Should I Establish a Trust Even If I Have Beneficiary Designations in Place to Avoid Probate? - Pennsylvania
The Short Answer
Sometimes, yes. In Pennsylvania, beneficiary designations can keep certain assets out of probate, but they usually don’t cover everything—and they don’t solve every planning problem (like incapacity planning, coordinating multiple beneficiaries, or handling “what if” scenarios).
A properly structured trust can still be valuable even if you already have beneficiaries listed on accounts, because it can act as a “backstop” plan and a central set of instructions for assets that don’t transfer cleanly by designation.
What Pennsylvania Law Says
Pennsylvania recognizes that some transfers at death happen by contract/registration rather than through a will, which is why certain beneficiary-designated assets can pass outside probate. For example, Pennsylvania law treats a transfer-on-death (TOD) registration as effective by contract and “not testamentary,” meaning it generally does not require probate to transfer ownership.
The Statute
The primary law governing this issue is 20 Pa.C.S. § 6409.
This statute establishes that a transfer on death resulting from a registration in beneficiary form is effective by contract and is not treated as a testamentary transfer.
Why You Should Speak with an Attorney
While beneficiary designations can be a powerful probate-avoidance tool, applying them to a real estate plan is rarely simple. Legal outcomes often depend on:
- Strict Deadlines and Claims Issues: Even if assets pass outside probate, creditor issues can still matter. Pennsylvania law specifically addresses creditor rights and post-death claim/distribution issues involving revocable trusts, including time-sensitive creditor-notice concepts. See, e.g., 20 Pa.C.S. § 7755.
- Burden of Proof / Documentation Problems: Banks and financial institutions often require precise paperwork and may reject or delay transfers if the beneficiary designation is outdated, incomplete, or conflicts with other documents. If a beneficiary predeceases you (or can’t be located), the asset may end up in the estate anyway.
- Exceptions and Gaps: Beneficiary designations typically don’t control everything—like assets without a designation, certain real estate situations, or “pour-over” assets that you acquire later and forget to title correctly. A trust can help consolidate and coordinate your plan so it works as intended.
Trying to rely solely on beneficiary designations can lead to unintended disinheritance, unequal distributions, family disputes, or assets being pulled back into probate. An attorney can review your asset list and align your beneficiary designations, will, and any trust so they work together under Pennsylvania law.
Get Connected with a Pennsylvania Attorney
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Disclaimer: This article provides general information under Pennsylvania law and does not create an attorney-client relationship. Laws change frequently. For legal advice specific to your situation, please consult with a licensed attorney.