Understanding Revocable Trusts in Pennsylvania
A revocable trust, which are sometimes referred to as a revocable living trust, is a trust that allows the trustor to change its terms, or even revoke it in full, while the trustor is alive. Once the trustor passes away, the trust is distributed by a trustee according to its terms. It is a way for a person to manage and control their assets while they are living and have those assets pass to their loved ones when they die. There are, of course, other advantages as well as some disadvantages that you should consider.
The types of assets that can be transferred to a trust include but are not limited to:
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Real property (e.g., homes, farms, vacation homes)
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Deposit accounts
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Investments (e.g., stocks, bonds, money market accounts)
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Business interests
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Collectables, art, antiques
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Life insurance policies
Pros of Revocable Trusts in Pennsylvania
There are distinct advantages to using a revocable trust as an estate planning tool. Below are brief descriptions of the most common advantages. Not all may apply in your unique situation. Likewise, there may be other advantages not listed below. It is important to seek the advice of an estate planning attorney to ensure the trust you choose is the right one.
Probate Avoidance
The ability to avoid probate is the main reason people consider placing assets in a revocable trust. Probate is the process where a decedent's estate is administered through the court system. It can be a tedious and time-consuming procedure. Assets placed in a revocable trust typically do not have to go through this court-supervised process.
Flexibility
While there are other types of trusts, the revocable trust remains a popular choice due to its flexibility. The creator of the trust is able to make changes to the trust up until the time of their death.
Incapacity Protection
A trust provides protection in case of testator incapacity. In other words, if the person that creates the trust later becomes incapacitated (develops dementia, for example), a new or successor trustee can take over the management of the trust. They will also be required to administer the trust according to its terms.
Privacy
If maintaining privacy over your assets is important to you, a revocable trust is an option worth considering. Assets placed in the trust are administered to beneficiaries privately, unlike assets administered through the probate process, which is public.
Cons of Revocable Trusts in Pennsylvania
There are some disadvantages to revocable trusts. Below are brief descriptions of the most common disadvantages, which must be weighed against the advantages and your specific needs.
Time and Money
Going through the process of setting up a revocable trust can take significantly more time and money than simply executing a Will. It requires that the trust be funded by changing deeds, titles, and other documents to transfer into the fund.
Lack of Asset Protection
Some trust types shield assets from the reach of creditors and judgments. A revocable trust, however, does not provide this protection, and assets are still within the reach of creditors.
Terminating a Revocable Trust in Pennsylvania
The good news, and the reason most people choose to use a revocable trust, is that the trustor retains the right to terminate it when they choose to do so. The steps you need to take to terminate the trust vary by jurisdiction and the terms of the trust.
Typically, you will need to execute a trust revocation document and “defund” the trust, which means removing the assets placed into it. This may involve re-issuing titles, deeds, and other documents out of the name of the trust.
Contact a Revocable Trust Lawyer in Delaware County Today
A revocable trust can offer many benefits. They can be used as a way to protect your assets and help family members or other individuals or organizations about which you care a lot. To find out if a revocable trust is right for you, contact an estate planning attorney at L. Theodore Hoppe, Jr., Esquire - Attorney at Law in Media, Pennsylvania. You can schedule an appointment for a free consultation by using this online formcalling us directly at 610-497-3579 or using our online calendar to schedule a consultationWhen we meet, we will listen to what your wishes and concerns are and develop a customized estate plan that works for you.