To set up a trust in PA, you sign a written trust instrument that identifies the settlor, trustee, and beneficiaries, then separately retitle each asset you want the trust to hold into the trust’s name. Pennsylvania’s Uniform Trust Act, in Title 20, Chapter 77 of the consolidated statutes, controls how trusts are created and administered. The signed document is not the finish line. The funding step, where assets actually move into the trust, is where most people stall.
Choose Revocable or Irrevocable First
This decision shapes everything else: your control, your tax picture, and whether the trust protects anything from creditors.
A revocable trust lets you change the terms, swap beneficiaries, add or remove assets, or dissolve the whole arrangement at any time during your lifetime. For tax and creditor purposes, the law treats the assets as still yours. Most people setting up a trust for basic probate avoidance and family planning use a revocable structure.
An irrevocable trust works differently. Once property goes in, you cannot pull it back or rewrite the terms without the beneficiaries’ consent or a court order. In exchange for that loss of control, the assets are generally beyond your personal creditors and may be removed from your taxable estate. Irrevocable trusts also come up in Medicaid planning, where the timing rules are strict.
The choice is not always either/or. Some families put the home and financial accounts in a revocable trust for probate avoidance and use a separate irrevocable trust for life insurance or specific assets that need protection.
What the Trust Document Must Contain
Pennsylvania law lists five conditions that all must be met for a trust to exist. The settlor must have the mental capacity to create a trust, judged by the same standard used for signing a will. The settlor must sign a written document showing intent to create a trust and setting out its terms. There must be at least one identifiable beneficiary, with exceptions for charitable trusts and pet trusts. The trustee must have actual duties to perform. And the same person cannot be both the sole trustee and the sole beneficiary.1Pennsylvania General Assembly. Pennsylvania Code Title 20, Section 7732 – Requirements for Creation
A trust can be created by transferring property to another person as trustee under a written instrument, by a written declaration that you hold the property as trustee yourself, or by exercising a power of appointment in favor of a trustee.2Pennsylvania General Assembly. Pennsylvania Code Title 20, Section 7731 – Creation of Trust
Beyond the bare legal minimum, the document needs to answer several practical questions.
Who Serves as Trustee
The trustee manages assets, handles distributions, files tax returns, and keeps records. You can name yourself as trustee of a revocable trust during your lifetime, which is common, but you still need at least one successor trustee to take over on incapacity or death. Successors can be a family member, a trusted friend, or a corporate trustee such as a bank or trust company. Corporate trustees bring professional management and typically charge annual fees of 1% to 2% of trust assets.
Pennsylvania does not require a trustee to post a bond unless a court orders it. Most trust instruments include a bond waiver, which saves the trustee the cost of a surety bond. If the document is silent, a beneficiary can still ask a court to require one where there’s reason to question the trustee’s reliability.
Who Receives What, and When
Every trust needs at least one beneficiary, identifiable now or later. Beyond naming them, you decide when and how they receive assets. Some parents stagger distributions so children get a portion at 25 and the rest at 30 or 35 rather than everything at once. Others tie distributions to events like graduating from college or buying a first home. You can also give the trustee discretion to distribute based on a beneficiary’s health, education, or general welfare, which handles circumstances you cannot predict.
How Long the Trust Lasts
Pennsylvania allows trusts to last up to 360 years from creation under its version of the rule against perpetuities.3Pennsylvania General Assembly. Pennsylvania Code Title 20, Section 6107.1 – Applicability of Rule Against Perpetuities Most family trusts need far less. The document should state when the trust terminates, whether that’s on final distribution, after a set number of years, or when the last named beneficiary dies.
Trustee Powers
Pennsylvania’s trust code lists illustrative trustee powers, including buying and selling property, investing funds, paying debts and taxes, and making distributions.4Pennsylvania General Assembly. Pennsylvania Code Title 20, Chapter 77 – Trusts Spelling these out explicitly in the document heads off situations where a bank or title company questions whether the trustee has authority to act.
Signing and Notarizing the Document
The settlor’s signature is what makes the trust legally effective. Pennsylvania does not require witnesses the way it does for a will, but a notary acknowledgment is standard practice and inexpensive. Banks, brokerages, and county recorders often refuse to act on a trust document without notarization, and the acknowledgment forecloses later disputes about whether the settlor actually signed.
