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If you are reading this Article, someone has likely told you that you need or should have a “Revocable Trust” or a “Living Trust”. In fact, you might have been told a horror story about what will happen if you do not have a Living Trust. You also might have attended a seminar where you were told that a Living Trust is a cure-all, and that for a certain dollar amount someone will draft a Revocable Living Trust for you and give it to you in a handsome, faux leather binder.

Is a Revocable Living Trust Right for you? Let me first give you some quick thoughts, then debunk some Revocable Living Trust myths and half truths. Finally, lets talk about the good things a Revocable Living Trust can do so you can deduce if the cost of setting up a Revocable Living Trust makes sense for you.

A revocable trust, or its more popular name a “Living Trust”, is an increasingly popular estate planning tool. The Living Trust serves many useful purposes, but many people are told that one purpose is to reduce taxes. This is not true. A Revocable Trust does not reduce income taxes, estate taxes, gift taxes, generation skipping taxes or inheritance taxes. In short, there is no tax advantage gained by a Living Trust. If someone is trying to sell you on the idea of forming a Revocable Trust based on tax savings, run away!

Some trusts do create various tax benefits. So why does a Living Trust provide no tax benefit?

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.