A revocable trust can simplify incapacity planning, reduce probate, and add privacy — but only if it’s properly funded, kept current, and understood by your successor trustees. Unruh Turner Burke & Frees explains what a Pennsylvania revocable trust can and cannot do before you create, fund, or rely on one.
Quick Answers From Unruh Turner Burke & Frees
These quick answers are brief and designed to get you thinking.
Does a revocable trust avoid probate in Pennsylvania? It can, but Pennsylvania probate is often already fast and inexpensive, filing fees generally run about $650 to $750 per $1 million of estate value, depending on the county.
Does a revocable trust reduce estate or inheritance taxes? No. A conventional revocable trust does not, by itself, reduce federal estate tax or Pennsylvania inheritance tax.
Is a revocable trust worth it if I own property in another state? Often yes, it can eliminate the need for a separate “ancillary” probate proceeding in that state.
Do trustees and successor trustees under a revocable trust need special preparation? Yes. Naming yourself and/or your spouse as trustee(s), or someone as successor trustee is easy; preparing them to actually serve is a separate step most families skip. And it can cause major problems.
Is a revocable trust better than a will in Pennsylvania? It depends on your goals. Incapacity planning, privacy, multistate property, and blended families often favor a trust; a modest, straightforward estate often doesn’t necessarily need one - and they can be more expensive than the probate fee savings.
Read on for more useful tips and accurate information about Pennsylvania revocable trusts.
If you have been thinking about creating a revocable trust, or if you already have one, there is one question you should probably ask before any other:
What problem or problems are you trying to solve?
That may sound obvious. In practice, it is a question that is too often overlooked.
Many people create revocable trusts because they have been told that they should have one. They may have heard that a revocable trust will avoid probate, save taxes, protect their assets, make things easier for their children, or eliminate much of the work that would otherwise be required after their death.
Some of these objectives may be legitimate reasons to consider a revocable trust.
Others reflect misunderstandings about what a revocable trust can and cannot accomplish.
And even when a revocable trust is an appropriate planning tool, creating one may introduce new responsibilities, expenses, and complications that should be considered before deciding whether the benefits justify them.
This is particularly important in Pennsylvania, where a properly drafted estate plan can often make probate relatively simple and inexpensive. The cost of probate fees themselves may be surprisingly modest compared with the size of the estate, often approximately $650 per $1 million of assets passing through probate, although the exact fees vary by county and estate value.
That does not mean probate should never be avoided. There are circumstances in which reducing or avoiding probate can provide meaningful advantages.
It does mean that “avoiding probate” should not automatically end the analysis.
If you are considering a revocable trust to avoid probate, the better questions may be:
What exactly are you trying to avoid?
How much will avoiding it actually save?
What other advantages do you expect the trust to provide?
And what new responsibilities or complications might you create in the process?
The same questions should be asked if you already have a revocable trust.
Perhaps you created it five, ten, or twenty years ago. Your family may have changed. Your assets may have changed. Your wealth may have increased substantially. You may own property in different states. The people you selected as successor trustees may no longer be the people you would choose today.
Perhaps you do not remember exactly why the trust was created.
You may not know which assets were actually transferred to it.
You may assume that your home, investments, business interests, and other property are all “in the trust” without having confirmed whether that is actually true.
And the person you named as successor trustee may have little idea what they will eventually be expected to do.
These are not unusual situations.
They reflect a fundamental misunderstanding about revocable trusts that we regularly encounter in estate planning.
A revocable trust is not simply a document. It is part of a legal, financial, administrative, and family system.
Creating the document is only the beginning.
For the trust to work as intended, you must decide what problems you are trying to solve, determine whether the trust is the appropriate solution, transfer or coordinate the appropriate assets, maintain the plan as circumstances change, and prepare the people who may eventually have to take control.
That is why there is no single answer to the question of whether you should have a revocable trust.
The better answer is usually: It depends.
It depends on what you own.
It depends on where you own it.
It depends on your family.
