Revocable Living Trusts

Revocable Living Trusts — Pennsylvania FAQs

Does a revocable living trust avoid Pennsylvania inheritance tax?

No. Assets in a revocable trust remain part of your taxable estate for Pennsylvania inheritance tax purposes and are reported on the REV-1500 like anything else. Rates are 0% to a spouse, 4.5% to lineal descendants and parents, 12% to siblings, and 15% to everyone else. What a revocable trust avoids is probate — the Register of Wills filing, the public inventory, the advertising, and the delay — not the tax.

What is the difference between a revocable and an irrevocable trust?

A revocable trust can be amended or terminated by you at any time while you have capacity; because you keep that control, the assets are still yours for tax, creditor, and Medicaid purposes. An irrevocable trust generally cannot be changed, and that surrender of control is exactly what produces the protection — removing assets from your Medicaid five-year lookback exposure or from your taxable estate. Revocable trusts are about probate avoidance and incapacity management; irrevocable trusts are about protection.

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

Yes. A pour-over will directs anything you failed to retitle into the trust — a forgotten bank account, a car, a recent inheritance — into the trust at death. It is also the only place you can nominate a guardian for minor children. Think of the will as the safety net under the trust rather than a competing document.

How is a living trust funded in Pennsylvania?

Funding means changing the title on each asset. Real estate is transferred by a new deed recorded with the county recorder of deeds; transfers to your own revocable trust are exempt from Pennsylvania realty transfer tax. Bank and brokerage accounts are retitled in the name of the trust. Business interests are assigned. Retirement accounts are never retitled — they keep individual beneficiary designations, with the trust named only when there is a specific reason. An unfunded trust does nothing: the assets left outside it still go through probate.

Can I change or revoke the trust later?

Yes, at any time while you are living and competent. You can amend the terms, add or remove beneficiaries, change the successor trustee, or revoke the trust entirely and take the assets back into your own name. The trust becomes irrevocable only at your death, or earlier if you become incapacitated and your successor trustee takes over under the terms you wrote.