Maryland law provides many options to create a trust as part of your estate plan. Depending on your situation, one or more trusts may be in your best interests. Trusts are complex documents that can have life-long effects for you and your beneficiaries, so care must be taken in choosing and drafting your trusts. A Maryland estate-planning attorney can work with you to help you decide which type of trust or trusts best meet your needs.
#1 - Revocable Trusts
You can create a revocable trust during your lifetime. The word “revocable” means you can revoke parts of the trust or the entire trust if you choose to do so. You can change some terms of the trust, put more assets into it, take assets out of it, or name a different trustee. Once you pass on or become incapacitated, you can no longer make any changes to a revocable trust.
#2 - Irrevocable Trusts
Once you make an irrevocable trust, you cannot change, amend, or revoke it. When you put assets into an irrevocable trust, you no longer own those assets. As such, you lose all the rights of ownership of that property. One of the primary benefits of an irrevocable trust is to reduce or avoid taxes. You should talk with a Maryland estate planning attorney before creating an irrevocable trust.
#3 - Testamentary Trusts
A testamentary trust does not exist while you are alive. The way you create a testamentary trust is through your will. The trust receives none of your assets until you die.
One of the most common examples of a testamentary trust is when you state in your will that the assets your minor children will inherit will go into a trust until they are 18 years old or some other age you designate in your will. You can name the trustee who will hold and manage the assets on behalf of the children until they reach legal age or the age you select.
If you will provides that the trust is for the benefit of your children if they are under, for example, the age of 18 at the time of your death, there is a possibility that the trust will never come into existence. If your children reach adulthood during your lifetime, then the testamentary trust will never happen. It is a good idea to speak with an estate planning attorney in Maryland periodically to keep your estate planning documents, including testamentary trusts, up to date.
#4 - Special Needs Trusts
If you have a loved one with a disability, you can create a special needs trust. Through this device, you can provide a supplemental source of financial support without disrupting the person’s eligibility for public assistance and other government benefits. These trusts are tricky, so you should get legal advice if you are contemplating a special needs trust.
#5 - Bypass Trusts
These trusts allow you to provide for a surviving spouse while minimizing or eliminating estate taxes. A bypass trust maximizes the estate tax exemption of the first spouse to die. Your legal advisor can talk with you about whether this type of trust will be beneficial in your situation.
Need a Maryland Estate-Planning Attorney?
Trusts provide many advantages over simple wills, but they also come with additional requirements. A Maryland estate planning lawyer can explain the different trusts, when to use them, and how to maximize their benefits for your estate plan. Contact Thienel Law today to schedule a time to review your estate plan soon. Maryland estate-planning lawyer Steve Thienel is dedicated to assisting clients in Maryland, Virginia, and throughout the DC Metro area.