By: Henry I. Langsam, Esquire of Langsam Stevens Silver & Hollaender LLP
September 13,2026
NOTE: This article is NOT a substitute for the advice of counsel.
Introduction. A revocable living trust can be a powerful estate planning tool. There is publicity about the need for a living trust to avoid probate. Sometimes that can be a sales pitch. Sometimes a living trust can be beneficial.
What is a trust? A trust is a written document created by one person, the grantor, in which some asset, which may be placed in it in the future, is controlled by another person, the trustee, for the benefit of a third person, a beneficiary. All three persons can be the same individual or not.
Generally, a revocable living trust is a type of trust that can be cancelled at any time and the creator of the trust (the “Grantor”) is both the trustee and beneficiary (allowing for control of the trust’s assets). With a revocable living trust, assets can be distributed to the Grantor, and upon death, a “successor trustee” distributes the assets in accordance with the legal dictates of the trust.
Some of the Pros for a Revocable Trust
Probate can be avoided. Upon death, assets held in the revocable trust bypass probate, meaning the assets can pass to heirs without involving the courts, which can be time-consuming and expensive. The problem is probate is generally never completely avoided. Not all assets have paper titles to transfer to a trust. Also, some financial accounts like checking and savings accounts are often titled in the Grantor’s name. A successor trustee generally takes over without court oversight. However, in Pennsylvania, probate is an “inconvenience”; there is some cost and time delay before assets can be distributed, but it is not considered overly burdensome.
“Ancillary” probate in another state can also be avoided. Moving property into a revocable trust (by registering the deed to the trust) can avoid certain probate issues involving out of state property.
Protection in case of incapacity. At the point of incapacitation, a successor trustee can take charge, and that successor trustee has a fiduciary responsibility to manage trust assets for the Grantor.
Privacy. A living trust generally does not go through probate, so all transactions are private, which is important to some people. A will, on the other hand, becomes part of the public record once it is probated. Pennsylvania requires an inventory of assets, a Pennsylvania inheritance tax return and a final accounting, unless a family settlement is agreed upon privately by the heirs, which occurs often. Thus, information on the estate may be accessible to the public if no family settlement is reached.
Management by a Trustee. Sometimes, it is better that large assets, like life insurance, be managed by a Trustee after one passes.
Step Up in Basis Applies. Assets passed through a revocable living trust get a stepped-up basis. A stepped-up basis means that for tax purposes, the government values assets at market value on the date of death as opposed to the purchase price. Thus, when the inherited property is sold, there may be less tax due on appreciated property.
Some of the Cons for a Revocable Trust
No immediate tax benefits. Shifting assets into a revocable living trust will not save income or estate taxes, as all assets in the trust are considered to be in the control of the Grantor, and are therefore includable in the Grantor’s estate. Pennsylvania does not impose a separate state estate tax, so the only state-level transfer tax to consider is the inheritance tax described below. Inheritance tax is 0% in Pennsylvania on property passed to a surviving spouse, or from a parent to a child aged 21 or younger, and only 4.5% on property passed to other direct descendants and lineal heirs. The Pennsylvania inheritance tax rates are:
● 0 percent on transfers to a surviving spouse, or from a parent to a child aged 21 or younger;
● 4.5 percent on transfers to other direct descendants and lineal heirs;
● 12 percent on transfers to siblings; and
● 15 percent on transfers to other heirs, except charitable organizations, exempt institutions and government entities, which are exempt from tax.
No asset protection. Although assets held in an irrevocable trust are generally beyond the reach of creditors, that is not true with a revocable living trust. If asset protection is important, an irrevocable trust, limited liability company or a family limited partnership could be a better choice. Since the Grantor can revoke a living trust, the trust is viewed as a mirror image of the Grantor and not only does not provide any type of income or estate tax benefit, but provides little protection from creditors. However, if the trust continues after the death of the Grantor, it becomes irrevocable, and the assets in the trust then have protection against creditors. It is also worth noting that a revocable trust provides no protection against the cost of long-term care: because the Grantor retains full control over the trust, its assets are treated as available resources for Medicaid eligibility purposes and remain subject to Medicaid estate recovery. Pennsylvania is also among the states where transferring a home into a revocable trust can cause the home to lose its normal Medicaid exemption, so this step should be considered carefully with an elder law attorney if long-term care planning is a concern. Anyone seeking to protect assets from nursing home costs typically needs an irrevocable Medicaid asset protection trust instead, funded well before care is needed.
It requires some administrative work and expense. After creating a revocable living trust, assets must be retitled into the trust’s name, because assets not formally held in the trust still have to go through probate and will not be under the management of a successor trustee in case of incapacity. But certain types of assets can still avoid probate, like retirement plans, insurance policies, annuities and jointly held property, meaning a revocable trust may not always be needed. There may be some expense in transferring assets. A revocable trust should also be paired with a “pour-over” will, which directs into the trust any assets that were never formally retitled during the Grantor’s lifetime; the trust does not eliminate the need for a will.
Added Complexity. A trust is like another living creature to take care of. You have to get bank permission to transfer property with loan encumbrances; you may need extra investment, checking and banking accounts to maintain assets. Banks, tradesmen and others are not always comfortable dealing with properties in trust as compared to properties held by the Grantor individually.
No Stepped-Up Basis on Irrevocable Trust Assets. Unlike assets in a revocable trust, assets held in an irrevocable trust do not receive a stepped-up basis; instead, any gain is measured against the asset’s original purchase price, so more capital gains tax may be due when the property is later sold. This is an important trade-off to weigh against the creditor protection an irrevocable trust offers.
Closing Comments. I think revocable living trusts are useful estate planning tools. Most estates that I see do not need avoidance of probate (unless the estate is very large), so I generally do not transfer all assets to the trust. However, if an heir will receive a large sum, such as life insurance, it may be good to have that managed by a trustee when you die.
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Henry I. Langsam, Esquire is a founding partner of Langsam Stevens Silver & Hollaender LLP and now serves as Of Counsel to the Family & Estate and Business & Real Estate practices. He is a seasoned attorney with decades of experience in Pennsylvania and New Jersey estate planning law and is delighted to help clients learn more about their options for long-term life planning.