Blog & Resources

Pennsylvania allows you to form a Revocable Living Trust. These trusts can own almost any asset including bank accounts, autos, stocks, gold, and Bucks County real estate. While Revocable Trusts can serve many purposes, the primary goal is to avoid probating the will with the Bucks County Register of Wills.

For centuries, trusts have been formed to provide safety and protection for valued assets. Recent changes in the law have made this old institution even more popular by reducing trust’s ongoing maintenance costs. You might think that only the very wealthy need the protection of a trust, but the truth is that a trust is a huge benefit to anyone having an asset in need of protection from their children’s creditors, divorce or from self-destructive beneficiaries.

As of November 6, 2006, the Pennsylvania Uniform Trust Act imposes a duty on trustees to inform trust current beneficiaries about the existence of a trust and the current beneficiaries’ rights to receive certain information on the trust. These notice requirements for Pennsylvania trustees are dependent on specific triggering events*. A current beneficiary is a person at least 18 years old to or for whom income or principal of a trust must be distributed currently or a person at least 25 years old to or for whom income or principal of a trust may, in the trustee’s discretion, be distributed currently.

The new tax rules for 2011 and 2012 increase the applicable exclusion amount that can be used to give away $5 million free of gift tax. This provides a unique opportunity to shift wealth out of your estate to your children or other heirs and a vehicle to reduce estate tax. By using an irrevocable trust the wealth can be protected from your children’s divorces, creditors and from estate and inheritance taxes when those same assets later pass to or in further trust for your grandchildren when your children die.

Inheritances are often left directly to a person, which is called an “outright” distribution. At other times clients choose to have an inheritance held in Trust. Trusts at their most basic are arrangements where one person, the Grantor, transfers an asset to a second person, the Trustee, to hold for a third person, the Beneficiary. In some Trusts one person wears more than one of these hats, for example when a parent forms a Trust for a child (Beneficiary) and names that child as the Trustee. Trusts can be Irrevocable or Revocable (sometimes called “Living Trusts”), complex or simple and serve a multitude of purposes, but typically if a client wants to give money in trust for a Beneficiary the client will create the Trust in the client’s Will.
What if a client wishes to make a gift in his or her Will into a trust formed by someone else?

This question was addressed in an August 2006 Decree from the Orphans’ Court Division of the Court of Common Please of Chester County in the Estate of Elizabeth Harris, deceased. Thinking this case may have interest to you, I have written the following short article.