How to Set Up a Trust in PA: Options, Process, and Costs
Written by Elizabeth Gangloff
Setting up a trust in Pennsylvania can be a valuable step in ensuring your assets are managed according to your wishes—during your lifetime and after. Whether you’re seeking asset protection, smoother estate administration, or tax benefits, understanding your options is crucial.
This guide will walk you through how to set up a trust in PA, the types of trusts available, the cost to set up a trust in PA, and the steps you need to take to get started.
What Is a Trust?
A trust is a legal arrangement in which a grantor (you) places assets under the control of a trustee, who manages them for the benefit of named beneficiaries. Trusts can serve a variety of purposes, including:
- Avoiding probate
- Providing for minor children or individuals with special needs
- Minimizing estate taxes
- Protecting assets from creditors or lawsuits
Types of Trusts in Pennsylvania
When setting up a trust in PA, your first major decision is choosing the type of trust that meets your goals. The two main categories are:
1. Revocable Living Trust
A revocable living trust is the most common type for estate planning. As the name suggests, it can be altered or revoked at any time during your lifetime. You maintain control over the trust assets and can make changes as your circumstances evolve.
Advantages:
- Avoids probate
- Maintains privacy
- Allows for management of assets in case of incapacity
Disadvantages:
- Offers limited asset protection
- Assets in the trust may still be included in your taxable estate
2. Irrevocable Trust
An irrevocable trust cannot be changed once established, but it offers more robust asset protection and tax benefits. Once assets are transferred, they are no longer considered part of your estate.
Common uses:
- Medicaid planning
- Charitable giving
- Life insurance trusts
How to Set Up a Trust in PA
Setting up a trust in Pennsylvania involves several key steps:
Step 1: Determine Your Objectives
Consider your goals—do you want to avoid probate, reduce taxes, or ensure care for a loved one? This will help determine the type of trust that fits best.
Step 2: Choose a Trustee
You can name yourself, a trusted individual, or a professional fiduciary to serve as trustee. In a revocable living trust, you can act as your own trustee during your lifetime.
Step 3: Draft the Trust Document
Work with an estate planning attorney to draft the trust agreement. This legal document outlines:
- The name of the trust
- The trustee and successor trustees
- The beneficiaries
- Instructions for asset management and distribution
Step 4: Sign the Trust Document
You must sign the trust document in accordance with Pennsylvania law—typically in the presence of a notary. This makes the trust legally enforceable.
Step 5: Fund the Trust
Transferring assets into the trust is essential. This may include:
- Real estate
- Bank accounts
- Investments
- Business interests
Without funding, the trust won’t serve its intended purpose.
Cost to Set Up a Trust in PA
The cost to set up a trust in PA varies depending on the complexity of your estate and the type of trust. The fees usually include consultations, trust drafting, and assistance with asset transfers. While online templates exist, using a qualified attorney ensures your trust complies with Pennsylvania law and meets your personal needs.
Why Consider a Trust?
Creating a trust offers peace of mind that your assets will be managed and distributed according to your wishes. It can provide:
- Streamlined estate administration
- Greater privacy than a will
- Asset protection in certain cases
- Potential tax advantages
Need Help Creating a Trust in Pennsylvania?
MPL Law Firm, LLP is an experienced firm for trust and estate planning services in PA. Our attorneys can help you navigate your options, from setting up a revocable living trust to protecting your assets through more complex strategies.
Contact MPL today to schedule a consultation and take the next step in securing your legacy.