Facts on Living Trusts in Pennsylvania

By David Carnes

A living trust allows you to place assets under the care of a trustee who then distributes them to your beneficiaries in accordance with your wishes. A living trust, in contrast with a testamentary trust, comes into existence while you are still alive. Pennsylvania's trust law is based on the Pennsylvania Uniform Trust Act.

A living trust allows you to place assets under the care of a trustee who then distributes them to your beneficiaries in accordance with your wishes. A living trust, in contrast with a testamentary trust, comes into existence while you are still alive. Pennsylvania's trust law is based on the Pennsylvania Uniform Trust Act.

Parties

Three parties are required to create a living trust: The settlor, or trustor, is the party who creates the trust, sets its terms and deposits assets into it. The trustee is the person that administers the trust in accordance with the terms you, as the settlor, have set. You may appoint yourself as the trustee. Beneficiaries are the persons or organizations you appoint to receive the trust assets. A trust may include other parties as well; for example, you may name either a successor trustee or a trust protector whose sole function is to hire and fire trustees.

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Creation

A living trust is created when you draft and sign a Declaration of Trust. The Declaration of Trust identifies the parties to the trust, specifies whether it is revocable or irrevocable, and tells the trustee how to distribute trust assets. The Declaration of Trust may give the trustee specific instructions on how to distribute the trust's assets or allow the trustee broad discretionary authority. For example, the trustee may be permitted to invest the trust assets and distribute only capital gains to the beneficiaries. If the trust is revocable, as most are, you may modify or terminate it at any time. Pennsylvania, unlike many other states, allows you to modify or terminate a living trust, even an irrevocable one, if you can secure the unanimous consent of the beneficiaries.

Funding

A living trust is useless until it is funded with assets. You may list trust assets in an appendix to the Declaration of Trust. If the trust is irrevocable, titled assets such as bank accounts and real estate should be retitled in the name of the trustee. Some assets are difficult to hold in a trust -- for example, insurance companies may be reluctant to insure an automobile owned by a trust.

Notice Requirements

Pennsylvania requires the trustee of an irrevocable living trust to send a notice to any beneficiary or potential beneficiary over the age of 25. The primary reason for this requirement is that, unlike in many states, a Pennsylvania court will not enforce a trust except upon the request of the trustee or a beneficiary. A beneficiary must know that he is a beneficiary to seek judicial assistance in enforcing the trust. The notice must inform the beneficiary of the existence of the trust, identify the settlor, provide the trustee's contact details and inform the beneficiary that he has the right to a copy of the trust document and an annual report detailing the trustee's disposition of trust assets.

Probate

The assets of a living trust are not subject to the Pennsylvania probate process. The trustee may immediately distribute trust assets to beneficiaries to the extent the Declaration of Authority expressed in the trust document grants him the authority to do so. Assets may be distributed without seeking approval from the estate executor or probate court.

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Can the Powers of the Successor Trustee Be Revoked?

References

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Living Trusts in Michigan

A trust is a vehicle for holding assets. In the United States, trusts are governed by state law. Although the Michigan Trust Code, found in the Estates and Protected Individuals Code, includes certain distinctive features, the basic principles of Michigan trust law are similar to elsewhere in the United States.

How to Prepare a Living Trust at Home

A living trust allows you to place assets under the care of a trustee who then distributes the assets to the beneficiaries of your choosing, in accordance with the terms you've set forth in your trust document. A living trust is often used to protect assets from the expense and delays of the probate process. A revocable trust is taxed as the grantor's personal assets, while an irrevocable trust is taxed as an independent legal entity. You may establish a living trust by executing a trust document and placing assets into the trust. Although it is best to retain an attorney to draft the living trust, it is possible to draft it yourself with the aid of an online legal document provider.

Can I Change a Successor Trustee Without a Lawyer?

A successor trustee of a trust is the party appointed to replace the trustee named in the original trust deed. There are a number of ways to replace a successor trustee and none of them absolutely require that you retain a lawyer. Keep in mind that state laws vary somewhat on the process of replacing a successor trustee.

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