Reasons to Create Maryland Trusts
There are many reasons to create a Maryland trust. Whether you want a way to more easily manage your assets, provide for a child’s special needs, or allow your beneficiaries to avoid probate, there are options available. A well-versed trusts lawyer can help you find a trust that works for you and meets your needs.
What Types of Trusts Can People Create?
The two primary categories of trust are testamentary and freestanding trusts. Testamentary trusts are trusts that are created within a last will testament, but they are created during the lifetime of a settlor or the grantor and they are not funded until after their death. A freestanding trust is created during the lifetime of the grantor and is funded during the lifetime of the grantor.
Under freestanding trusts, there are revocable and irrevocable trusts. A revocable living trust is a document created during a settlor’s lifetime and used to support the settlor while he or she is alive and then addresses what should happen to the trust after death. An irrevocable trust allows individuals to provide liquidity for their estate and to pay taxes while passing on the full value of the life insurance policy prior to death in a much lower basis than the full value of the policy once the policy has been realized.
Reasons to Create an Estate Plan in Maryland
There are many different reasons that an individual may want to consider creating a trust or incorporating several trusts into their estate plan. One of the common reasons to create a free-standing revocable living trust is so that assets in multiple jurisdictions can be managed more easily.
Another reason is to avoid probate. While a free-standing revocable living trust may or may not be a good fit for everyone, it is common for individuals to incorporate trusts into their last will and testaments so that their beneficiaries can avoid the probate process.
Individuals with children or grandchildren who have special needs may also wish to create a trust that addresses any special needs issues. Similarly, if a child, grandchild, or any beneficiary has issues with drug dependency or finances, a trust may be a consideration to help with those issues. Whether an estate plan should include a trust depends on a person’s unique needs and objectives.
Why Someone Would Choose a Trust Over a Bank Account
A trust is an agreement between the person creating a trust, sometimes called a settlor, and the trustee. A trust becomes a legal vehicle to manage assets such as bank accounts, investment accounts, real estate, life insurance proceeds, and several other kinds of assets.
A bank account is one of the assets that a trust may include. How a bank account will be administered after the death of an individual will depend on the title of the bank account. For example, if an individual has a personal bank account in his or her name, it will pass pursuant to the terms of their last will and testament or according to the laws of intestacy. If a bank account has a payable in-debt beneficiary, it may be distributed to pay those debts. If a bank account has been titled into the name of the trust before an individual has passed away, the terms of the trusts will most likely govern the assets held in the bank account. They are two different vehicles but they are sometimes interrelated because bank accounts are often part of a trust.
Discuss Reasons to Create a Maryland Trust
Different trusts are created for different reasons. Every estate plan is unique to the individual, their family dynamics, their level of wealth, their wishes for the future, and their wishes for the disposition of their assets after death. To learn more about reasons why you may want to create a Maryland trust, call today for a consultation.