T HE TRUTH
A BOUT PROBATE
L IVING TRUSTS
IN
PENNSYLVANIA
&
ISSUED AS
A
PUBLIC SERVICE BY
THE PROBATE AND TRUST LAW SECTION
OF
THE ALLEGHENY COUNTY BAR ASSOCIATION
© THE ALLEGHENY COUNTY BAR ASSOCIATION 2002
THE TRUTH ABOUT PROBATE
IN PENNSYLVANIA
H
OW DOES THE PROBATE
PROCESS BEGIN?
When a person dies owning assets in his or her name alone,
an estate must be started by a personal representative to handle
the decedent’s assets and take care of settling the decedent’s
affairs. This is called the probate or estate administration pro-
cess. The personal representative is called an Executor if ap-
pointed in the decedent’s Will and is otherwise called an Ad-
ministrator. The personal representative can be an individual
or corporation (such as a bank or trust company).
WHAT HAPPENS AFTER AN
ESTATE IS STARTED?
The job of the personal representative is to wind up the
decedent’s affairs by notifying beneficiaries, gathering assets,
paying debts and taxes, accounting for all estate transactions
and properly distributing the estate. The personal representa-
tive is the only one legally authorized to deal with the assets of
the estate and handle matters of estate administration.
WHY IS THERE A PROBATE PROCESS?
Reasons for the probate process include prevention of fraud
and protection of creditors and rightful beneficiaries of estates.
Beneficiaries are entitled to notice of the estate administration
and an accounting of all estate transactions. They also have ac-
cess to all documents filed by the estate. The probate process in
Pennsylvania is an efficient way to protect beneficiaries and credi-
tors and to assure proper distribution of estate assets.
ARE THERE DISADVANTAGES
TO LIVING TRUSTS?
If assets are distributed through a living trust instead of your
estate after death, beneficiaries will have no automatic legal
right to the notices required for estates. Trustees of living trusts
who decline to follow the procedures used by executors under
Wills to conclude the administration of estates may remain sub-
ject indefinitely to personal liability, even after funds have been
distributed. Also, while personal representatives of estates are
granted broad legal authority to fully wind up a decedent’s
affairs, as evidenced by a certificate issued by the Register of
Wills, trustees of living trusts have no authority beyond assets
placed in the trust.
HOW DO I KNOW
WHAT I NEED?
The only way to be certain your specific needs and
desires are met is to consult a trusted attorney or an
attorney referred to you by a trusted source. High-
pressure solicitations by mail or in person should
be viewed with skepticism. Your financial and estate
planning situation is unique and should be accorded
the proper time, attention and expertise which only
a properly trained and experienced attorney can
provide.
DO ALL OF A DECEDENT’S ASSETS
GO THROUGH PROBATE?
No. Assets held in joint ownership between spouses or with
others with right of survivorship pass automatically to the sur-
vivor and are not subject to probate. Bank accounts held in
joint ownership or in trust for another are also not subject to
probate. Assets with designated beneficiaries such as life insur-
ance policies, annuities, IRAs and various retirement plans pass
to named beneficiaries and are usually not subject to probate.
Finally, assets held in a trust are governed by the terms of the
trust rather than the decedent’s Will and pass outside the pro-
bate process. It is important to note that assets controlled by
the decedent at death, even if not subject to probate, are still
subject to all of the same death taxes as probate assets.
HOW DOES THE
PROBATE PROCESS END?
The probate process ends upon receipt by the beneficiaries
of their proper share of the estate and release of the personal
representative from further responsibility for the administra-
tion of the estate.
THE TRUTH ABOUT
LIVING TRUSTS
WHAT IS A LIVING TRUST?
A “living trust” is a legal entity to which your assets (bank
accounts, securities, house, etc.) can be transferred and
managed by a person, including yourself, or corporation (such
as a bank or trust company) called a “trustee”. The trustee
manages your assets in accordance with written instructions
contained in a trust document. Living trusts can be revocable
or irrevocable.
ARE LIVING TRUSTS
SOMETHING NEW?
No. Living trusts have existed for centuries. They are more
formally called “inter-vivos trusts” to distinguish them from
“testamentary trusts” which are contained in Wills and take
effect upon death. Living trusts traditionally were and still are
used for the management of assets of those requiring or
desiring such services.
WHY AM I HEARING SO MUCH
ABOUT LIVING TRUSTS NOW?
Today, revocable living trusts are heavily marketed as sub-
stitutes for Wills, often using exaggerated tales of costs and
delays in the administration of estates under Wills (sometimes
called the “probate” process) as a sales tactic. Publicity has arisen
from these sales activities as well as from press coverage of fines
and other sanctions imposed by the Pennsylvania Attorney
General on certain vendors of living trusts.
WHAT ARE THE
COSTS OF PROBATE?
In Pennsylvania, the costs of probate include filing fees for
opening the estate, advertising the estate, filing an inventory
of estate assets and other papers to complete the administra-
tion process. In addition, legal fees are paid to the attorney
handling the estate work, which may include preparation of
various death and income tax returns. The personal represen-
tative may charge a commission. Obtaining appropriate legal
advice about the administration of the estate can help keep
down costs as well as taxes. Legal counsel is also advisable in
dealing with assets which pass outside of probate, such as when
a living trust is involved.
