plans.

A trust can help you meet some of the long-term goals you can’t accomplish with a will alone. Let our Montgomery County trust lawyers help ensure that your trust aligns with your goals while also complying with Pennsylvania law.

What Are the Benefits of Trusts?

There are different types of trusts, each serving its own purpose. However, some of the general benefits of including a trust in your estate plan include the following:

Avoiding Probate

One of the biggest advantages of many trusts is the ability to avoid probate. Assets properly transferred into a trust generally pass directly to beneficiaries without going through the probate process. This is important given how costly and time-consuming probate court can be.

Protecting Assets

Certain trusts provide protection from creditors and lawsuits. By placing assets into specific types of trusts, you can reduce the risk that property will be exposed to claims against you or your beneficiaries.

Managing Assets for Beneficiaries

Trusts can provide long-term asset management for children, individuals with disabilities, or beneficiaries who may not be prepared to handle large sums of money independently. The trust document can establish rules for how and when distributions are made.

Protecting Your Privacy

Unlike wills, which generally become part of the public record during probate, trusts often remain private. This privacy can help families avoid unnecessary public disclosure of financial information.

Planning for Incapacity

While most people use trusts to distribute their assets after death, they can also be useful for planning for potential incapacity. You can set up a trust to cover your medical expenses and other costs if you lack the capacity to manage those things yourself.

How Wills and Trusts Work Together

Many people mistakenly believe they must choose between a will and a trust. In reality, these tools often work together as part of a comprehensive estate plan. In fact, getting the most out of your trust usually requires some specific language in your will to ensure assets don’t fall through the cracks.

Many estate plans include both documents. For example, individuals with living trusts often use a “pour-over will.” This type of will directs any remaining assets into the trust at death. Wills also address issues that trusts may not cover, such as guardianship nominations for children.

Together, wills and trusts provide a level of flexibility you can’t find using one or the other. With the help of our Montgomery County trusts lawyers, you could determine which of these tools is right for your situation.

Common Types of Trusts

There are several different types of trusts, each designed to serve specific purposes. Some popular options include the following:

Revocable Living Trusts

A revocable living trust allows the creator to maintain control over the assets during their lifetime. The trust can generally be modified or revoked at any time. You can generally avoid probate with these trusts, but they don’t come with any tax-related benefits.

Irrevocable Trusts

Irrevocable trusts generally cannot be changed once they are created. Because the creator gives up control over the assets, these trusts may offer stronger asset protection and potential tax benefits for your heirs.

Special Needs Trusts

Special needs trusts help provide financial support for individuals with disabilities while preserving eligibility for government benefits such as Medicaid or Supplemental Security Income.

Charitable Trusts

Charitable trusts allow individuals to support charitable organizations while potentially receiving tax benefits. These trusts can also provide income to beneficiaries during their lifetime. The rules surrounding charitable gifts can be complicated, so it’s important to discuss these trusts with an attorney.

Why Drafting Trust Documents on Your Own Is a Mistake

Online forms and generic templates may seem convenient, but drafting trust documents without the help of a Montgomery County trusts lawyer can be a major mistake.

Trusts involve complex legal language and financial considerations, so even a small mistake can have devastating consequences in the future. You need a trust document that will withstand scrutiny in court while also ensuring your final wishes are respected.

Another common issue is the improper funding of the trust. Creating the document alone is not enough for a trust to be viable. You’ll also need to transfer assets into the trust in order for it to function properly.

Another major risk involves ambiguity. If your trust document includes vague or inconsistent language, it can lead to disputes and even litigation. Our Montgomery County trusts attorneys can help you avoid those conflicts.

Call Our Montgomery County Trust Lawyers Right Away

If you intend to include a trust in your estate plan, our attorneys are here to help. At Klenk Law, we understand how powerful these tools can be. Reach out to a Montgomery County trust attorney as soon as possible for a private consultation.

Frequently Asked Questions

Do trusts avoid probate?

One of the major benefits of most trusts is that they can be used to avoid probate court.

Are trusts only for wealthy individuals?

No. Trusts can benefit individuals with many different financial situations, especially those who want to simplify estate administration or manage assets for beneficiaries.

Can I serve as my own trustee?

Yes, in some cases, you may be able to serve as trustee of a revocable living trust during your lifetime. That’s not the case with other types of trusts.

What happens if I forget to transfer assets into the trust?

Assets not properly transferred may still go through probate and may not receive the intended trust protections.

How often should a trust be reviewed?

Trusts should be reviewed periodically and after major life changes such as marriage, divorce, births, or significant financial changes.