Statutory notary fees in Pennsylvania are set by the Department of State. An acknowledgment costs $5.00, plus $2.00 for each additional name.5Pennsylvania Department of State. Notary Public Fees Banks, credit unions, and shipping stores usually have a notary on hand. Bring a valid government photo ID.
Pennsylvania also allows remote online notarization under Act 97 of 2020, which lets a notary in Pennsylvania perform a notarial act by audio-video technology for a signer located anywhere.6Pennsylvania Department of State. Electronic or Remote Notarization The session must be recorded and the notary must verify identity through the platform. Useful when the settlor is out of state or has mobility limitations.
Fund the Trust
A signed trust document with no assets in it is just an empty container. Every asset you want the trust to control has to be formally retitled or transferred into the trust’s name. Anything left out stays in your personal name and goes through probate, which defeats much of the point.
Real Estate
Transferring real property requires a new deed naming the trust as owner. A typical deed would run from “John Smith” to “John Smith, Trustee of the John Smith Revocable Trust dated [date].” The deed gets recorded with the county Recorder of Deeds, and fees vary by county, commonly $70 to $120 depending on local surcharges.
Pennsylvania’s realty transfer tax rules exclude transfers from a settlor to the trustee of their own living trust when no real consideration changes hands.7Legal Information Institute. 61 Pennsylvania Code 91.156 – Trusts You still need to file a Statement of Value form with the deed to claim the exemption. Skip that step and the county may assess the 1% state transfer tax plus any local transfer tax, leaving you to dispute it later.
Bank and Brokerage Accounts
Retitle these by contacting each institution and requesting an ownership change. Most banks and brokerages will ask for either a full copy of the trust or a certification of trust. The certification is a shorter document that confirms the trust exists, identifies the trustee, and states the trustee’s powers without revealing beneficiaries or distribution terms.8Pennsylvania General Assembly. Pennsylvania Code Title 20, Section 7790.3 – Certification of Trust Under Pennsylvania law, an institution that demands the full trust instead of accepting a valid certification can be liable for damages if a court finds it acted in bad faith.
Jewelry, Art, and Other Tangible Items
Items without titles get transferred through a written assignment of personal property. It’s a simple document that lists the items and states you’re transferring ownership to the trust. Keep the assignment updated as you acquire or dispose of valuable pieces.
Retirement Accounts and Life Insurance
Naming a trust as beneficiary of an IRA, 401(k), or life insurance policy is mechanically simple: you request a change-of-beneficiary form and list the trust. The tax consequences for retirement accounts are the complicated part.
When an individual inherits a retirement account, most non-spouse beneficiaries must empty it within 10 years under the SECURE Act. When a trust is named, the account may face even faster payout timelines depending on how the trust is structured.9Internal Revenue Service. Retirement Topics – Beneficiary A trust that doesn’t qualify as a “see-through” trust may need to be emptied within five years rather than ten, creating a compressed income tax bill that naming individuals directly would have avoided. Talk to a tax advisor before naming a trust as beneficiary of a tax-deferred retirement account.
Life insurance is a different story. Death benefits are typically income-tax-free, so naming a trust as beneficiary mainly serves to route the proceeds through the trust’s distribution terms rather than paying beneficiaries directly. Useful when beneficiaries are minors or have trouble managing money.
Add a Pour-Over Will as a Backup
Even a well-funded trust rarely captures every asset. You might open a new account and forget to title it in the trust’s name, or receive an inheritance in your personal name. A pour-over will directs that anything still in your personal name at death gets transferred into your trust. Those assets do go through probate because the pour-over will is processed like any other will, but they end up governed by the trust’s terms rather than distributed separately. Most estate planning attorneys draft a pour-over will alongside every revocable trust as standard practice.
Taxes a Trust Won’t Eliminate
Pennsylvania Inheritance Tax
A trust does not avoid Pennsylvania inheritance tax. When the settlor dies, assets in the trust are still subject to inheritance tax at rates that depend on the beneficiary’s relationship to the deceased:
- Surviving spouse: 0%
- Direct descendants and lineal heirs: 4.5%
- Siblings: 12%
- Everyone else: 15% (charities and government entities are exempt)
These rates apply whether assets pass through a will or a trust.10Pennsylvania Department of Revenue. Inheritance Tax Probate avoidance and tax avoidance are separate things. A trust accomplishes the first, not the second. The inheritance tax return is typically due within nine months of the date of death.
