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Combining a trust and a will

On Behalf of | Jun 22, 2018 | Estate Administration And Planning |

Pennsylvania residents who wish to protect their wealth, ideals and investments for posterity face known and unknown challenges from various parties. Estate planning is often the answer to this problem. However, many individuals do not have adequate documents established to have a reasonable chance of carrying out their wishes should they become unable to do so themselves.

For most estates, whether they are simple or complicated, combining a number of different estate strategies during the planning process usually saves money. While trust formation, will drafting and account administration all require an investment of time and money, most individuals find that it preferable to intestacy.

As explained by FindLaw, trusts allow the transfer of assets to a special type of account. This usually involves adding certain restrictions on access to funds in return for special privileges. People often use trusts in estate planning: they are a way of making an active decision about where money goes in various situations, including an individual’s death.

The Pennsylvania Department of Revenue site on inheritance taxes is a quick illustration of how inheritance taxes might take a sizeable portion of an estate. Wills do provide a clear statement of intent for an estate, but they also tend to require lengthy probate assessment along with the associated fees and taxes. As a point of interest, the inheritance tax also applies to funds transferred by operation of law or during intestate succession. 

Combining wills and taxes in a comprehensive estate plan is often just the beginning of establishing a smooth inheritance. However, these two types of important documents often form the foundation of an effective strategy.