What is a Living Trust?
Posted on Sat Apr 6, 2024, on Revocable Trusts and Living Trusts
From Our “Ask a Question” Mailbag: “I have been hearing about Living Trusts. What is a Living Trust in Pennsylvania?”
Paige Zirrith, Revocable Trust Lawyer
What is a Revocable Living Trust?
Revocable Trusts were invented to avoid the government. You can create one without registering it with any agency, and it does not need an identification number. The essential parts are you (the Grantor), an asset of some type, which is then held in the Trust for you (the Beneficiary).
You are free to “revoke” the Trust at any time, which differs from an Irrevocable Trust. During your lifetime, a Revocable Trust does not avoid taxes, nor does it help you avoid creditors or a spouse’s claims. The primary purpose of using a Revocable Trust is to avoid the probate process. Avoiding probate may greatly reduce the time your family must spend and the costs they incur.
What Does a Revocable Living Trust Look Like?
A Revocable Trust is a document. The length depends on your situation and the plan you wish to implement after your death. If you have children and want to protect their inheritance from divorce, the document could easily be 40 pages long. Other situations can make the document more complex, such as a special needs heir, a business, or planning around a second marriage.
We work with people every day to craft Revocable Trusts that fit specific needs. These documents are surprisingly flexible and satisfy a multitude of different needs.
How Does a Revocable Living Trust Work?
Revocable Trusts are created during your lifetime and work best when you move your assets into the Trust. This way, at your death, your successor trustee immediately takes control of the Trust’s assets without the cost and delay of filing a Will. In short, the Trust avoids the government’s involvement in the process.
During your lifetime, you serve as the Trustee. You will have your Revocable Trust Lawyer move your real property into the Trust. Moving a house into a Revocable Trust does not trigger transfer tax nor concern your mortgage company. As the Trustee, you may also transfer your various financial accounts into the Trust (but NOT your IRAs or 401ks). As Trustee, you manage these assets for yourself, the Beneficiary. You can pay your bills and maintain the property.
At your death, the successor Trustee takes over. For example, you may name your daughter. She needs your death certificate to prove you have died; then, she is the Trustee. There is nothing filed with the county and no fees. She then takes over the Trust and manages it for the following beneficiaries, such as your children.
What Assets Does a Revocable Trust Own?
Your real estate is moved into theTrustt, as we discussed earlier. However, you may also move your investment accounts, bank accounts, CDs, businesses, and other assets into the Trust. Each case is different, and we will sort out these details as part of planning your trust. The goal is that at your death, all assets are either in theTrustt, poured into the Trust because you name the trust as a beneficiary (such as life insurance), or the asset passes to a named beneficiary (such as your IRA).
What Are the Advantages of a Revocable Trust?
- Peace of mind knowing that you have organized your assets to pass as easily, quickly, and cheaply as possible at your death.
- You are creating a way for your family to manage your assets if you should become incapacitated more easily.
- Privacy. Wills are published; Revocable Trusts are not.
- You reduce the chances of a challenge.
What Are the Disadvantages of a Revocable Trust?
- You do more work and pay some upfront to make things faster, easier, and cheaper at your death.
Want to Read More?
This Blog is just a quick introduction to some ideas about What a Revocable Trust is in Pennsylvania. To learn more, follow this link to my website’s pages, Revocable Trusts: Everything You Need To Know.
In Conclusion, What is a Revocable Trust in Pennsylvania?
I hope you found this short article, What Is a Revocable Trust in Pennsylvania, helpful. I have also included some links for more detailed information.
Contact us if you want to know more or have an estate needing our help. Let our Pennsylvania Executor Removal Lawyers help walk you through what can be a confusing process. Feel free to contact our office for a free consultation.
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