Setting up a living trust is one way to make sure your children or your other intended heirs receive their inheritance. However, some Pennsylvania residents still opt for a traditional last will and testament. If you find yourself debating this choice, TheStreet explains four key differences between trusts and wills. Seeing how wills and trusts can meet your particular needs can help you make an informed choice.
People who are concerned about avoiding probate might feel more comfortable with a living trust. In many cases, a will still has to proceed through the probate process before beneficiaries can receive assets from the estate. Conversely, a living trust does not go through probate, although if creditors claim portions of the estate, a trust might still find its way into court.
Living trusts also provide a shield of privacy. A will, once filed with a probate court, becomes public record. This is not the case with a living trust. The beneficiaries of the trust are permitted to know what the trust contains, but otherwise, the contents of a living trust are kept confidential from the eyes of the general public.
Perhaps the greatest difference between trusts and wills is that a trust can go into effect while the testor is still alive. It is up to the testor to decide when a trust may dispense assets. Some people opt for a trust to pay out after they die. Others, however, may want to witness their heirs receive their inheritance. Wills, on the other hand, only take effect upon the death of the testor.
The probate process that wills go through can also rack up court costs. Since living trusts do not go through probate, costs and fees associated with going through a court are avoided. However, sometimes living trusts may cost a person more time and effort than is needed, as FindLaw points out. People that are not affluent or do not own a business or are married and jointly own assets generally find living trusts to be unnecessary. Also, a living trust requires more attention than does a will, so people who do not have the time may prefer to compose a will instead.