A living trust is a very important estate planning tool in Maryland. The Uniform Probate Code simplifies the probate process, but unfortunately Maryland does not use it. The easiest way to spare loved ones the necessity of enduring the lengthy complexities of Maryland’s probate process is to establish a living trust.
What Is a Living Trust?
A living trust is created by one people, the grantor, who appoints a trustee. Often, the grantor and the trustee are the same person. The trustee holds legal title to the property on behalf of the beneficiary and retains full control over all of the property held by the trust. If the first trustee should die or be unable to continue as trustee, a successor trustee would take over.
This aspect makes living trusts very helpful for contingency planning, as the successor trustee will be able to continue to make investments, manage the property and pay bills. A power of attorney is often needed, as well as the living trust, in order to move the property into the trust.
A living trust is extremely useful in many situations but is not a one-size-fits-all estate planning solution. It would be necessary to discuss your unique situation with an experienced estate planning lawyer in Bel Air, MD in order to determine if a living trust would be recommended in your circumstances.
Is a Will Still Necessary?
A will is always necessary. Otherwise, any property that wasn’t transferred to the beneficiary(ies) by the living trust will be passed on to your closest relatives in accordance with Maryland law. A will serves as a backup plan for the new property that had not yet been added to the trust. Both the living trust and will should be reviewed and updated periodically.
Will a Living Trust Reduce the Estate Tax?
A living trust created simply to avoid probate will not reduce federal estate tax. A more complicated living trust can reduce the amount of federal estate tax, but is only really useful for estates over $5 million. Avoiding the federal estate tax is not an issue for most people with assets under $5 million.
To find out more about living trusts and how this could benefit your family, contact Michael S. Birch, Attorney at Law. This knowledgeable estate planning lawyer in Bel Air, MD has been providing legal services for estate planning and real estate for over 35 years.