DOES PROBATE TAKE A
LONG TIME?
In Pennsylvania, probate need not and normally does not
take long in comparison with other states. Personal represen-
tatives are accorded broad powers to accomplish the admin-
istration of estates expeditiously. They are empowered to
handle most details (liquidating assets, paying debts and
expenses, etc.) without seeking court approval for each and
every transaction. Personal representatives are required to file
only an inventory of estate assets and periodic short status
reports stating whether the estate administration has been
completed. Accounting of estate transactions to beneficiaries
and heirs may be accomplished informally (not involving the
court) or formally (filed with the court). Pennsylvania Court
and Register of Wills charges are relatively modest since their
involvement in the probate process is less supervisory than in
some other states.
DO I NEED A REVOCABLE LIVING TRUST?
The answer depends on your unique family situation, finan-
cial position and goals. In Pennsylvania, the benefit of creating
a living trust for the sole purpose of avoiding probate is debat-
able. This is because in Pennsylvania, probate entails relatively
moderate cost and less time in comparison to many other states.
Executors named in Wills to administer estates are accorded
much flexibility in decision-making, and Courts do not become
involved in each detail of the estate administration process.
DOES HAVING A REVOCABLE LIVING
TRUST REDUCE TAXES?
No. The Pennsylvania Inheritance Tax and Federal Estate Tax
are the same, regardless of whether assets are administered through
a revocable living trust or under a Will. Also, estate planning tech-
niques designed to reduce these taxes are available under Wills to
the same extent they are available under revocable living trusts.
WHAT ABOUT LEGAL FEES?
Overall, legal fees may be more or less with revocable living
trusts than Wills. For the provisions of a living trust to control, a
trust document must be prepared and your assets must be trans-
ferred to the trust during your lifetime. This often entails signifi-
cant legal fees. On the other hand, a living trust may reduce or
eliminate Court filing fees incurred after your death with a Will.
After death, both trustees of living trusts and executors under Wills
require legal advice as to the proper payment of taxes and credi-
tors, distribution to beneficiaries, document interpretation and other
issues. Also, a Will is advisable even if you have a living trust to
provide for the administration and distribution of assets not trans-
ferred to the trust during your lifetime. Note that the reasonable-
ness of legal fees charged to trusts is judged by the same rules of
professional responsibility as legal fees charged to estates.
DO ALL OF A DECEDENT’S ASSETS
GO THROUGH PROBATE?
No. Assets held in joint ownership between spouses or with
others with right of survivorship pass automatically to the sur-
vivor and are not subject to probate. Bank accounts held in
joint ownership or in trust for another are also not subject to
probate. Assets with designated beneficiaries such as life insur-
ance policies, annuities, IRAs and various retirement plans pass
to named beneficiaries and are usually not subject to probate.
Finally, assets held in a trust are governed by the terms of the
trust rather than the decedent’s Will and pass outside the pro-
bate process. It is important to note that assets controlled by
the decedent at death, even if not subject to probate, are still
subject to all of the same death taxes as probate assets.
HOW DOES THE
PROBATE PROCESS END?
The probate process ends upon receipt by the beneficiaries
of their proper share of the estate and release of the personal
representative from further responsibility for the administra-
tion of the estate.
THE TRUTH ABOUT
LIVING TRUSTS
WHAT IS A LIVING TRUST?
A “living trust” is a legal entity to which your assets (bank
accounts, securities, house, etc.) can be transferred and
managed by a person, including yourself, or corporation (such
as a bank or trust company) called a “trustee”. The trustee
manages your assets in accordance with written instructions
contained in a trust document. Living trusts can be revocable
or irrevocable.
ARE LIVING TRUSTS
SOMETHING NEW?
No. Living trusts have existed for centuries. They are more
formally called “inter-vivos trusts” to distinguish them from
“testamentary trusts” which are contained in Wills and take
effect upon death. Living trusts traditionally were and still are
used for the management of assets of those requiring or
desiring such services.
WHY AM I HEARING SO MUCH
ABOUT LIVING TRUSTS NOW?
Today, revocable living trusts are heavily marketed as sub-
stitutes for Wills, often using exaggerated tales of costs and
delays in the administration of estates under Wills (sometimes
called the “probate” process) as a sales tactic. Publicity has arisen
from these sales activities as well as from press coverage of fines
and other sanctions imposed by the Pennsylvania Attorney
General on certain vendors of living trusts.
WHAT ARE THE
COSTS OF PROBATE?
In Pennsylvania, the costs of probate include filing fees for
opening the estate, advertising the estate, filing an inventory
of estate assets and other papers to complete the administra-
tion process. In addition, legal fees are paid to the attorney
handling the estate work, which may include preparation of
various death and income tax returns. The personal represen-
tative may charge a commission. Obtaining appropriate legal
advice about the administration of the estate can help keep
down costs as well as taxes. Legal counsel is also advisable in
dealing with assets which pass outside of probate, such as when
a living trust is involved.
