How to Set Up a Living Trust in Maryland

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Estate planning is crucial in managing your financial future and ensuring that your assets are protected and passed on according to your wishes. One essential tool in this process, especially for residents of Maryland, is the creation of a living trust.

This article aims to demystify the process of setting up a living trust in Maryland, offering a clear guide to help you secure your legacy.

If you’re looking for expert assistance in setting up a living trust in Maryland, you can contact me here for a FREE consultation, where I will walk through your current estate plan and help you build a custom plan to secure your family’s future.  

What is a Living Trust?

A living trust is a legal document that, much like a will, contains instructions for what you want to happen to your assets when you die. However, unlike a will, a living trust can start benefiting you while you are still alive.

There are two types of living trusts: revocable and irrevocable.

The key differences between a revocable living trust and an irrevocable trust lie in their flexibility and control mechanisms. Revocable trusts can be changed or revoked as long as you're alive and competent, while irrevocable trusts, once established, cannot be altered.

If I Have a Will, Do I Need a Trust?

Almost everyone needs a will, but not everyone needs a trust. Whether or not you need a trust in addition to a will entirely depends on your personal financial situation, whether you have children or other beneficiaries, and other specific circumstances.

The best way to find out if you need a trust in addition to a will is to contact an estate planning attorney.

Benefits of a Living Trust in Maryland

For Maryland residents, a living trust offers several advantages.

1.      Avoiding Probate

A trust often allows your estate to avoid the often lengthy and expensive probate process. This means your beneficiaries can gain quicker access to the assets, and they are distributed according to your wishes instead of probate law.

2.     Maintaining Privacy

A trust is a private document, ensuring that the details of your estate do not become a matter of public record.

3.     Control Over Asset Distribution

A living trust ensures that your assets are distributed according to your specifications instead of allowing them to be divided according to probate law.

Setting Up a Living Trust in Maryland

The process of setting up a living trust in Maryland involves several steps:

1.      Decide whether to create an individual or joint trust.

If you’re married or share significant assets with another person, you may want to create a joint trust where each person is a trustee of one trust. However, if you’re single or you and your partner own most of your assets separately, an individual trust might be the better option.

2.     Choose a reliable and trustworthy person to act as your trustee.

Choosing a trustee who will be able to take on the responsibilities of the trust upon your passing is a big decision. Make sure to carefully consider who in your community might be able to take on this responsibility when the time comes.

If you don’t have a friend or family member you would name as your trustee, a professional trust management service is also an option.

3.     Work with an attorney to draft your trust document, which includes designating beneficiaries and setting terms for asset distribution.

Trusts are complex documents, and working with a professional ensures that nothing is overlooked or misaligned. An estate planning attorney can also provide customized advice based on your situation, possibly including additional documents that will help you achieve your overall goals for the distribution of your assets.

4.     Fund the trust by transferring your assets into it, such as your home, bank accounts, and investments.

Once you’ve created your trust, you’ll need to fund it by transferring the assets it will control over to it. You’ll need to work with your bank, mortgage lender, and all other parties who help you manage your assets to ensure that these assets are successfully added to the trust.

Again, seeking legal advice is crucial to effectively navigating the Maryland-specific laws and regulations surrounding trusts. When it comes to documents controlling your assets, it’s critical to work with an expert to ensure nothing is left to chance or mismanaged.

To schedule a FREE consultation with an expert Maryland estate planning attorney, contact us here or call us at (301) 456-0982. We have over 25 years of experience and will help you create a customized estate plan solution that protects your family’s legacy.

Maintaining Your Living Trust

A living trust is not a 'set it and forget it' arrangement. It’s important to review and possibly amend your trust periodically, especially after significant life events like marriage, divorce, or the birth of a child. Additionally, as you acquire new assets, remember to add them to your trust.

Common Misconceptions About Living Trusts

There are quite a few misconceptions about living trusts and who benefits from them. These include:

1.      Living Trusts are Only for the Wealthy

You don’t have to have millions of dollars in assets to benefit from a trust. Anyone who has assets they want to control the distribution of can benefit from a trust.

2.     Trusts Hide All My Assets from Taxes or Creditors

While in some cases, trusts can reduce estate taxes, trusts do not completely shield your assets from taxes or creditors. Consult an attorney or tax professional for more detailed information on how trusts can affect your estate taxes or debts.

3.     Hiring an Estate Attorney to Create a Trust is Expensive

While the process of creating a trust may be more expensive than a document like a Will, the ultimate savings a properly constructed trust can provide for your beneficiaries in many cases far exceeds that of the attorney's fees.

In many cases, a trust is an essential part of any well-constructed estate plan, and the initial costs of creating one are an investment in the long-term financial health of your family after you’ve passed on.

Conclusion

Setting up a living trust in Maryland can be straightforward with the right guidance. It’s an effective tool to ensure that your estate is managed and distributed according to your wishes.

For personalized advice and assistance in setting up a living trust, feel free to contact our office and schedule a FREE consultation to review your unique needs and create a strategic plan to set you and your family up for success.