Pennsylvania Income Tax
Pennsylvania treats trusts as separate taxpayers owing state income tax on any of the state’s eight classes of taxable income. A trust is a Pennsylvania resident trust if the settlor was a PA resident when the trust was created, regardless of where the trustee or beneficiaries live.11Pennsylvania Department of Revenue. Estates, Trusts and Decedents The state’s flat rate applies to trust income that isn’t distributed to beneficiaries.
During the settlor’s lifetime, a revocable trust is usually a “grantor trust” for state and federal purposes, so income flows through to the settlor’s personal return and the trust doesn’t file separately. That changes when the settlor dies or when an irrevocable trust holds income-producing assets.
Federal Filings
A revocable trust can use the settlor’s Social Security number during the settlor’s lifetime. Once the settlor dies, or when an irrevocable trust is created, the trust needs its own Employer Identification Number from the IRS.12Internal Revenue Service. Employer Identification Number You can apply online at irs.gov and get one immediately.
Any trust with gross income of $600 or more in a tax year has to file federal Form 1041.13Internal Revenue Service. 2025 Instructions for Form 1041 Income distributed to beneficiaries is reported on Schedule K-1 and taxed on the beneficiary’s return. Income retained by the trust is taxed at trust rates, and those brackets are compressed, hitting the top federal rate much faster than individual brackets.
Transfers into an irrevocable trust may trigger federal gift tax reporting. In 2026, you can transfer up to $19,000 per beneficiary per year without filing a gift tax return. Transfers above that require Form 709, though no tax is owed until cumulative lifetime gifts exceed the $15,000,000 basic exclusion.14Internal Revenue Service. Whats New — Estate and Gift Tax
Creditor Protection and the Medicaid Look-Back
A revocable trust provides no protection from your creditors. Because you keep the power to revoke and pull the assets back, the law treats them as yours. If you’re sued or face a judgment, creditors can reach assets in a revocable trust as easily as money in your checking account.
An irrevocable trust can shield assets from creditors because you’ve given up ownership and control. That protection generally applies to the settlor’s creditors. Assets may still be reachable by the beneficiaries’ own creditors depending on the trust’s design. A spendthrift clause, which blocks beneficiaries from assigning their interest to creditors, adds another layer.
For Medicaid, transfers to an irrevocable trust fall within a 60-month look-back period. When you apply for Medicaid long-term care benefits, the state reviews all asset transfers made in the five years before your application. Any transfer to an irrevocable trust inside that window is treated as a disqualifying gift and triggers a penalty period during which you’re ineligible for coverage. The penalty length depends on the amount transferred and the average cost of nursing home care in your area. Medicaid planning through an irrevocable trust therefore requires action at least five years before you expect to need long-term care, which is exactly the kind of planning people put off.
What Setting Up a Trust Costs in Pennsylvania
Attorney fees vary with complexity, your location in the state, and whether you’re planning as an individual or a couple. The national median flat fee for an individual revocable living trust package runs around $2,475, and most estate planning firms price these on a flat-fee basis rather than hourly. Couples’ packages usually cost more overall but less per person than two separate trusts. A typical “trust package” includes the trust, a pour-over will, a financial power of attorney, and a healthcare directive.
A corporate trustee such as a bank trust department charges ongoing management fees, typically 1% to 2% of asset value per year. Larger trusts can negotiate lower percentages, and some corporate trustees add fees tied to annual income or transaction volume. A family member serving as trustee can waive compensation or take a reasonable fee, which Pennsylvania law allows unless the trust says otherwise.
The other out-of-pocket costs are recording fees for deeds, commonly $70 to $120 by county, and the $5.00 notary fee for each acknowledgment.5Pennsylvania Department of State. Notary Public Fees Retitling a bank account is generally free. Total cost to establish and fully fund a trust usually runs a few thousand dollars, well below what probate administration would cost for a moderately sized estate.