Pennsylvania Living Trusts FAQ | Revocable Trusts, Funding…

Question 1

Does a Pennsylvania living trust avoid probate?

Accepted Answer

Yes — for assets that are actually titled in the name of the trust. An unfunded trust avoids nothing. The funding step (re-titling real estate, bank accounts, investment accounts, and business interests into the trust) is what produces the probate-avoidance benefit, and it is the step most often skipped.

Question 2

Does a Pennsylvania living trust avoid inheritance tax?

Accepted Answer

No. Revocable trust assets are treated as owned by the grantor at death and are reported on the REV-1500 inheritance tax return. Trust-marketing material that suggests otherwise is wrong. Inheritance tax reduction requires different tools — irrevocable trusts, lifetime gifting outside the one-year window, beneficiary designation planning, and exemption-qualifying business or farm structures.

Question 3

Do I still need a will if I have a living trust?

Accepted Answer

Yes. Pennsylvania living-trust plans use a 'pour-over will' that catches any asset that was not retitled into the trust during life and directs it into the trust at death. The pour-over will also nominates guardians for minor children — something a trust cannot do.

Question 4

Is a living trust worth it for most Pennsylvania residents?

Accepted Answer

It depends on the situation. Living trusts are most valuable when (1) the client owns real estate in more than one state, avoiding ancillary probate; (2) privacy matters (Pennsylvania probate filings are public, trust administration is not); (3) disability management matters; or (4) the family situation is complex enough that streamlined administration is worth the upfront cost. For a Pennsylvania resident with only Pennsylvania real estate and most assets passing by beneficiary designation, a well-drafted will and current powers of attorney often deliver the same practical result at lower cost.

Question 5

How much does a living trust cost in Pennsylvania?

Accepted Answer

Fees vary by complexity and firm, but a Pennsylvania revocable trust package — trust, pour-over will, durable financial power of attorney, advance healthcare directive, and basic funding instructions — typically runs in the low-to-mid four figures. Pennsylvania does not impose a percentage-of-estate executor or attorney fee schedule, so the probate-avoidance dollar savings are smaller here than in states that do.

Question 6

What is the difference between a revocable and irrevocable trust in Pennsylvania?

Accepted Answer

A revocable trust can be amended or revoked by the grantor at any time and offers probate avoidance, privacy, and disability management — but no creditor protection and no tax savings. An irrevocable trust generally cannot be changed by the grantor, but in exchange can deliver Pennsylvania inheritance tax reduction, Medicaid asset protection (subject to the five-year lookback), and protection from beneficiary creditors and divorces.

Question 7

Can I be my own trustee in Pennsylvania?

Accepted Answer

Yes, for a revocable living trust. Most Pennsylvania revocable trusts name the grantor as the initial trustee, with a successor trustee (spouse, adult child, professional fiduciary, or institution) who takes over at incapacity or death. For irrevocable trusts, the rules are tighter — keeping certain powers as trustee can defeat the tax or asset-protection purpose of the trust.

Question 8

How do I transfer my Pennsylvania house into a living trust?

Accepted Answer

A new deed is prepared transferring the property from the individual owner(s) to the trustee of the trust and recorded with the Recorder of Deeds in the county where the property is located. Pennsylvania exempts transfers between the same beneficial owner and a revocable trust from realty transfer tax. Talk to your mortgage lender first — the Garn-St. Germain Act protects most owner-occupied transfers from due-on-sale enforcement, but notice is still advisable.

Living Trusts in Pennsylvania

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