What is a Revocable Trust?

A revocable trust is worth considering as part of your estate plan. In case you've never thought about estate planning, it's crucial to securing your financial future. Estate plans offer several benefits:

  • Protects your assets
  • Ensures fulfillment of your wishes
  • Minimizes estate taxes
  • Eliminates probate court

A comprehensive estate plan includes a power of attorney, will, and advanced healthcare directive. Another powerful tool in estate planning is the revocable trust, a living or inter vivos trust.

It allows you to manage your assets during your lifetime. It also allows you to distribute them upon your death. And, as the name implies, the key feature of the trust is that you can change it, making it a valuable estate planning tool.

Revocable Trusts vs. Irrevocable Trusts

Although you can change a revocable living trust, that's not the case with an irrevocable trust, at least not without more effort. It requires the consent of the beneficiaries.

Otherwise, you can petition the court to modify the trust under a theory such as "changed circumstances." For example, you may seek to change the trust owing to a tax law change.

The other key difference between the two is control. With a revocable living trust, you retain control and ownership of the assets. You can also pass control to a successor trustee.

With an irrevocable living trust, on the other hand, you transfer ownership to the trust. That offers some advantages:

  • reducing estate taxes
  • gift tax exemptions through a gifting trust
  • ensuring that children on government benefits don't lose them through a special needs trust
  • shielding from creditors

Here's a comparison of irrevocable vs. revocable trusts:

Revocable Trust Irrevocable Trust
Protection of Assets You are liable for claims against the assets. Because the property doesn't belong to you, assets are protected from creditors or claimants.
Ownership You retain ownership of the property. The trust owns the property.
Trustee Appointment You serve as the trustee. You select the trustee.
Estate Taxes You remain liable to pay taxes. You are no longer responsible for estate taxes.

Benefits of a Revocable Living Trust

An estate attorney can help you decide which type of trust suits your circumstances. Revocable trusts offer several benefits in estate planning.

  • Avoidance of Probate: Assets in the trust bypass the often costly and time-consuming probate process. The assets also typically take precedence over those in your will.
  • Privacy and Confidentiality: Revocable trusts are not subject to public records, offering greater privacy for your estate.
  • Flexibility: Grantors can amend or revoke the trust as circumstances change.
  • Planning for Incapacity: It can outline plans for your care in case of incapacity.
  • Tax Benefits: While revocable trusts don't provide significant tax benefits, they can be part of a broader tax strategy. For example, you can include provisions to transfer wealth by creating a credit shelter should you die.
  • Avoiding Challenges: A will may create disputes, with family members challenging it. With a trust, you can disinherit anyone who challenges it.
  • Segregation of Assets: For married couples with substantial separate property assets, you can keep those assets from community property.

You can't include retirement savings, health accounts, cars, and money in a revocable living trust. The same holds for assets held in other countries. However, you can include bank accounts in a trust.

How to Create a Trust

To create a revocable trust, follow these steps:

  1. Identify the assets to include in the trust.
  2. Select a trustee who will manage the trust's assets.
  3. Draft the trust document specifying the distribution of assets.
  4. Fund the trust by transferring ownership of assets into it.
  5. Maintain and update the trust as necessary to reflect changing circumstances.

Talk with an estate attorney near you to ensure you correctly set up the revocable trust. Each state has differences in trust laws. That said, a trust drawn up in one state is valid in any state. However, some differences between jurisdictions may make it advisable to review and modify your trust. You can get more information on revocable trusts in PA here.

Our Estate Attorneys Can Help with Trust Creation

Regardless of the type of trust, our estate attorneys can offer guidance. We have law offices in Norristown and Doylestown, PA. We can also help with other estate planning documents, such as POAs, wills, and advanced care directives.

 

What is a Living Will?

Many people are familiar with traditional wills and advanced healthcare directives when planning for the future. However, another important legal document to consider is the living will.

A living will is a type of advanced healthcare directive. It covers your preferences for medical treatment if you cannot communicate or make decisions about your healthcare. Moreover, it gives medical professionals clear instructions about the type of medical care you want or want to avoid.

Why Should You Have a Living Will?

Roughly 45% of Americans have a living will (Gallup). It's easy to forget about creating one, but there are good reasons to have one.

  1. Peace of Mind: It allows you to express your preferences about your medical care and ensures your healthcare decisions align with your values and beliefs.
  2. Stress: You relieve your loved ones from making difficult decisions during an already emotional time.
  3. Conflicts: Having a living will can help avoid disagreements among family members or medical professionals regarding your care.
  4. Quality of Life: You can maintain control over the extent of medical interventions. That can help preserve your quality of life according to your standards.

Do all States Accept Living Wills?

Thanks to the Uniform Healthcare Decisions Act (UHCDA), most states, Pennsylvania included, accept living wills. This act also establishes a legal framework for advanced healthcare directives, including living wills.

However, living will requirements and regulations vary slightly from state to state. Thus, your living will must comply with state laws to ensure its validity and effectiveness.

That's why consulting with an estate attorney is a good idea. At the least, use state-specific templates that adhere to your state's requirements.

When Is a Living Will Best Used?

A living will is best used when you cannot communicate your healthcare preferences. For instance, typical scenarios where a living will come into play include:

  1. Terminal Illness: A living will guides end-of-life decisions when facing a terminal illness. It ensures medical professionals honor your wishes for treatment preferences, comfort, and dignity.
  2. Severe Injury: A living will clarify life support or other medical interventions if you become incapacitated.
  3. Aging: As you age, it is crucial to plan your healthcare preferences. This is especially important if you cannot make decisions or develop a severe illness.