DOES PROBATE TAKE A
LONG TIME?
In Pennsylvania, probate need not and normally does not
take long in comparison with other states. Personal represen-
tatives are accorded broad powers to accomplish the admin-
istration of estates expeditiously. They are empowered to
handle most details (liquidating assets, paying debts and
expenses, etc.) without seeking court approval for each and
every transaction. Personal representatives are required to file
only an inventory of estate assets and periodic short status
reports stating whether the estate administration has been
completed. Accounting of estate transactions to beneficiaries
and heirs may be accomplished informally (not involving the
court) or formally (filed with the court). Pennsylvania Court
and Register of Wills charges are relatively modest since their
involvement in the probate process is less supervisory than in
some other states.
DO I NEED A REVOCABLE LIVING TRUST?
The answer depends on your unique family situation, finan-
cial position and goals. In Pennsylvania, the benefit of creating
a living trust for the sole purpose of avoiding probate is debat-
able. This is because in Pennsylvania, probate entails relatively
moderate cost and less time in comparison to many other states.
Executors named in Wills to administer estates are accorded
much flexibility in decision-making, and Courts do not become
involved in each detail of the estate administration process.
DOES HAVING A REVOCABLE LIVING
TRUST REDUCE TAXES?
No. The Pennsylvania Inheritance Tax and Federal Estate Tax
are the same, regardless of whether assets are administered through
a revocable living trust or under a Will. Also, estate planning tech-
niques designed to reduce these taxes are available under Wills to
the same extent they are available under revocable living trusts.
WHAT ABOUT LEGAL FEES?
Overall, legal fees may be more or less with revocable living
trusts than Wills. For the provisions of a living trust to control, a
trust document must be prepared and your assets must be trans-
ferred to the trust during your lifetime. This often entails signifi-
cant legal fees. On the other hand, a living trust may reduce or
eliminate Court filing fees incurred after your death with a Will.
After death, both trustees of living trusts and executors under Wills
require legal advice as to the proper payment of taxes and credi-
tors, distribution to beneficiaries, document interpretation and other
issues. Also, a Will is advisable even if you have a living trust to
provide for the administration and distribution of assets not trans-
ferred to the trust during your lifetime. Note that the reasonable-
ness of legal fees charged to trusts is judged by the same rules of
professional responsibility as legal fees charged to estates.
THE TRUTH ABOUT PROBATE
IN PENNSYLVANIA
H
OW DOES THE PROBATE
PROCESS BEGIN?
When a person dies owning assets in his or her name alone,
an estate must be started by a personal representative to handle
the decedent’s assets and take care of settling the decedent’s
affairs. This is called the probate or estate administration pro-
cess. The personal representative is called an Executor if ap-
pointed in the decedent’s Will and is otherwise called an Ad-
ministrator. The personal representative can be an individual
or corporation (such as a bank or trust company).
WHAT HAPPENS AFTER AN
ESTATE IS STARTED?
The job of the personal representative is to wind up the
decedent’s affairs by notifying beneficiaries, gathering assets,
paying debts and taxes, accounting for all estate transactions
and properly distributing the estate. The personal representa-
tive is the only one legally authorized to deal with the assets of
the estate and handle matters of estate administration.
WHY IS THERE A PROBATE PROCESS?
Reasons for the probate process include prevention of fraud
and protection of creditors and rightful beneficiaries of estates.
Beneficiaries are entitled to notice of the estate administration
and an accounting of all estate transactions. They also have ac-
cess to all documents filed by the estate. The probate process in
Pennsylvania is an efficient way to protect beneficiaries and credi-
tors and to assure proper distribution of estate assets.
ARE THERE DISADVANTAGES
TO LIVING TRUSTS?
If assets are distributed through a living trust instead of your
estate after death, beneficiaries will have no automatic legal
right to the notices required for estates. Trustees of living trusts
who decline to follow the procedures used by executors under
Wills to conclude the administration of estates may remain sub-
ject indefinitely to personal liability, even after funds have been
distributed. Also, while personal representatives of estates are
granted broad legal authority to fully wind up a decedent’s
affairs, as evidenced by a certificate issued by the Register of
Wills, trustees of living trusts have no authority beyond assets
placed in the trust.
HOW DO I KNOW
WHAT I NEED?
The only way to be certain your specific needs and
desires are met is to consult a trusted attorney or an
attorney referred to you by a trusted source. High-
pressure solicitations by mail or in person should
be viewed with skepticism. Your financial and estate
planning situation is unique and should be accorded
the proper time, attention and expertise which only
a properly trained and experienced attorney can
provide.
T HE TRUTH
A BOUT PROBATE
L IVING TRUSTS
IN
PENNSYLVANIA
&
ISSUED AS
A
PUBLIC SERVICE BY
THE PROBATE AND TRUST LAW SECTION
OF
THE ALLEGHENY COUNTY BAR ASSOCIATION
© THE ALLEGHENY COUNTY BAR ASSOCIATION 2002
