Estate planning in Maryland comes with making various decisions on what becomes of assets. Most people handle their assets in the form of a will, but not everything has to be included in a will. Revocable trusts provide another way for people to manage their estate in addition to a will.
Basics of revocable trusts
A revocable trust allows the grantor to create it during their lifetime and place collective assets in it called the trust fund. The grantor may name a trustee and a co-trustee, which can be an individual or a company, to manage the trust after the grantor’s death. Naming a co-trustee helps in case the main trustee can no longer perform their role.
Money placed in the trust becomes known as principal of trust that may change in value. The trust becomes irrevocable after the death of the grantor, meaning assets cannot be changed.
Benefits of revocable trusts
Wills have to go through probate court, which can take weeks and reduce inheritances. One main benefit of a revocable trust is that it saves time and money on probate court. Some examples of assets that a trust could hold include real estate, patents, valuable artwork and valuable collectibles, and they can be sold or altered.
The grantor avoids conservatorship if they are no longer able to manage the trust. They may name out-of-state trustees and name themselves as trustee. Assets of a trust do not get listed for public viewing, so transferring of assets stays private. The FDIC offers protection for revocable trusts up to $250,000 per beneficiary and a maximum of $1.25 million.
The advantages of revocable trusts outweigh the cons, but they come with some considerations, such as taxes on assets and cost of creation. Individuals who are thinking about including trusts as part of an estate plan should seek legal advice.