It depends on your objectives.
It depends on your age, health, and concerns about future incapacity.
It depends on whether privacy is important to you.
It depends on the complexity of your assets.
It depends on the people who may eventually be responsible for administering your affairs.
Most importantly, it depends on what problem you are trying to solve.
Start With the Problem, Not the Type of Trust
One of the most common mistakes in estate planning is beginning with a planning technique rather than an objective.
Someone attends a seminar, talks to a friend, reads an article, watches a video, or speaks with a financial advisor and concludes:
“I need a revocable trust.”
Perhaps they do.
But that conclusion comes too early.
A revocable trust is a tool. Like any tool, its usefulness depends on the job you are trying to accomplish.
Imagine someone walking into a hardware store and announcing that they need to buy a chainsaw.
A reasonable salesperson might ask what they intend to cut.
If the answer is a fallen oak tree, a chainsaw may be an excellent choice.
If the answer is a sheet of plywood, it probably is not.
If the answer is a tomato, we have an entirely different problem.
Estate planning should work the same way.
Before deciding that you need a revocable trust, you should identify what you are actually trying to accomplish.
Are you concerned about managing your property if you become incapacitated?
Do you own real estate in more than one state?
Are you trying to reduce the amount of property that will pass through probate?
Is privacy particularly important to you?
Do you want to centralize the management of complicated financial assets?
Are you concerned about how a spouse or children will manage property after your death?
Do you have a blended family?
Are you trying to protect assets passing to children or grandchildren from divorce, lawsuits, creditors, or financial mistakes?
Do you own a closely held business?
Are you worried that your children will have difficulty taking control of your financial affairs if you become seriously ill?
These are all legitimate planning concerns.
But they do not necessarily lead to the same solution.
A revocable trust may be an important part of the answer.
In other situations, a properly drafted will, durable power of attorney, beneficiary designation, business succession agreement, irrevocable trust, jointly owned property, or other planning technique may solve the problem more effectively.
Often, the best plan involves several of these tools working together.
The important point is that sophisticated estate planning should not begin with the question, “Should I have a revocable trust?”
It should begin with the question:
“What am I trying to accomplish?”
Only then can you intelligently evaluate whether a revocable trust will help.
What Can a Revocable Trust Actually Do?
Revocable trusts can provide significant benefits.
The problem is not that they are ineffective.
The problem is that their advantages are sometimes exaggerated, while their limitations and continuing requirements receive far less attention.
A good place to begin is by understanding what a revocable trust may actually accomplish.
A Revocable Trust May Help With Incapacity Planning
One of the most important advantages of a properly structured and funded revocable trust is continuity of asset management.
While you are healthy and capable, you may serve as your own trustee and continue managing the property owned by the trust much as you did before creating it.
If you later become unable to manage your financial affairs, a successor trustee may be able to assume responsibility for the trust property.
This can provide an orderly transition.
But notice the qualifications.
The benefit depends on what the trust says.
It depends on how incapacity is determined under the document.
It depends on whether the appropriate property was actually transferred to the trust.
And it depends on whether the successor trustee knows that they have been named, understands what is expected of them, and can locate the information and professional assistance they need.
A beautifully drafted incapacity provision is not particularly useful if most of your property remains outside the trust and your successor trustee has no idea what to do.
A Revocable Trust May Reduce or Avoid Probate
Assets properly owned by a revocable trust generally do not have to pass through probate merely because the person who created the trust dies.
That can be useful.
It may reduce the amount of property subject to probate proceedings. It may provide greater privacy. It may simplify the transfer of certain assets. It can be particularly helpful when someone owns real estate in more than one state.
But probate avoidance should be evaluated in context.
Pennsylvania is not California, Florida, or one of the other jurisdictions where concerns about probate costs and procedures have driven much of the national marketing of revocable living trusts.
When a Pennsylvania estate plan is properly drafted and administered, probate can often be relatively straightforward.
