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How should you structure asset distribution in your estate plan?

Creating an estate plan involves dictating where specific assets will go when you die. This can be done through wills and trusts, which are parts of most comprehensive estate plans.

Determining what to distribute via wills and what should be handled through trusts can be rather complex. Considering these basic guidelines may make the process easier.

Assets to pass down via a will

In Pennsylvania, your personal possessions, real estate solely owned by you and any interests in partnerships or sole proprietorships are typically distributed through a will. This includes items like jewelry, family heirlooms, personal collections and individually owned vehicles and homes.

Assets to place in trusts

Trusts are a strategic component of estate planning used to manage how certain assets are distributed. These offer benefits like avoiding probate, reducing estate taxes and providing for minors or dependents with special needs. Assets ideal for placement in trusts include:

  • High-value assets: Real estate, stocks and other significant investments can be managed through a trust to avoid probate and potentially minimize estate taxes.
  • Business interests: A trust can ensure a smooth transition of business ownership or provide for ongoing management.
  • Assets intended for minors: A trust can stipulate age or conditions under which minor beneficiaries can access their inheritance, ensuring their financial well-being until they are mature enough to manage the assets themselves.

It’s critical to ensure that each asset is only named once in the estate plan. Having the same asset in multiple places sets up the potential for issues in the future if the information in every place doesn’t match exactly.

Totten trusts

A Totten trust, also known as a payable-on-death (POD) account, is a simple and effective way to pass down assets outside of the will and avoid probate. Upon your death, the designated beneficiary can claim the account’s funds directly from the bank without going through probate, simply by presenting your death certificate and identification.

Estate planning can become rather complex, especially if you have a high-value estate or own a business. Working with a legal representative who can assist you with determining what structural elements to use in your estate plan may help to ensure that your approach is both effective and enforceable.


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