Create a Living Trust in Pennsylvania
Create a Living Trust in Pennsylvania
A Pennsylvania living trust places your assets in a trust during your life and distributes them to your beneficiaries after your death. A revocable living trust offers flexibility and control, making it a popular option.
Living Trusts in Pennsylvania
When you establish a living trust in Pennsylvania, you are the grantor, the person putting your assets into the trust. The goal is usually to place as many assets into the trust as possible, but some assets such as life insurance and retirement accounts cannot be held by a trust. The trust assets are used for your benefit during your life and you need a trustee to manage the trust. You can select anyone to be your trustee, but most people choose themselves. A successor trustee is also named to step in after your death, take over management of the trust, and distribute the assets to the beneficiaries according to the terms you have established. Your trust can be changed or eliminated during your life if you wish. An irrevocable trust is not alterable once created.
Probate is the court procedure that approves a will and puts it into effect. Probate can take months and also involves the expense of an attorney, an executor, and court fees. Assets passed by a will cannot be distributed until probate has concluded. A living trust Pennsylvania allows you to bypass probate entirely. Assets in the trust do not go through probate and can be distributed at any time, even immediately upon your death. If you have assets in more than one state, your trust allows you to bypass probate in those other states as well.
Pennsylvania has not adopted the Uniform Probate Code, so its procedures are considered complex. However, a small estate probate proceeding is available if you have $50,000 or less in your estate when you die. This simple procedure is faster and less expensive and is also less costly than creating a trust.
Do I Need a Living Trust in Pennsylvania?
Deciding to create a living trust in Pennsylvania is an important decision. One of the most popular reasons for opening a trust is because of the control it gives you over your assets. It is a common misperception that a trust takes your assets away from you. While the trust technically owns your assets, you continue to live in your home, drive your car, spend your money, and do everything you normally would. You also have control of the assets after you die because you set up the rules for the trust. You can decide to distribute the assets whenever you want. Some grantors wait for beneficiaries to turn certain ages before they inherit. A will does not offer this; its assets are distributed as soon as probate concludes.
Your revocable living trust protects you should you become mentally incapacitated. All of your assets are already controlled, owned, and managed by the trust and a conservatorship proceeding is likely unnecessary. While a durable power of attorney can be rejected, a trust cannot be. Your financial life is protected by the trust.
Another trust benefit is the privacy it offers. When a will is probated, it becomes public record. Your trust does not become public record. Your assets, beneficiaries, and instructions are not revealed. A trust is also much more difficult to contest than a will, so it offers security in that sense.
Living Trusts and Estate Taxes in Pennsylvania
Estate tax is an important consideration in estate planning, however living trusts do not avoid estate or inheritance tax. Pennsylvania applies an inheritance tax of 4.5% to transfer to direct descendants (such as children and grandchildren), 12% to siblings, and 15% to all others. The federal government applies an estate tax to estates valued over $5 million. Specially constructed trusts called AB, marital, or QTIP trusts do avoid estate tax by transferring assets from a deceased spouse to a surviving spouse. Your trust does not hide assets from Medicaid or from creditors.
How to Create a Living Trust in Pennsylvania
Creating a living trust Pennsylvania occurs when you prepare a trust document and sign it in front of a notary. The trust is not active and complete until you transfer ownership of your assets into it. Living trusts provide a variety of benefits and may be something to include in your estate plan.
Create a living trust online in Pennsylvania through LegalZoom. LegalZoom living trusts include a pour-over will, transfer deeds, a document organizer, and more.