Perhaps you have seen newspapers or television advertisements for living trusts, suggesting that a living trust can substitute for a will. Often times, these ads exaggerate the costs and delays in estate administration using a will.
Before you make a decision about using a living trust, you should know exactly what it involves. A living trust is a separate legal entity established by a specific type of trust document which indicates that a trustee will manage the trust according to written instructions in the trust document. The trustee is often the person who created the trust. Once the trust document is executed, the grantor (the person who established the trust) must place his or her assets in the trust; some examples are preparing a deed transferring real estate from the grantor to the trust, or transferring ownership of accounts in banks and investment brokerages to the trust. Without such transfers, the trust really amounts to nothing. Many of the companies advertising for living trusts simply set up the trust but never provide assistance in funding the trust, and it becomes a worthless but expensive exercise in futility.
While a living trust may be a good idea for some people, it is not for everyone and does not reduce the time or expense of estate administration. In Pennsylvania, handling an estate is faster and less expensive than many other states. Judges are rarely involved with estate administration . Having a living trust will not reduce the Pennsylvania inheritance tax and federal estate tax and will not reduce legal fees.
If you choose a living trust, you will be required to pay for its preparation and also for the transfer of assets into the living trust. Generally, it will be more expensive than a will. After the grantor’s death, the trustee will need legal advice on death taxes, creditors and distributions to beneficiaries. With a will , the executor will need essentially the same legal advice.
A living trust may or may not be right for you. For the protection of your family, you should review your individual situation with your lawyer and proceed accordingly.
Contact an experienced Greensburg estate planning attorney via email or phone us at 724-837-0080 in Greensburg or toll free at 888-534-6016.
For more information please visit our Wills, Estate Planning, Estate Administration and Probate Information page.
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Pennsylvania Inheritance Tax