As the grantor, a trust allows you to set aside property for your loved ones that will bypass probate, as well as bypass certain taxation if your estate is large. A trust can also be used to ensure that the beneficiary is not harmed economically by being bequeathed a sum of money that would, for example, cause the loss of public benefits such as Supplemental Security Income Benefits (SSI) or Medicaid. Trusts are used by all socioeconomic classes of people. You and your loved ones do not need to be rich to benefit from a trust. There are many types of trusts to suit you and your family’s circumstances. You may benefit from a simple revocable trust or an estate plan that includes others, such as a generation- skipping trust. We can help you decided which trust is best for you, contact our Maryland trust attorneys.
Various Types of Trusts
There are many types of estate planning trusts, to suit various purposes such as a trust that can set you up for financial stability in your later years. Tara K. Frame, an experienced estate planning attorney, can help you select the best trust for your situation to ensure that your loved ones are left behind in the best state possible.
- Revocable Trust—A revocable trust is the most common type of trust for avoiding probate., A revocable trust, sometimes called a living trust, can be modified during your lifetime. A revocable trust will help you leave your property to your loved ones in the manner you best see fit, in a private manner outside the probate process. You can even leave property to be held in trust for several generations.
- Irrevocable Trust— Conversely, an irrevocable trust cannot be modified. An irrevocable trust can be used by a grantor with a taxable estate. Assets in an irrevocable trust are no longer the grantor’s property, an estate tax reduction strategy, although the grantor still has access to the funds in an irrevocable trust.
- Special Needs Trust—If you leave a child or other relative with special needs a large sum of money (even as little as $10,000 or so), you could ruin that person’s ability to collect public benefits this person depends upon. A special needs trust allows your loved one to continue receiving these benefits, while at the same time, have access to the financial resources that you leave to him or her.
- Medicaid or Long-Term Care Planning Trust—This type of trust is for those concerned about paying for senior living, assisted living or nursing home care. The average cost of a one-bedroom assisted living apartment is $3,900 per month in Maryland, not including other related costs such as meals and nursing. One might deplete their lifelong savings or the value of a family home paying for such care. A Medicaid trust or a long-term care trust allows you to put your assets in a trust while still qualifying for long-term care benefits.
- Charitable Trust—If your estate is subject to estate taxes, there are many ways to reduce the tax burden. One of these is to set up a charitable trust, which can also help avoid the lifetime gift tax and can benefit your favorite charities, while minimizing your taxable estate.
- Generation-skipping Trust—Another way to reduce estate taxes is to set up a generation-skipping trust. Instead of leaving your property to your children, a generation-skipping trust passes down some or all of your assets property to your grandchildren, keeping the wealth in the family.
- Spendthrift Trust—Assets in a spendthrift trust are protected from creditors while being managed by a trustee working in the beneficiary’s best interests. This type of trust may be useful for a beneficiary who is unable to manage money properly since the trustee is in control of all of the assets.
- Marital Trust—When a spouse dies, co-owned assets can be moved into a marital trust. The income created by these assets is then transferred to the surviving spouse. When the surviving spouse dies, the property is then distributed to the couple’s heirs.
There are many different types of trusts that offer methods of maximizing what you leave behind for your loved ones. Our Maryland trust attorneys can help you establish the best trust for each situation.
A trust is a binding agreement with fiduciary responsibilities and duties. The trustee must act in the best interest of the beneficiary of the trust. As such, it may be required of the trustee to buy and sell stock and real property, or make other financial decisions. A trustee has important legal and fiduciary responsibilities Choosing that party wisely is an important aspect of creating a trust. Our Maryland trust attorneys can help you safeguard yourself and your family by establishing a responsible, dedicated and knowledgeable trustee.