The probate filing fees themselves can also be modest compared with the value of the estate. A useful general estimate is approximately $650 in probate fees for every $1 million of assets passing through the probate estate, although actual fees depend on the county and value of the estate.
So, consider a person with a $5 million estate.
If the principal reason for creating and funding a revocable trust is to avoid several thousand dollars of probate filing fees, it is reasonable to ask what the trust will cost to create, fund, maintain, update, and eventually administer.
Again, this does not mean avoiding probate has no value.
It means the analysis should be more sophisticated than:
“Probate is bad. Trusts avoid probate. Therefore, I need a trust.”
The better question is:
What are the actual advantages of avoiding probate in my circumstances, and are those advantages worth the costs and responsibilities involved?
A Revocable Trust May Be Particularly Helpful if You Own Real Estate in Another State
This is one situation in which a revocable trust may provide a significant administrative advantage.
If you are a Pennsylvania resident and own real estate directly in another state, your estate may otherwise require a separate probate proceeding in that jurisdiction after your death.
This is commonly referred to as ancillary probate.
Depending on the state, the property, and the circumstances, placing the real estate into an appropriately structured trust may reduce or eliminate the need for that additional proceeding.
For someone who owns a vacation home, investment property, or other real estate in another state, that can be a meaningful benefit.
Of course, the transfer itself must be handled correctly.
The laws of the state where the property is located must be considered.
Mortgages, title insurance, property insurance, local taxes, homeowner association requirements, and other issues may also need to be reviewed.
Once again, the trust may solve a problem, but only if the planning and implementation are done correctly.
A Revocable Trust May Provide Greater Privacy
Probate proceedings can involve documents and information that become part of a public court record.
Trust administration may provide greater privacy.
For families concerned about public disclosure of wealth, property, beneficiaries, or family arrangements, this can be a legitimate consideration.
But privacy should not be oversold either.
Trusts do not make property invisible.
Deeds are recorded.
Financial institutions maintain records.
Tax returns may be required and may be viewable in public records.
Beneficiaries may have rights to information.
Litigation can result in disclosure.
The appropriate claim is not that a revocable trust guarantees secrecy.
It is that, depending on the circumstances, a trust may provide greater privacy than a probate-centered plan.
A Revocable Trust May Centralize Asset Management
For someone with substantial or complicated assets, a trust may provide a useful management structure.
Financial accounts, real estate, and other appropriate property can potentially be managed under one legal arrangement.
This can be particularly helpful as someone ages and begins sharing financial responsibility with a spouse, child, professional trustee, or other trusted person.
It can also create continuity if responsibility eventually shifts to a successor trustee.
But this advantage depends heavily on implementation.
If half of the intended assets are never transferred to the trust, the promised centralization may never occur.
A Revocable Trust Can Create Protected Trusts for Your Beneficiaries
A revocable trust generally does not protect your assets from your own divorce or creditors while you retain the ability to revoke the trust and control the property.
But that does not mean a revocable trust cannot play an important role in asset protection.
After your death, the trust can continue holding property for a spouse, children, grandchildren, or other beneficiaries under terms designed to provide meaningful protection from divorce, lawsuits, creditors, financial mistakes, and other threats.
This is an important distinction.
The trust may provide little or no asset protection for you during your lifetime while creating significant protection for the people who inherit from you.
For many successful families, this is one of the most valuable features of sophisticated trust planning.
What a Revocable Trust Does Not Automatically Do
Understanding the limitations of a revocable trust is every bit as important as understanding the advantages.
Many planning problems begin when someone expects the trust to accomplish something it was never designed to do.
A Revocable Trust Does Not Automatically Reduce Estate Taxes
One of the most persistent misconceptions about revocable trusts is that creating one automatically reduces estate taxes.
Generally, it does not.
If you create a trust that you can revoke, continue controlling the property, and retain the economic benefits of ownership, the assets generally remain part of your estate for federal estate tax purposes.
There are many sophisticated planning techniques that can reduce estate taxes.
A conventional revocable trust, by itself, is generally not one of them.
