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Probates | Trusts
This material is intended to be a general
statement of Trust laws in Pennsylvania and is not a detailed guide.
Be sure to consult with an attorney if you have specific questions.
What is a Trust?
What kind of Trusts are there?
What is the main benefit of a Trust?
Can I Have a Trust for my Minor Son or Daughter?
What is a Living Trust?
Can a Living Trust Substitute for a Will?
What Is a Trust?
Generally speaking, a trust consists of ownership of property
for the use or benefit of someone else. The classic trust is
where a person puts ownership of part or all of his or her
property into the hands of someone else to be used for another
person. Without getting too technical, the "Settlor" of
the Trust is the person who owns the property originally. The "Trustee" can
be either a bank or financial institution or an individual
who uses the property or income for a third person, the "beneficiary".
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What kind of trusts are there?
An "inter vivos" trust is a trust established during
the lifetime of the Settlor. A "testamentary trust" is
a trust established in a will. There are other kinds of trusts,
but this can be a very complex and technical field of the law.
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What is the main benefit of
a Trust?
One benefit of a trust is that you can put property or
income for the trustee to use for a person who is too young,
too unsophisticated, or mentally unable to manage funds
or property on his own. A testamentary trust, for instance,
is very useful if you have young children. The Trustee
can hold the property until they turn 18 or older, or until
they have completed college.
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Can I Have a Trust for my
Minor Son or Daughter?
Sure. Most people correctly feel that someone only 18
years old cannot handle their own assets, so they set up
a trust to handle their child’s assets until the
child turns 21, 22 or even 25. However, when a child turns
18 he or she is no longer subject to Court supervision
and can live or do whatever he or she pleases.
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What is a Living Trust?
A Living Trust is a document that puts all of your assets
into a Trust, a legal entity run by an individual or individuals
who are called “Trustees.” Generally speaking,
a living trust is a lengthy document that costs thousands
of dollars to prepare. Also (generally speaking) a trust
of some sort can be a good idea at times if you have a
substantial Estate running into the millions of dollars.
A Living Trust requires that you put all, or substantially
all of your assets into the name of the trust, to be run
by the Trustees. There must be considerable follow-up on
the Living Trust since - if items are omitted from the
Trust- it may all have been a waste of money.
You should even put ownership of your dog and cat into
a Living Trust!
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Can a Living Trust Substitute for a Will?
Generally speaking, no. A Living Trust is almost certainly
not a good idea if your Estate consists (say) of a house,
some money in the bank and some retirement benefits. Also,
if you are married and all of your assets are held with
your spouse as husband and wife, there is virtually no
need for a living trust unless your estate exceeds $650,000.00.
The high expense of a Living Trust ordinarily does not
justify the time and expense to put one together even if
you are single.
Generally speaking, a Living Trust is completely inappropriate
for people of modest means.
Some lawyers aggressively market and sell Living Trusts
with the argument they provide a complete substitute for
a Will. However, the assets in a Living Trust remain subject
to Pennsylvania Inheritance Tax and (often) Federal Estate
Tax as well (if your Estate is over $650,000.00).
A Living Trust can avoid probate, but sometimes probate
is preferable to no probate at all in that there can be
a judicial determination or ruling that the Estate is concluded.
In fact, most (if not all) attorneys who market Living
Trusts also recommend that you have a will anyway!
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For more detailed answers on these
or any other legal matters,
please feel free to contact me at my office.
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