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Do I need to set up a living trust in Maryland?

Law Offices of Yu & Associates

A living trust usually refers to a revocable trust, which is established during an individualí»s lifetime and can be modified at any time. A living trust is a trust contract between the trust grantor/founder and the trustee. The grantor puts the property in the trust, and the property is transferred from the grantor to the living trust, and the trustee manages and distributes the assets for the beneficiary. The titles of the assets must be changed from the grantorí»s individual name to the name of the trust. However, the grantor and the trustee can be the same person, thus, even if the property has been transferred to the trust, in fact the grantor still retains absolute control over the property.

Living trusts are not exclusively for wealthy individuals or high-net-worth individuals. Anyone who has accumulated certain amount of wealth can use a living trust to effectively manage and control the distribution of assets. Of course, the establishment of each trust requires a specific plan for each individual based on the situation.

When considering whether to set up a living trust in Maryland, there are some factors to consider:

  • Age status: Generally speaking, middle-aged and elderly people are more likely to need a living trust. For young people, a simple will may be sufficient. Generally speaking, they are not likely to become incapacitated or die any time soon, but middle-aged and elderly people need to seriously consider having a proper arrangement in advance by setting up a living trust and transferring assets to the trust.

  • Understanding of funding assets into the trust: After the trust document is properly prepared and executed, the grantor of the trust needs to put the existing assets into the trust, and if assets increase after the trust is set up, the grantor needs to continue putting new assets into the trust on an ongoing basis. This could be challenging for some people.

  • Health status: It is very important to arrange a living trust and appoint a trustee to manage the assets and serve as the adult guardian or guardian for a minor in case a person becomes incapacitated. If none of these are done, court procedures will be necessary to appoint adult guardians and guardians for minor children. This court procedure will take time and delay things, and the court's arrangements regarding guardianship may not be satisfactory in term of who will serve as the guardian(s).

  • Desire for privacy protection: Revocable living trusts generally provide individuals more privacy, as the documents do not need to go through the court probate process, and they are not open to the public. However, wills are subject to a court probate process. The content of the wills will be disclosed to the public without privacy protection.

  • The need to avoid the court probate procedure: A living trust can help avoid court probate process to distribute the assets. With a valid living trust, a trustee can distribute the estate in accordance with the provisions of the trust without court interference at the death or incapacity of the grantor. The court probate process is a lengthy and expensive probate process. Maryland law stipulates that the attorney's fees in the probate process can be 9% of the first $20,000 of the total estate and 3.6% of the amount over $20,000. Maryland's probate process generally takes a year or even longer. Therefore, it is very necessary to set up a living trust which can save both costs and time.

  • Properties located in multiple states: if you own real estate in more than one state, then making a revocable living trust can be a very useful estate planning tool. You can put all your assets in one living trust; you don't have to set up a trust in every state that you have the property. If you do not have a living trust, it may be necessary to go through the time-consuming court probate process in multiple states, which will incur a lot of additional costs.

The above is a general introduction, and should not be construed as individual legal advice. For specific legal questions, please contact the Law Offices of Yu & Associates. Tel: 301-838-8986, Fax: 202-595-1918; E-mail: syu@yulegal.com, Address: 110 N. Washington St., Suite 328E, Rockville, MD 20850. (All rights reserved.)

Ó Yu & Associates LLC, 110 North Washington Street, Suite 328E, Rockville, MD 20850, USA. Tel: 301-838-8986