A Revocable Trust Does Not Automatically Avoid Pennsylvania Inheritance Tax
Probate and inheritance tax are different issues.
An asset can avoid probate and still be subject to Pennsylvania inheritance tax.
Property passing through a revocable trust may still need to be reported for Pennsylvania inheritance tax purposes, and tax may still be due depending on the beneficiary and other circumstances.
This is another reason the statement “a trust avoids probate” can create unrealistic expectations.
Even if probate is reduced or avoided, someone may still need to identify and value the assets, prepare tax returns, calculate taxes, maintain records, communicate with beneficiaries, pay expenses, and coordinate the administration.
Changing the legal route through which property passes does not make the work disappear.
A Revocable Trust Does Not Automatically Protect Your Assets From Your Creditors
If you create a revocable trust, retain control over the assets, and can take the property back whenever you wish, you generally should not expect the trust to protect those assets from your creditors.
The basic logic is straightforward.
If you retain the legal power to recover and use the property for yourself, your creditors may generally be able to reach it as well.
Asset protection requires different planning.
A Revocable Trust Does Not Automatically Control Everything You Own
This may be the most practically important misconception.
People sometimes say:
“I have a trust. Everything goes through the trust.”
That may not be true.
Property can pass in many different ways.
Some assets may pass under a trust.
Others may pass under a will.
Some may pass by joint ownership.
Others may pass under beneficiary designations.
Business interests may be controlled by shareholder agreements, operating agreements, partnership agreements, or buy-sell arrangements.
Retirement accounts are subject to their own beneficiary designations and tax rules.
Life insurance may pass under beneficiary designations.
The result is that a sophisticated estate plan is not simply a collection of documents.
It is a coordinated system.
The trust, will, powers of attorney, beneficiary designations, account ownership, real estate, business arrangements, insurance, and tax planning must work together.
And a Revocable Trust Does Not Eliminate Administration
This point deserves particular emphasis.
Avoiding probate does not mean avoiding administration.
After your death, someone may still have to:
locate and protect property;
identify financial accounts;
value assets;
manage investments;
deal with real estate;
pay bills and expenses;
address creditor claims;
prepare tax returns;
pay taxes;
communicate with beneficiaries;
interpret the trust;
maintain accounting records;
resolve disputes;
decide when distributions can safely be made;
and obtain appropriate releases, approvals, or accountings.
Some of this work may occur outside the probate process.
But the work still exists.
In some cases, trust administration may be easier.
In others, it may simply be different.
And occasionally, a poorly funded or poorly coordinated trust can result in both trust administration and probate administration occurring at the same time.
That brings us to the central warning of this article.
You Created the Trust to Avoid Problems. What New Problems Might You Create?
One of the dangers of oversimplified estate planning advice is that it focuses entirely on the problem a planning technique is supposed to solve.
It pays far less attention to the new issues that may arise when the technique is implemented.
Consider something as seemingly simple as transferring your Pennsylvania home to your revocable trust.
You might reasonably think:
“I own the house now. I will own and control the trust. I will continue living in the house. Nothing has really changed.”
From a practical standpoint, that may feel true.
Legally, however, a great deal may have changed.
The Pennsylvania Realty Transfer Tax Issue
Pennsylvania imposes a realty transfer tax on many transfers of real estate.
Properly structured transfers to qualifying revocable living trusts may be excluded from that tax.
But the exclusion is not necessarily automatic merely because the document is called a “revocable trust.”
The terms of the trust matter.
The identity of the settlor matters.
The people who may receive benefits from the trust during the settlor’s lifetime may matter.
The ownership of the property before the transfer matters.
The deed matters.
The Statement of Value and supporting documentation matter.
Recent Pennsylvania litigation has demonstrated just how technical these issues can become.
In one case, provisions designed to permit distributions to people other than the grantors under certain incapacity circumstances created a realty transfer tax controversy. Resolving the problem ultimately involved judicial modification of the trust and litigation over the tax consequences.
