There are several reasons for someone to begin creating a trust in Maryland. Many people are interested in establishing a revocable living trust to avoid the probate process. The probate process sometimes gets a bad reputation and people look to trusts to avoid probate. Experienced trusts and estates attorneys have seen people with minor children to be interested in creating a trust so money and other assets are held until the minor children become adults or until a specific time decided on by the person creating the trust.
Defining a Trust
Creating a trust in Maryland means preparing a legal arrangement. A trust is an arrangement that a person can use to distribute assets after they die. It is also an arrangement a person can use to hold title to a property for the benefit of another person. The person who creates the trust is called the grantor or the settlor.
The trustee of the trust is the main person who is responsible for managing the trust property. The beneficiary is the main person who benefits from the trust assets. The trust arrangement is written up into a legal document that describes exactly how the assets are managed during the grantor’s lifetime and how the assets are managed once the grantor dies.
Once the trust is established, assets must be placed into the trust. A person’s bank account in their personal name is re-titled to the name of the trust. The trust becomes the owner of the bank account and the bank account is an asset of the trust.
Before meeting with an estate planning attorney, it is helpful for a client to consider their wishes or the distribution of their assets when they die. That includes deciding which people or entities they want to name as beneficiaries. It is also helpful for clients to have a complete understanding of their own assets and how those assets are titled. That puts the attorney in a position to better advise the client of their estate planning options and the pros and cons of creating a trust, given their assets.
What are Common Types of Trusts?
A revocable living trust is a common type of trust that people use as an estate planning tool. It is created during a person’s lifetime and is used to manage assets that are titled in the name of the trust. The trust also governs at the person’s death and directs what happens to trust assets such as who will manage them and who will benefit from them. Whether a person decides to establish a last will and testament or a revocable living trust, a trust for minors can be created. This is common when a person has minor children or knows they will rename assets to minors.
Creating a trust in Maryland is often for reasons that are personal to them. However, in certain situations, trusts are created to protect assets for the benefit of minor beneficiaries, avoid the probate process, and avoid estate tax. There are other types of trusts that have more specific purposes. Trusts for minors are created to hold assets until a minor is of age and can own an asset. Trusts for individuals with special needs are created that protect assets for those who currently have special needs or expect to have special needs in the future.
Choosing an Attorney
A person often chooses an attorney to initially create a trust. Often the attorney who created the trust works with the trustee to help them administer the trust because the attorney is familiar with the trust, the people, and the assets involved. However, if the trustee seeks the help of an attorney, it does not have to be the attorney who created the trust. An attorney can be helpful to a trustee and offer guidance with respect to the trustee’s responsibility. The attorney who helps with the administration of the trust is not necessarily chosen by the grantor of the trust.