Financial Education

August 8, 2017

Estate planning — which includes planning for your assets at the time of your death — is difficult enough, it shouldn’t be confusing as well. But even common concepts like “wills” and “trusts” can be hard to decipher. The type of estate plan you need, and whether that includes a will, trust or both, depends on many factors. Here’s an introduction to help you better understand your options.

Defining terms

A will is a document that describes what should happen to your property and assets after you pass on. It’s read by a county court after your death, and the court ensures that your final wishes are carried out.

A trust is a legal agreement that involves three parties:

  • The trust maker, also called the grantor — the person who creates the trust and supplies the assets that go into it
  • The trustee — the person or financial institution (or both) responsible for managing the trust’s assets for the benefit of the beneficiary or beneficiaries
  • The beneficiary or beneficiaries — the people or organization that receive the benefit of the assets owned by the trust

Many different types of trusts exist. A revocable living trust is created and goes into effect during your lifetime, if you’re somehow incapacitated. During your lifetime, you also serve as the trustee. When you die, a successor trustee steps in to manage the trust’s assets.

How do I know if I need a will?

Almost all adults should prepare a will, because it not only provides specific instructions for the distribution of your estate, but also can be used to name guardians for your minor children and their property, and provide instructions for how debts and taxes will be paid. For some people, with small estates, a will is the only estate planning tool needed.

When should I set up a trust?

A trust can address more complex estate planning needs. Reasons you may consider creating a trust include:

  • Planning for the management of your assets if you become mentally incapacitated.
  • Avoiding or minimizing the probate process, especially if you have out-of-state property.Setting specific conditions for
  • Setting specific conditions for inheritance of assets by beneficiaries, such as when and under what circumstances funds or real estate become available. This can also include protecting against creditors and others trying to access a beneficiary’s funds.
  • Establishing a plan for long-term support of a child or grandchild with special needs.

Ask the experts

Don’t tackle estate planning on your own. The experienced Wealth Management professionals at PeoplesBank can help you put together a plan that meets your needs.



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