Think about that for a moment.
A family creates a revocable trust as part of an estate plan intended, presumably, to make things easier.
A provision intended to address incapacity creates an unexpected issue under Pennsylvania’s realty transfer tax rules.
Correcting the problem requires legal proceedings.
This does not mean you should be afraid to transfer Pennsylvania real estate to a revocable trust.
It means the transaction deserves more analysis than:
“Just prepare a deed and put the house in the trust.”
Then There May Be a Municipal Surprise
Pennsylvania’s municipalities do not all treat real estate transfers the same way.
Depending on where the property is located, a transfer of title may require some combination of applications, certificates, fees, inspections, sewer certifications, use-and-occupancy procedures, or other municipal compliance.
Some municipalities have extensive property-transfer procedures.
Others do not require a resale use-and-occupancy certificate at all.
Still others may distinguish among different types of transfers or changes in occupancy.
The important point is that a transfer to a revocable trust can create a municipal issue that the homeowner never anticipated.
Imagine discovering that transferring your home to your trust, even though you continue living there exactly as before, has triggered an application or inspection process.
Perhaps an inspection then reveals an older improvement, permit issue, property condition, or code question that must be addressed.
You began with an estate planning objective.
You ended up dealing with the local municipality.
Again, this does not mean that the trust transfer was a mistake.
It means that the consequences should have been investigated before the deed was recorded.
The Deed Is Only One Part of the Real Estate Analysis
Even when realty transfer tax and municipal requirements are properly addressed, additional issues may remain.
Does the property have a mortgage?
Should the lender be notified?
Does the transfer affect any loan provisions?
Should the title insurance company be contacted?
Does the homeowner’s insurance policy properly reflect the trust ownership?
Is the property jointly owned by spouses?
Does the new deed preserve the intended form of ownership and estate planning?
Is the property located in another state?
Are there homeowner association restrictions or requirements?
The broader lesson is simple.
Funding a trust is not merely an administrative exercise.
It is a series of legal and financial decisions.
Not Everything Necessarily Belongs in Your Trust
Once someone understands that an unfunded trust may fail to accomplish its objectives, there is a temptation to move to the opposite extreme.
“Fine. I will put everything in the trust.”
That is not necessarily the right answer either.
Different assets require different analysis.
Retirement Accounts
Retirement accounts generally should not simply be retitled into a revocable trust during the account owner’s lifetime.
Doing so can create significant tax problems.
A trust may sometimes be named as the beneficiary of a retirement account, but that is a separate and often complicated planning decision.
The appropriate beneficiary designation depends on the family, tax consequences, asset-protection objectives, ages of beneficiaries, trust language, and other circumstances.
Bank and Investment Accounts
Bank and brokerage accounts may often be transferred to a revocable trust.
But even here, practical issues matter.
How will automatic payments work?
Will online access change?
Does the account involve margin borrowing or other lending arrangements?
What documentation will the institution require?
Will the successor trustee be able to obtain access when needed?
Closely Held Businesses
Business interests may be subject to operating agreements, partnership agreements, shareholder agreements, buy-sell agreements, lender restrictions, licensing rules, or tax considerations.
Transferring the ownership interest to a trust without reviewing those documents can create problems.
Life Insurance
Life insurance ownership and beneficiary designations should be coordinated with the overall plan.
Simply transferring a policy or changing a beneficiary without understanding the tax and estate planning consequences may undermine other objectives.
And, to prevent federal estate tax on life insurance proceeds (yes they ARE taxable under federal tax law but not for the state of Pennsylvania) it must be in a special type of IRREVOCABLE trust known as an ILIT (irrevocable life insurance trust).
Vehicles and Personal Property
Whether vehicles, valuable collections, tangible personal property, firearms, boats, aircraft, or other assets should be transferred to a trust depends on the circumstances.
The correct lesson is not:
“Put everything in the trust.”
It is:
Determine what should be owned by the trust, what should remain outside it, and how everything will work together.
