Maryland Trust Attorney
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 them to become ineligible for Supplemental Security Income (SSI) benefits. 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 relevant to estate planning, and depending on your 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., contact our Maryland trust attorneys today.
Various Types of Trusts
There are many types of estate planning trusts, as well as trusts that can help set you up for financial stability in your later years. An experienced estate planning attorney can help you pick out the right types of trusts to meet your needs, and 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, the timely and expensive process of officially proving a will. By creating a revocable or “living” trust, which can be modified during your lifetime, you can also leave behind your property for your loved ones hassle-free and specifically in the manner you best see fit.
- Irrevocable Trust—Unlike a revocable trust, an irrevocable trust cannot be modified. An irrevocable trust can be used by a grantor who has a large, taxable estate, as the money put into an irrevocable trust is essentially no longer the grantor’s property. As such, much planning and thought needs to go into creating an irrevocable trust, as there is no going back after your property is put in.
- Special Needs Trust—If you have a child with special needs, by leaving them a large sum of money (even as little as $10,000 or so), you could effectively be ruining their ability to collect Social Security Insurance benefits, Medicaid, or other necessary financial or medical benefits that they depend upon. They would get a large sum of money during your death, and then once that is used up they would be left on their own without SSI or Medicaid. 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 behind with them. However, the beneficiary must be “disabled” as per the Social Security Administration’s definitions, according to the American Bar Association.
- Medicaid Or Long Term Planning Trust—If you or your loved one has reached the golden years, you may have questions about how assisted living or nursing home care will eventually be paid for. The average cost of a one bedroom assisted living apartment is $3,900 per month in Maryland, not including all other costs. One would have to be quite wealthy, or spend all of their savings on paying for such care if it were not for a Medicaid trust. A Medicaid trust allows the elderly person or couple to put their savings in the trust, and still qualify for long term living Medicaid assistance.
- Charitable Trust—If you have a large estate that is subject to taxation, there are many ways to get around heavy taxation. One of these is to set up a charitable trust, which can help you avoid the lifetime gift tax as well. You can benefit your favorite charity or charities, while minimizing your taxable estate.
- Generation Skipping Trust—Another way to avoid estate tax is to set up a generation skipping trust. Instead of leaving your property to your children, you can set up a generation skipping trust to pass down some or all of your property to your grandchildren, keeping the wealth in the family and avoiding taxation.
- Spendthrift Trust—Assets in a spendthrift trust are not only protected from creditors, but are managed by the trustee in the beneficiary’s best interests. This type of trust may be good for someone who is unable to manage their money properly, as the property in this trust is not actually theirs, and the trustee is in full control of all of the assets.
- Marital Trust—When the first spouse dies, assets can be moved into a marital trust. The income created by these assets is then transferred to the other spouse. When the second spouse dies, the property is then distributed to the couple’s heirs.
There are dozens of other different types of trusts and ways to maximize what you leave behind for your loved ones in order to improve their lives or guarantee their accustomed quality of life. An attorney can help you set up the specific trusts that will benefit you.
Legally speaking, a trust is a binding agreement that places fiduciary duties on behalf of the trustee. Therefore, 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, buy or sell real property, or make other financial decisions in your or the beneficiary’s best interests. As such, much responsibility comes with being a trustee, and choosing that party wisely is an important aspect of creating a trust. An attorney can help you safeguard yourself and your family by establishing a responsible, dedicated, and knowledgeable trustee.
Contact a Maryland Trust Attorney With Frame & Frame Today
The type of trust that you need depends on a variety of factors. Does your child suffer from a disability? Are your heirs or beneficiaries capable of managing the assets in a trust, or do they require professional assistance? Do you have enough to pay for life in an expensive assisted living home? For answers, do not hesitate to contact our Maryland trust attorneys with Frame & Frame today.