A revocable living trust may be an ideal way to circumvent Maryland probate laws. It may also help you keep the terms of your estate plan private, which can be beneficial if you’re worried about family infighting or other issues after you’re gone. However, it may not necessarily help shield assets from being taken to satisfy outstanding debts.
You still control the assets
As a general rule, you maintain full control over assets placed in a living trust. Therefore, creditors may be able to seize them if they were used to secure loans. It may also be possible for the government to get its hands on assets that are currently in a revocable trust if there’s sufficient reason to take them.
Trusts must be created under the right circumstances
Trusts need to be created for legitimate, valid reasons under the right circumstances, and if there’s doubt of that, it’s possible they may be contested. For example, the settlor must be of sound mind and not be under any type of influence that led them to create the trust in the first place.
The trust must be funded
A non-funded trust is simply a piece of paper with instructions. If assets aren’t titled in the trust’s name, there’s nothing the trust can do to manage them on your behalf. Even if you are the trustee, assets that aren’t titled in the trust’s name would still be considered part of your estate. Ultimately, reviewing the status of property you want to hold outside of your estate should be a top priority during your annual estate planning sessions.
Wills, trusts or other estate planning documents that aren’t drafted or executed properly may be invalidated. This might mean that assets go to beneficiaries who you don’t have a strong relationship with, lead to family infighting or result in other potentially costly problems.