You Signed the Trust. Now What?
For many people, the most important part of this article begins here.
You already have a revocable trust.
Perhaps our firm prepared it.
Perhaps another lawyer did.
Perhaps you created it many years ago.
The important question is no longer whether you should create one.
It is:
Is the trust you already have doing what you think it is doing?
A trust is created at a particular moment in time.
Your life does not stop changing at that moment.
Children marry and divorce.
Grandchildren are born.
Family members die.
Relationships change.
People develop disabilities.
Children who seemed financially immature at twenty-five may become successful business owners at forty-five.
A child who once appeared to be the obvious successor trustee may move across the country, develop health problems, experience financial difficulties, or become estranged from other family members.
Your assets change too.
You buy and sell real estate.
You open and close financial accounts.
You acquire business interests.
You sell companies.
You inherit property.
Your wealth may increase substantially.
A plan designed for a $2 million estate may no longer be appropriate for a family worth $10 million, $20 million, or more.
The law changes.
Tax laws change.
Trust laws change.
Reporting requirements change.
Your objectives may change.
Perhaps your greatest concern when you created the trust was avoiding probate.
Today, you may be far more concerned about incapacity, protecting property from a child’s divorce, preserving wealth for grandchildren, reducing taxes, protecting a family business, or preparing the next generation.
The question is not whether the trust was well drafted when it was created.
The question is whether it remains appropriate now.
Was the Trust Ever Properly Funded?
This is one of the first questions that should be asked during a trust review.
Which assets were actually transferred?
Which were supposed to be transferred but never were?
What assets have been acquired since the trust was created?
Have financial accounts been opened or closed?
Has real estate been bought or sold?
Have business interests changed?
Are beneficiary designations consistent with the current plan?
Do the trust and the will still work together?
Do powers of attorney coordinate with the trust?
Is there a current list of trust assets?
These are practical questions.
They are also questions that can determine whether the trust accomplishes its intended purpose.
Does the Trust Still Reflect Your Family’s Reality?
Estate planning is ultimately about people. Documents matter because people matter.
Consider the successor trustees you selected (the person who would act when you no longer can).
Would you select the same people today?
Are they still capable of serving?
Are they willing to serve?
Do they get along with the beneficiaries?
Do they have the financial judgment necessary for the role?
Do they live in a location that makes administration practical?
Would an individual trustee, corporate trustee, co-trustee arrangement, trust director, or other structure work better today?
Now consider the beneficiaries.
Have marriages, divorces, creditor problems, disabilities, addiction, financial immaturity, business risks, or other circumstances changed the way you would want property managed for them?
The most dangerous estate plan may not be a badly drafted plan.
It may be a very well-drafted plan for a family that no longer exists in the same form.
Does the Trust Still Reflect Your Current Level of Wealth?
Successful people frequently underestimate how much their financial circumstances have changed.
A business grows.
Real estate appreciates.
Investment accounts increase.
Life insurance is acquired.
An inheritance is received.
The estate plan that was entirely appropriate fifteen years ago may no longer address current tax, asset-protection, liquidity, succession, or family concerns.
This is another reason a trust should not be viewed as a document that is signed and forgotten.
And Then There Is the Other Person Who Needs to Understand Your Trust – Or Who Needs Training To Do The Job?
At some point, you may no longer be the person managing the trust.
That transition may occur because of incapacity.
It will eventually occur because of death.
Someone else will take over.
Who is that person?
More importantly:
Are they prepared?
Naming someone as successor trustee is easy.
Preparing them to serve is something entirely different.
A parent may spend forty years building a business, accumulating investments, buying real estate, creating an estate plan, and making sophisticated financial decisions.
Then the parent names an adult child as successor trustee.
The child may receive almost no education about the role.
They may not have read the trust.
They may not know where the original documents are located.
They may not know which assets are owned by the trust.
They may not know the lawyer, accountant, financial advisor, insurance professional, or other people who should be contacted.
They may not know how incapacity is determined.
