When it comes to estate-planning, the two terms that generally come to mind are wills and trusts. We know we should have one or the other, or perhaps both. For many people, it can be difficult to determine what the best course of action will be to protect their assets. Additionally, because Maryland updated its law on trusts a few years ago, incorporating many provisions from the Uniform Probate Code, it may be necessary for those people who have a trust to reconsider their options. If you are wondering whether you should have a will, a trust, or both, it is best to seek the advice of a competent Maryland trusts attorney to discuss your specific situation.
Living or revocable trusts have many advantages over a simple will. Some of these advantages are:
- Avoiding probate court.
- Greater flexibility on how and when to distribute assets to your beneficiaries.
- The ability to better address unique situations like special needs, a loved one who does not handle money well, addiction, and other issues.
- Peace of mind for the individual who really wants a trust instead of a will.
Is It Worth It to Avoid Probate Court?
Trusts do not go through the probate courts, but trusts usually cost more than a simple will, so you might wonder if avoiding probate court is worth the price difference. Since a trust does not go through the probate court, your heirs often get their assets sooner with a trust. Also, because you do not have to file the trust document with the court for public inspection, you have much more privacy with a trust than with a will.
A judge has to approve your will, which means it must be filed with the court. Anyone who can pull your file at the courthouse could find out what you gave to whom.
There are costs for your lawyer to take your estate through probate court because state laws require multiple detailed filings and potentially costly court hearings. The more you have to pay your lawyer, the less money you have to give to your loved ones. Since trusts do not routinely go through the courts, your lawyer will not have to prepare those filings or attend hearings.
How Are Trusts More Flexible on Distributions than Wills?
With a will, once you have gone through the many stages of the process and the judge approves the final distribution, everyone gets their money and items. A will does not allow you to hand out assets to people over time, a little here and a little there. It is all or nothing with the probate court because they want to wrap up everything and close your case.
On the other hand, your trust can distribute a specified amount to your children when they turn 18, some more when they graduate from college, and more when they finish graduate school or turn 30, for example. Many people worry about an 18-year-old not having the maturity to handle a large lump sum. That is not a concern with a trust, if you space out the payments to give your child some time to grow up a little.
How Do Trusts Handle Unique Situations?
If you have a loved one with special needs, you can set up a type of trust called a special needs trust. These devices carefully provide financial security for your loved one without making him ineligible for government benefits.
Another clever use of living trusts is to provide for that relative whom you adore but who wrestles with her inner demons, such as addiction issues or one financial crisis after the other. You know that if you give her a chunk of money, it will go through her fingers. With a living trust, you can set up a spendthrift provision that dictates, for example, that she will get money for her necessary living expenses only. That way, she will have financial security and will not be able to burn through the money.
Only you can decide if a Maryland trust is right for you. You should talk with your estate planning lawyer to find out the best strategy and to tailor your legal documents to your needs and wishes. Estate-planning attorney Steve Thienel is dedicated to assisting clients in Maryland and throughout the DC Metro area. Contact Thienel Law, LLC today for assistance with your estate planning or administration needs.