Many people plan their estates by creating a document called a Last Will and Testament. A Will is essentially a legal document that lays out how you want your assets distributed at death.  A Will doesn't control the distribution of all your assets.  Some assets, such as Real Estate held by Joint Tenancy and life insurance proceeds both pass outside your Will.  Wills don't take effect until you die so they are no help with lifetime planning. Probated Wills are public documents and may be examined by anyone who wants to read it.  Some argue that a Will is a poor estate planning device, but its simple nature and ease of modification, if coupled with Probate planning make it by far the preferred method of most individuals. 

Many professionals recommend a revocable Living Trust.

A revocable Living Trust is a complete will substitute.  It can control all of your assets both during your life and after your death.  When you set up a Living Trust, you transfer the title of all your major assets (stocks, bonds, real estate, etc.) from your name to the name of the trust. You then name yourself as the trustee and beneficiary. That gives you and you alone, total and complete control of all your assets. You can buy, sell, trade, and do whatever you want, just like you do now.

The difference and the real benefit of a Living Trust comes when you die.  Then, there are no assets left in your name and no need for probate.  But, whomever you name as your successor trustee will immediately gain control of your assets to distribute them according to your exact instructions.  

But, a Living Trust does not avoid estate or inheritance taxes issues.  And, there can be expected to be costs associated with transferring assets and administration of the Trust until it is fully distributed. 

The biggest plus I find of using a Living Trust is to avoid what I call the “Lotto effect”.  Which is the name I give to the unreasonably high fees charged by many estate attorneys.  This mainly occurs because people don’t know they are free to shop around for better prices.  Getting a fair price for services can be accomplished two ways.

1.      Call several attorneys and request a quote for their service and how they will bill the estate for services.

2.      Enter into a preplanned agreement for services.  That way, you know what the typical charges will be, for the services that will be performed.  And, you’ll know what the hourly rate will be for more complex matters or claim disputes.

What happens if you do nothing?

Unbelievably, some experts estimate that up to 70% of all Americans have no written estate plan.  In the event you do not have a Will or a Living Trust, then state law will dictate how your estate will be distributed.  This is the worst method of passing your estate because, under the Pennsylvania Intestacy laws, you may pass assets to heirs you do not want to receive assets from your estate or at levels you would not chosen. Further, now it is likely that the costs associated with Probating and Administering your estate will be larger, due to more complex situations and more professional service hours.