A living trust is a legal arrangement that protects an individual's assets and distributes them according to his wishes. The history of living trusts goes back at least a few centuries, with early trusts being called inter vivos trusts as a way to avoid confusion with testamentary trusts that are set up upon a person's death.
The benefits of a living trust for Pennsylvania residents may differ than those available to residents of other states. Probate costs are lower in Pennsylvania, and the process is resolved quickly. Executors of a last will and testament are given a great deal of flexibility in administering the estate without interference from the court. This makes it less desirable to avoid the probate process with a living trust. There is also no tax benefit to using a revocable living trust instead of a will.
To create a living trust, assets must be transferred to the ownership of the separate legal entity and placed under the control of a trustee. The trustee can be any individual, company or financial institution designated by the settlor of the trust.
The recent popularity of living trusts is due to their attractiveness as an alternative to probate. They are often marketed as a simple way to pass assets to one's heirs. Living trusts have also been the news recently due to the Pennsylvania Attorney General levying fines and sanctions against certain vendors engaging in inappropriate sales activities. Consulting an estate planning attorney can help Pennsylvania residents set up trusts that are in compliance with the relevant laws. Furthermore, the attorney may be able to help a client use other tools to create a comprehensive estate plan.
Source: The Allegheny County Bar Association, "The Truth About Probate Living Trusts in Pennsylvania", October 24, 2014