They may not understand what happens after death.
They may not know what information beneficiaries are entitled to receive.
They may not understand the tax responsibilities.
They may not know that Pennsylvania law can impose notice obligations within relatively short periods after certain events.
They may not understand that distributing assets too quickly can create serious problems.
They may not even know that they have been named.
Then something happens.
The parent has a stroke.
Develops dementia.
Suffers a serious accident.
Or dies.
The successor trustee is suddenly expected to learn under pressure.
At the same time, they may be dealing with grief, frightened family members, demanding beneficiaries, unpaid bills, investment decisions, real estate, taxes, deadlines, and family disagreements.
This is not the ideal time to begin trustee education.
Being Named as Trustee and Being Prepared to Serve Are Not the Same Thing
A successor trustee needs to understand several different issues.
First, they need to know when they are authorized to act.
The trust document may contain specific provisions for determining incapacity.
Medical certifications may be required.
A judicial determination may be relevant in some circumstances.
The trustee should not simply assume authority because a family member says, “Dad isn’t doing well.”
Second, the successor trustee needs the complete trust document.
That includes amendments.
It is surprisingly common for families to locate an original trust but be uncertain whether later amendments exist.
Third, the successor trustee needs to identify the property actually owned by the trust.
Remember, the trust only controls the assets properly coordinated with it.
Fourth, the successor trustee needs to understand the terms of the trust.
Who are the beneficiaries?
What distributions are permitted?
What distributions are required?
What discretion does the trustee have?
What standards govern the use of trust property?
Are there special provisions for a spouse?
Children?
Grandchildren?
Disabled beneficiaries?
Business interests?
Real estate?
Fifth, the trustee needs to understand their fiduciary responsibilities.
A trustee is not simply a family member helping out.
The trustee occupies a legal position of responsibility.
The First 30 Days Can Matter
When a successor trustee takes over after incapacity or death, there may be immediate legal and practical responsibilities.
Pennsylvania law imposes notice obligations on trustees in certain circumstances, including after the death of the settlor of a revocable trust.
Depending on the circumstances, the trustee may need to notify the personal representative, spouse, adult children, or others.
This is another example of the difference between avoiding probate and avoiding administration.
The successor trustee may need to act quickly to:
confirm their authority;
locate the trust and all amendments;
identify and protect trust property;
determine whether a probate estate also exists;
identify the executor or personal representative;
contact legal, tax, and financial advisors;
begin maintaining detailed records;
address insurance and property concerns;
review bills and expenses;
consider tax deadlines;
communicate appropriately with beneficiaries;
and avoid making premature distributions.
The exact responsibilities depend on the trust, assets, family, and circumstances.
But one point is universal.
The successor trustee should not have to figure everything out for the first time during a crisis.
Your Trustee Is Still Your Child, but They Are Also a Fiduciary and Probably Also A Beneficiary!
This can be one of the most difficult transitions for families.
Suppose you name your daughter as trustee for your children.
Before your death, she is a sister.
After your death, she is still a sister.
But she is also a fiduciary.
Her siblings may ask:
“Why haven’t you distributed the money?”
“Why are you selling the house?”
“Why are you keeping so much cash?”
“Why do you need a lawyer?”
“Why can’t I have my inheritance now?”
“Why did you give our brother money and not me?”
The trustee must answer those questions based on the trust, applicable law, fiduciary duties, tax considerations, and the circumstances.
Family expectations and fiduciary responsibilities do not always align.
This is one reason trustee education matters.
A prepared trustee is more likely to understand the role, communicate effectively, maintain records, seek professional assistance when appropriate, and avoid preventable family conflict.
You Do Not Have to Tell Your Children Everything to Prepare Them
Some clients resist discussing their estate plans because they do not want to disclose their wealth or every detail of their planning.
That is understandable.
Preparation does not require complete disclosure.
You can educate a successor trustee about:
their role;
where documents will be located;
how incapacity is determined;
who the professional advisors are;
what immediate steps should be taken;
what records should be maintained;
what mistakes should be avoided;
and when professional assistance should be obtained.
