Historically, Marylanders have used trusts as a way of saving their estates money on different types of taxes. Times have changed, however. For example, the vast majority of people who live in the Prince George’s County suburbs now do not have to worry about the federal estate tax. This tax now only applies to the very wealthiest Americans.
Still, trusts have many other important benefits.
Trusts can keep an estate out of Maryland’s probate courts
One well-known benefit of trusts is that property in trust does not go through the probate process. Instead, the property in trust gets handled according to what the trust document itself says.
In the long term, this saves the money, stress and time associated with estate administration. It also gives the family a measure of privacy. Unlike probate proceedings, which are public, trusts generally stay out of the public eye.
Although lawsuits can still happen, a disgruntled relative may find it harder to challenge a trust.
Trusts can offer legal protection to both the creator and their loved ones
When set up correctly, trusts also offer legal protection to families. Trusts can make it hard for a loved one’s creditors, including a former spouse, to get control of money that was intended for a loved one.
On a related point, a certain type of trust, called a special needs trust, can help support a disabled loved one without affecting their ability to get government aid.
Trusts can give creators some ongoing control over their property
Trusts also give a person more ability to control how their loved ones will use their property. By contrast, when an adult receives property through a will, it is usually theirs to do what they please with it.
In a trust, the person passing down the property can put some restrictions on how that property is used. Restrictions can in some cases protect a loved one from facing serious consequences of their poor financial habits.
