Losing a family member is emotionally difficult. Maryland’s probate process can make it even harder. That’s because an estate has to go through a probate, which is a public court process that validates the will and legally passes the property to the heirs.
Probate can be time-consuming, costly and public. This is where a trust helps. Once assets are properly transferred into the trust, they generally avoid the probate process.
How a living trust works in Maryland
One of the key benefits of setting up a living trust is that it allows the successor trustee to distribute your property without going through the probate court in Maryland. One common way to help avoid probate is to create a revocable living trust and transfer eligible assets into the trust. Here’s what you need to know about creating and funding it:
- Transfer of assets: Simply listing assets in your trust document is not enough. You must change the ownership of your property and bank accounts so that the trust legally owns them.
- Control of assets: As long as you are alive, you will have complete control of the assets and can manage or dispose of them as you wish.
- Distribution of assets: After your death, the successor trustee distributes the trust assets according to the trust’s terms.
- Pour-over will: A pour-over will direct any assets left out of the trust to be transferred into it after your death, but those specific assets will typically still need to go through probate first.
A living trust does not protect the estate from Maryland estate taxes. The beneficiaries may still have to pay estate taxes if they do not qualify for an exemption. Maryland also has a separate inheritance tax, paid directly by certain beneficiaries (such as more distant relatives or friends) unless they qualify for an exemption. Close relatives like spouses, children and siblings, are typically exempt. A trust does not avoid either of these taxes.
Why setting up a trust matters for your family
Avoiding probate can reduce stress during the difficult time of grieving the loss of a loved one. A properly funded revocable living trust allows a successor trustee to distribute assets directly to beneficiaries, avoiding the delays and public nature of the probate process.