A trust is a legal entity that is created when one person (the settlor) transfers assets to another person or group of people (the trustees) to be held for the benefit of a third person or group of people (the beneficiaries). The trustees are responsible for managing the trust and must act in the best interests of the beneficiaries. 

In Pennsylvania, trusts can be used for a variety of purposes, such as estate planning, asset protection, and tax planning. However, there are a few important things to consider when creating a trust. We will discuss these below.

What are the Different Types of Trusts?

There are many different types of trusts. Some of the most common are:

Who Can Create a Trust in Pennsylvania?

In Pennsylvania, a trust can be created by any adult individual who has the capacity to plan. This means individuals who are 18 years of age or older. This also means that the creator of the trust must have the mental capacity to understand the terms and effects of creating the trust.

Apart from this, in order to create a valid trust in Pennsylvania, the grantor must make sure that all of the following requirements are met:

How Do You Fund a Trust in Pennsylvania?

After ensuring that the above has been completed, now, you will have to fund the trust. Depending on the type of trust, there are a few different ways to fund it, either with a transfer of assets directly to the trust, or with a cash transfer to the trust. Just as with choosing the trust type, the way you choose to fund it will depend on your individual circumstances and goals for the trust. 

Apart from a one-time transfer to the trust, some other common methods of funding a trust include:

What Cannot be Put in a Trust?

There are many things that people put into trusts, but there are also things that cannot be put into trusts. For example, children cannot be put in a trust, nor can a spouse be put in a trust.

There are a few other exceptions to this rule, including certain types of retirement accounts and some types of life insurance policies. Additionally, as assets need to be retitled into the trust’s name, any assets (e.g., your car) that you might want to have your name on will not be transferred to the trust.

What Rights Do Your Trust’s Beneficiaries Have?

If you have created a trust, or you are planning to do so, you likely did so in order to provide for your loved ones after you are gone. While the trust document will spell out who your beneficiaries are and how they will benefit from the trust, it may not be clear what rights those beneficiaries have. Here is a look at some of the most important rights that beneficiaries of trusts have in Pennsylvania.

First and foremost, beneficiaries have a right to information about the trust. This includes information about the assets held in the trust, how those assets are managed, and how much income and principal each beneficiary receives from the trust. Trustees must keep accurate records of all transactions involving the trust and must provide this information to beneficiaries upon request.

Second, beneficiaries have the right to receive distributions from the trust in accordance with the terms of the trust agreement. Trustees must distribute income and principal to beneficiaries in accordance with the terms of the trust document.

Contact a Trusts Attorney at NBMS Law

As you can see, trusts can be a great estate planning tool for Pennsylvania residents. They can help you protect your assets, provide for your loved ones, and save on taxes. If you are interested in creating a trust, please contact an attorney at NBMW Law today. We can help you create a trust that meets your needs and complies with the law.