You can do all of that without necessarily disclosing every account balance, beneficiary distribution, or personal financial detail.
The objective is not to surrender your privacy.
It is to prevent unnecessary confusion later.
Three Questions to Ask About Your Revocable Trust Now
After considering all of these issues, the subject can become complicated very quickly.
So it may help to return to three relatively simple questions.
1. What Problem Was My Revocable Trust Created to Solve?
Was it designed to address incapacity?
Avoid ancillary probate?
Increase privacy?
Centralize asset management?
Reduce probate?
Protect beneficiaries after your death?
Address family complexity?
If you cannot clearly explain why the trust exists, that is worth examining.
2. Is the Trust Current, Properly Funded, and Still Capable of Solving That Problem?
Have your assets changed?
Has your family changed?
Has your wealth changed?
Have the laws changed?
Were the intended assets ever transferred?
Have newly acquired assets been addressed?
Are beneficiary designations coordinated?
Are the successor trustees still appropriate?
A trust that was excellent planning fifteen years ago may no longer be the right plan today.
3. Are the People Who May Eventually Have to Administer the Trust Prepared?
Do they know they have been named?
Do they know where the documents are?
Do they understand their responsibilities?
Do they know whom to call?
Have they received any meaningful education?
If you cannot confidently answer all three questions, that does not necessarily mean you have a bad trust.
It means you have identified an opportunity to make the plan better.
The Better Question Is Not Whether Revocable Trusts Are Good or Bad
Estate planning rarely benefits from absolute answers.
Revocable trusts are not inherently good.
They are not inherently bad.
They are tools.
In the right circumstances, a revocable trust can improve incapacity planning, reduce probate proceedings, provide greater privacy, simplify management, help with multistate property, and create a structure for protecting beneficiaries after death.
In other circumstances, the benefits may be modest.
And when a trust is created, funded, or maintained without sufficient attention, it can create unexpected tax, municipal, administrative, financial, and family complications.
That brings us back to the question with which we began:
What problem are you trying to solve?
Once you know the answer, you can ask whether a revocable trust is the right tool.
If you already have one, you can ask whether it remains the right tool and whether it is actually working as intended.
And finally, you can ask whether the people who may someday have to take control are prepared for the responsibilities you have given them.
Those are more difficult questions than simply asking whether you should have a revocable trust.
They are also much more likely to lead to a plan that works when you and your family eventually need it.
Click here for our short assessment to help you figure out if you need a trust or if your revocable trust is doing what you think it is.
To register for our informational webinar (or the replay) contact the firm at 610-933-8069 and mention this blog post by name.
About The Author and Our Firm
David M. Frees, III, J.D. is Co-Chair of the Trust, Estates & Wealth Preservation Section at Unruh, Turner, Burke & Frees, P.C. He has practiced in the areas of estates, trusts, asset protection, and wealth preservation for nearly four decades and was an early adopter of trust protector provisions in Pennsylvania domestic planning.
Mr. Frees has:
- Been selected for many years to Best Lawyers in America® and Pennsylvania Super Lawyers®
- Received a 10.0 “Superb” rating from AVVO
- Lectured for the Pennsylvania Bar Institute and at institutions including Harvard, Yale, Dickinson, ASU, and Cornell
- Served on the boards and trust committees of multiple trust companies
Our firm has offices in Phoenixville and West Chester, and the Trust, Estates & Wealth Preservation Section has helped thousands of Pennsylvania families design plans that:
- Protect heirs from divorce, lawsuits, and business creditors
- Minimize taxes and administrative hassle
- Preserve privacy and family control
- Keep more of what you’ve built in the hands of the people you love
Important Disclosures
This article is for educational purposes only and does not constitute legal or tax advice. Laws change, and their application depends on your specific facts and circumstances.
If you’d like advice on your situation, please call our office at 610-933-8069 to schedule a confidential consultation.