How Does It Differ from a Regular Will?

A living will deals explicitly with your healthcare decisions. For example, it outlines your preferences regarding life-sustaining treatments, organ donation, and other medical interventions. A standard will, however, addresses the distribution of your property assets. It also appoints guardians for your dependents after your death.

Living wills take effect while you are alive but unable to make medical decisions. That typically happens in situations of incapacitation or terminal illness. Conversely, a standard will comes into play after your death. It guides the distribution of your assets according to your wishes.

Finally, a living will only focuses on healthcare decisions, such as using life support, pain management, and resuscitation. Conversely, a standard will covers various matters, including property distribution, naming an executor, and specifying funeral arrangements.

Living Will Versus Advanced Healthcare Directive

A living will is a subset of advanced healthcare directives. Advanced directives encompass a broader category and include other documents, including:

  • A durable power of attorney for healthcare
  • Mental health declaration
  • Mental health POA
  • DNR

What Should You Include in the Advanced Directive?

The document can cover any treatment and life care concerns you have. Here are some everyday items found in living wills:

Life-Sustaining Treatment

A living will often addresses whether you wish to receive or refuse specific life-sustaining treatments. For example, it may include decisions about cardiopulmonary resuscitation (CPR), mechanical ventilation, artificial nutrition and hydration (tube feeding), and dialysis.

Comfort Measures

You can specify your preferences for pain medication, management, and other comfort measures.

Do Not Resuscitate (DNR) Orders

A living will includes your stance on DNR orders. So you can elect to specify whether you want resuscitation. For example, some individuals choose to allow natural death without aggressive resuscitation efforts.

Organ and Tissue Donation

You can indicate whether you wish to donate organs or tissues upon death. You can also include which organs you want to donate.

Medical Interventions

The document can also address other medical interventions and procedures, such as transfusions, surgery, and antibiotic treatments. You can also outline under what circumstances you would like to consent to or refuse these interventions.

Mental Health Treatment

In some cases, individuals may include instructions regarding mental health treatment, specifying preferences for therapies, medications, or electroconvulsive therapy (ECT).

Quality of Life Considerations

The will may include statements about your values, beliefs, and acceptable quality of life. This can guide healthcare providers and loved ones when making healthcare decisions on your behalf.

Appointing a Healthcare Proxy

Using your living will, you can assign a healthcare agent or power of attorney to make medical decisions for you if you cannot make them yourself.

You can update the will at any time to reflect changes in your preferences. For instance, changes in your health may warrant adding or removing a consideration from the document.

Do You Need a Lawyer for a Living Will?

You can create a living will without an attorney. Plenty of online resources allow you to access forms to draft the document.

However, consulting with an estate attorney is a good idea. That's especially true if you have complex healthcare preferences or specific legal concerns.

Here are some considerations regarding the need for a lawyer when creating a living will:

  1. Legal expertise: An estate attorney can provide legal guidance to ensure your will complies with state laws and is executed properly.
  2. Customization: An estate attorney can ensure appropriate treatment if your medical preferences are intricate or unique.
  3. State-Specific Requirements: Legal requirements for living wills vary by state. An attorney can ensure that your document meets all the necessary criteria.
  4. Peace of Mind: Consulting an estate attorney can assure you that your living will is legally sound. That's essential to ensure a healthcare facility honors the document.

How to Create a Living Will

If you take the do-it-yourself path, you must follow specific guidelines when creating the document. Here's a step-by-step guide on how to create a living will:

1. Research Your State's Laws on Living Wills

Research your state's laws and requirements for living wills. Regulations vary, so it's crucial to understand your state's specific guidelines.

2. Decide on Your Healthcare Preferences:

Reflect on your values, beliefs, and preferences for medical care. Consider scenarios such as life-sustaining treatments, artificial nutrition and hydration, pain management, organ donation, and more. Be clear about what you wish to include or exclude in your living will.

3. Choose a Healthcare Proxy

Decide whether you want to appoint a healthcare proxy or power of attorney. If you cannot, this person will make medical decisions on your behalf. Ensure the chosen person is willing to take on this responsibility and understands your healthcare preferences.

4. Obtain the Necessary Forms

Many states provide standardized living will forms that you can use. These forms meet your state's legal requirements. You can typically find them online or from your state's health department or legal resources.

5. Complete the Living Will Form

Fill out the living will form thoroughly and accurately. Include your full legal name, address, date of birth, and other identifying information.

6. Clearly Express Your Preferences

Use clear and specific language to articulate your healthcare preferences. Mention under what conditions you would like or refuse specific treatments. Be explicit about your values and what constitutes an acceptable quality of life.

7. Sign the Living Will

A living will typically requires your signature in the presence of witnesses to be legally valid. It may also require the signature of a notary public. In Pennsylvania, your document requires two witnesses and signatures. The principal may sign by signature or by mark, or they may direct another person to sign on their behalf.

8. Distribute Copies of the Living Will

It's essential to provide copies of your living will to relevant parties. They can include your chosen healthcare proxy, primary care physician, and other relevant healthcare providers. Make it part of your medical record. Keep a copy for yourself in a safe and easily accessible place.

9. Periodic Review and Update

Review your living will, especially after significant life events or changes in your health status. Update the document as needed to ensure it accurately reflects your current preferences.

Again, you don't need an estate attorney to complete this advanced directive. But doing so ensures you meet Pennsylvania requirements.

Talk to an Estate Attorney at Our Law Firm

If you want a living will, contact us at our law firm. We have law offices in Norristown and Doylestown, PA. Our estate attorneys can work with you to create an advanced directive addressing your concerns.

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