Planning your estate can be a complex task that involves making critical decisions about your assets. Among the essential tools you can use in this process are trusts, which offer a flexible and effective means of managing and distributing your assets according to your wishes.
Trusts come in a variety of forms, each serving a unique purpose and offering distinct benefits, and it is important to understand your options.
Revocable living trusts
A revocable living trust is a popular tool in estate planning. As the name implies, you can alter or dissolve a revocable trust at any point during your lifetime. This type of trust allows you to transfer assets into the trust and maintain control over them. Upon your passing, the trust assets bypass probate and transfer directly to the designated beneficiaries.
With an irrevocable trust, once you create it, no one cannot alter or revoke it without the permission of the beneficiaries. The assets you transfer into this type of trust are no longer considered part of your estate, which can have significant tax benefits. Irrevocable trusts also offer protection against creditors.
If you wish to leave a portion of your estate to a charitable organization, a charitable trust might be the right choice. A charitable remainder trust, for instance, provides an income stream for you or your designated beneficiaries during your lifetime, with the remaining assets going to the charity after your passing.
Special needs trusts
You can use a special needs trust to provide for a loved one with disabilities. It allows you to allocate assets for their care without jeopardizing their eligibility for government benefits. It ensures the beneficiary has their needs met without directly giving them control over the funds.
Incorporating trusts into your Maryland estate plan can provide a range of benefits, from avoiding probate to reducing estate taxes and protecting assets from creditors. Choosing the right type of trust depends on your specific needs and objectives, and can help ensure your loved ones carry out your wishes effectively.