The Truth About Living Trusts

The perception is that by establishing a living trust you can save death taxes, prevent your assets from being disclosed to the public, reduce the overall costs to plan and administer an Estate and reduce the time to administer an Estate. BUT, do you know that:

• A living trust will not save Pennsylvania death taxes and does not save federal death tax unless your estate is worth more than $2,000,000.
• A living trust does not keep your assets from being disclosed to the public because in Pennsylvania, a copy of your Pennsylvania death tax return is filed and retained in the courthouse of the county of your residence. It is available for public inspection at any time.
• A living trust does not always reduce the overall cost to plan your estate and administer your estate. The average cost to prepare a simple Will is $300.00. The typical cost to prepare a living trust is between $2,000.00 and $2,500.00. Even with a living trust, you still have to pay an attorney to prepare and file the Pennsylvania death tax return and finalize administration of the living trust, which can cost at a minimum $1,000.00. If the attorney for the estate determines its fee based on the time actually worked (this is how Owlett & Lewis, P.C. charges for estate administration), rather than on the size of the estate (this is how most attorneys charge for estate administration), then a Will, rather than a living trust, in most instances results in the least overall cost to plan and administer an estate.
• A living trust in Pennsylvania does not decrease the time to administer an estate. With a Will or living trust, a Pennsylvania death tax return must be filed. An estate cannot be finalized without an acceptance of this death tax return from the Pennsylvania Department of Revenue.
• With either a living trust or a Will, estate assets can be distributed to beneficiaries at any time during the administration.

Call us before you commit to a living trust. We will tell you honestly if you need a living trust to reduce death taxes or to simplify your estate administration.