Types of Trusts in Maryland
A Maryland trusts attorney may help you decide if a trust can be a valuable tool for your overall estate plan. They can help you determine if a trust or the use of several trusts are the best fit for you or if your goal can be accomplished with another estate planning method. In addition, an attorney can advise you on the current trust laws in your state and can use his or her experience to guide you through some common practical pitfalls. An attorney may also be able to help you decide who should serve as a fiduciary when you are choosing a trustee. Finally, a Maryland trusts attorney may help you to review your assets, and determine which assets may best fund your trust. An attorney may often assist with the funding process, to ensure that all of your assets are coordinated with your overall estate plan.
Most Common Types of Trusts in Maryland
The three most common types of trusts are testamentary trusts, revocable trusts, and irrevocable trusts.
Testamentary Trusts: A testamentary trust is a trust that is created within someone’s last will and testament but that is not funded or go into effect until the death of the testator.
Revocable Trusts: A revocable trust is a trust that is created and often funded during a grantor’s lifetime. The grantor retains the right to revoke the trust provisions in part, or their entirety. The grantor may also amend the provisions of the trust, fund the trust with additional assets, remove assets from the trust, or change the nomination of a trustee. These changes may be made at any time until either the grantor dies or loses the necessary capacity to make any other changes or revocation.
Irrevocable Trusts: An irrevocable trust is a trust that cannot be revoked, amended or changed solely by the grantor. Essentially, the grantor has given up all rights of ownerships of the property used to fund the trust. Because of the often permanent nature of an irrevocable trust, careful consideration should be exercised before creating and funding an irrevocable trust.
Other Types of Trusts
Charitable Trusts: There are a lot of different types of charitable trusts, but essentially, a charitable trust is one where the beneficiary is a charitable organization. The purpose of the trust is to establish a way to distribute assets to a charitable organization. Often, charitable trusts are used to implement income or estate tax planning methods for the grantor.
Constructive Trust: A constructive trust is a trust that is created to provide an equitable remedy. Often, constructive trusts are created by a court because there is no other remedy available.
Special Needs Trust: A special needs trust is set up for the benefit of a disabled person or child. The goal of a special needs trust provide funds as a supplemental source of support for a disabled person or child rather than interfere with any public assistance the person may be receiving.
Bypass Trust: A bypass trust is used to take full advantage of the first spouse to die’s estate tax exemption. A bypass trust is created to provide for the surviving spouse. Assets that fund the bypass trust are typically considered taxed at the death of the first spouse and may be free from estate taxes at the death of the second spouse.