1Amending the act of March 4, 1971 (P.L.6, No.2), entitled "An
2act relating to tax reform and State taxation by codifying
3and enumerating certain subjects of taxation and imposing
4taxes thereon; providing procedures for the payment,
5collection, administration and enforcement thereof; providing
6for tax credits in certain cases; conferring powers and
7imposing duties upon the Department of Revenue, certain
8employers, fiduciaries, individuals, persons, corporations
9and other entities; prescribing crimes, offenses and
10penalties," in realty transfer tax, further providing for
<-11excluded transactions definitions.

12The General Assembly of the Commonwealth of Pennsylvania
13hereby enacts as follows:

<-14Section 1. Section 1102-C.3 of the act of March 4, 1971
15(P.L.6, No.2), known as the Tax Reform Code of 1971, is amended
16by adding a clause to read:

17Section 1102-C.3. Excluded Transactions.--The tax imposed by
18section 1102-C shall not be imposed upon:

19* * *

20(9.3) A transfer for no or nominal actual consideration from

1a donor under an arrangement respecting property or contract
2rights that is established during the donor's life, under which:

3(1) the right to possession or enjoyment of the property or
4to a contractual payment shifts outside of probate to the donee
5at the donor's death; and

6(2) substantial lifetime rights of dominion, control,
7possession or enjoyment are retained by the donor.

8* * *

9Section 2. The addition of section 1102-C.3(9.3) of the act
10shall apply to trusts executed on or after the effective date of
11this act.

<-12Section 1. The definition of "living trust" in section 1101-
13C of the act of March 4, 1971 (P.L.6, No.2), known as the Tax 
14Reform Code of 1971, added May 7, 1997 (P.L.85, No.7), is 
15amended to read:

16Section 1101-C. Definitions.--The following words when used
17in this article shall have the meanings ascribed to them in this 
18section:

19* * *

20"Living trust." Any trust, other than a business trust[,
21intended as a will substitute by the settlor which becomes
22effective during the lifetime of the settlor, but from which
23trust distributions cannot be made to any beneficiaries other
24than the settlor prior to the death of the settlor.]:

25(i) Which, throughout the settlor's lifetime, is
26wholly revocable by the settlor without the consent of an
27adverse party.

28(ii) Which vests no present interest in any of the
29trust corpus or income in any person other than the
30settlor or trustee until the settlor dies.

1(iii) In which all the corpus and income of which
2can be reached or materially affected by the settlor
3without revocation of the trust or the consent of an
4adverse party.

5(iv) From which no transfer of corpus or income may
6be made by the trustee at any time prior to the death of
7the settlor to any person in the capacity of a
8beneficiary other than the settlor.

9(v) Under which the trustee exercises no discretion
10as to the disposition of the trust corpus or income
11during the settlor's lifetime to any person other than
12the settlor without the express direction of the settlor
13to make the specific disposition.

14(vi) Which the trustee or, if the settlor was the
15trustee, the successor trustee is required under the
16governing instrument to distribute the corpus and
17retained income upon the death of the settlor.

18* * *

19Section <-3 2. This act shall take effect in 60 days.