When creating an estate plan in Pennsylvania, you may want to establish a revocable trust, which can help protect your assets and ensure that your beneficiaries are well taken care of. If you have been thinking about creating a trust for your property, here’s what you need to know.
What are revocable trusts?
A revocable trust, commonly known as a living trust, is a legal arrangement created during estate planning in which you hold title to the property for your heir, friend or any other person. The term “revocable” means that you can change the terms of the trust or revoke it while still alive. However, it becomes irrevocable after your death, and your trustee distributes your assets as per your terms.
How revocable trusts work in Pennsylvania
An estate planning lawyer may draft the revocable trust per your wishes, and then you’ll sign it before a notary public to make it official. You will be referred to as the settlor or creator of the trust.
You will name an individual or a company that will control and distribute your assets to your beneficiaries after you die. When you are alive, you have full control of assets that are in the trust, but you cease to become the owner; the trust is the new owner.
Advantages of creating a revocable trust
The main reason why people create a living trust is to avoid probate. This is particularly helpful if you have assets in other states besides Pennsylvania. However, in Pennsylvania, probate fees are quite modest, only including the court’s supervision over the executor of your estate.
Revocable trusts also help you avoid court interference if you become incapacitated. Your trustee will take over control of your assets and manage them the way you want.
What you should know about revocable trusts in Pennsylvania is that they don’t reduce taxes. Whether you have your assets in a will or trust, you will still pay federal estate taxes and inheritance tax.