To make a living trust in Pennsylvania, the settlor must have capacity, sign a writing that indicates an intention to create the trust and contains its essential terms, name a trust with duties for the trustee to perform, and ensure the same person is not both sole trustee and sole beneficiary. Pennsylvania's trust code spells out these requirements directly.
Key Takeaways
- Pennsylvania trusts are governed by 20 Pa.C.S. Chapter 77, the state's version of the Uniform Trust Code.
- A valid Pennsylvania trust requires a signed writing indicating intent and essential terms, a definite beneficiary, duties for the trustee, and cannot have the same person as sole trustee and sole beneficiary.
- Signing the trust is only the first step. Pennsylvania real estate and accounts still need to be retitled into the trust's name.
- A properly funded Pennsylvania living trust avoids probate for the assets it holds and lets a successor trustee act immediately if you become incapacitated.
What Does Pennsylvania Law Require to Create a Living Trust?
Under 20 Pa.C.S. Section 7732, Pennsylvania's requirements for creation, a trust is created only if the settlor has capacity to create a trust, the settlor signs a writing that indicates an intention to create the trust and contains its essential terms, the trust has a definite beneficiary or qualifies as a charitable, animal, or other permitted purpose trust, the trustee has duties to perform, and the same person is not the sole trustee and sole beneficiary. The statute also allows a trust instrument, other than a will, to be signed by mark or by another person on the settlor's behalf and direction, using procedures similar to those for powers of attorney.
Step-by-Step: Creating a Living Trust in Pennsylvania
- Decide on a revocable living trust if your goal is probate avoidance and incapacity planning, which fits most Pennsylvania residents.
- Name yourself as initial trustee if you want to retain full control, and name at least one successor trustee.
- Draft the trust instrument in writing, including the essential terms and clearly stating your intention to create the trust, as Section 7732 requires.
- Sign the trust document, satisfying Pennsylvania's requirements under Section 7732.
- Fund the trust by retitling assets, starting with Pennsylvania real estate and financial accounts, into the trust's name.
- Record a new deed for any Pennsylvania real property, transferring it from your individual name to yourself as trustee of the trust.
Why Does the Written Terms Requirement Matter?
Because Section 7732 specifically requires that the writing contain the trust's essential terms, not just a signature indicating a general intent to create a trust, a Pennsylvania trust document needs to actually spell out who the trustee and beneficiaries are and how the trust operates. A vague or incomplete document risks failing this requirement and being challenged as invalid, which is one reason a generic, non-Pennsylvania-specific trust template can create real problems for Pennsylvania residents.
How Do You Fund a Pennsylvania Living Trust?
Funding is what actually delivers probate avoidance, separate from signing the trust document. For Pennsylvania real estate, this means a new deed recorded with the recorder of deeds in the county where the property is located. For bank and brokerage accounts, contact each institution directly to retitle the account in the trust's name. See our national guide on how to fund a trust for the process asset by asset.
Does a Living Trust Avoid Probate in Pennsylvania?
Yes, for assets properly titled in the trust's name. Pennsylvania probate is handled through the Register of Wills and Orphans' Court and, like most states, is a matter of public record. A funded trust bypasses that process entirely for the property it holds, since the trust already legally owns those assets at your death. See how long does probate take in Pennsylvania to understand what a trust actually helps you skip.
Do You Still Need a Will in Pennsylvania If You Have a Trust?
Yes. Most Pennsylvania residents with a living trust still sign a pour-over will to catch any asset never retitled into the trust and to name guardians for minor children, which a trust cannot do. See how to make a power of attorney in Pennsylvania to round out the incapacity planning side of your estate plan alongside the trust.
Common Mistakes Pennsylvania Residents Make With Living Trusts
- Drafting a trust document that is too vague about its essential terms, risking a challenge under Section 7732's specific writing requirement.
- Signing the trust but never recording a new deed for Pennsylvania real estate, leaving the property exposed to probate.
- Overlooking Pennsylvania's inheritance tax, which applies to most transfers to beneficiaries regardless of whether the assets pass through a trust or a will, unlike the probate process itself.
- Not naming a backup successor trustee, leaving a gap in authority if the first choice cannot serve.
- Forgetting to fund a newly purchased property or account after the trust was originally signed.
How Does Pennsylvania's Inheritance Tax Interact With a Trust?
Unlike probate avoidance, which a properly funded trust delivers cleanly, Pennsylvania's inheritance tax generally still applies to most transfers to beneficiaries whether the assets pass through probate or through a trust, since the tax is based on the relationship between the deceased and the beneficiary rather than on how the asset was titled. A living trust is a probate-avoidance and incapacity-planning tool in Pennsylvania, not an inheritance tax reduction strategy, and it is worth setting expectations accordingly before assuming a trust changes what your beneficiaries ultimately owe.
Should Your Pennsylvania Trust Be Revocable or Irrevocable?
Most Pennsylvania residents setting up a living trust for probate avoidance and incapacity planning choose a revocable trust, since it preserves full control and flexibility to make changes. An irrevocable trust serves a different purpose, typically used for Medicaid planning, asset protection, or reducing exposure to Pennsylvania's inheritance tax, and it requires giving up control permanently once signed. See our national comparison of revocable versus irrevocable trusts if you are unsure which structure fits your situation.
For the underlying concept behind this structure, see our national guide on what is a living trust, and see the full picture of your options at estate planning in Pennsylvania.
FastWill's trust package is built to meet Pennsylvania's trust creation requirements and includes funding guidance for Pennsylvania real estate and accounts.
Frequently Asked Questions
Does a Pennsylvania living trust need to be notarized?
Section 7732 does not itself impose a general notarization requirement on the trust instrument, but a deed transferring Pennsylvania real estate into the trust needs to meet the state's standard deed execution and recording requirements, which typically include acknowledgment before a notary.
Can I be my own trustee of my Pennsylvania living trust?
Yes, most people serve as their own trustee while alive and competent, naming a successor trustee to take over upon incapacity or death.
Does a Pennsylvania living trust reduce inheritance tax?
A basic revocable living trust generally does not reduce Pennsylvania's inheritance tax, since the assets are still considered yours for tax purposes during your lifetime and inheritance tax is typically owed regardless of whether assets pass through a trust or a will.
What happens to property I forget to put in my Pennsylvania trust?
It remains in your individual name and typically goes through probate, often caught eventually by a pour-over will that directs it into the trust afterward.
Can someone sign a Pennsylvania trust on my behalf if I am unable to sign myself?
Yes, Section 7732 allows a trust instrument, other than a will, to be signed by mark or by another person acting on the settlor's behalf and at the settlor's direction, following procedures similar to those used for powers of attorney.
