prepared by Arden Law Firm’s experienced & licensed attorney(s). Our lawyers are licensed in Maryland only.
Arden Law Firm, LLC assists Maryland residents (or persons domciled in Maryland but living elsewhere) with trusts for an affordable, flat fee.
Read below for Trust FAQs and general information on trust types, pros/cons, trust alternatives and trust costs. While the information on this site is not legal advice and the facts of your particular situation may affect how it applies to you, we hope you find the posted information helpful as you research whether trusts should form a part of your estate planning.
Need more information or ready to schedule a consultation? Contact our firm by phone at 410-216-7000 or fill out a consultation request form.
Your neighbor spent many thousands to get a trust package from a botique estate planning law firm while your sister-in-law downloaded a trust form kit for a few hundred and filled it out herself. You just saw will maker software at an office supply store. - What do you really need?
Once you understand what a trust is, the next question is do you need one? What situations benefit from a trust? Are there trust alternatives?
How much does it cost to set up a trust in Maryland? What are the legal fees for estate planning including a trust?
What is a revocable trust? What is an irrevocable trust? What is a living trust?
Does a trust avoid inheritance taxes? Does it save on gift/estate taxes in Maryland?
Does a trust avoid probate in Maryland?
A Trust at its most basic is a way to hold and/or disburse property for specific purposes. A trust may be involved when someone is holding assets under someone else’s instructions (say to be used to education or until a child or grandchild reaches a certain age). Most of the time a Trust is set up by a written document called a Trust Instrument (or Declaration of Trust). Common estate planning often includes Revocable Living Trusts, designed to provide for the planner during the planner’s lifetime and the planner’s beneficiaries after their death.
A Trust can avoid probate where the planner dictates what happens both during their lifetime and after they die. This attracts many to trusts as many planners want their wishes carried out without the need for court involvement.
Trusts always need a TRUSTEE (someone to manage) and BENEFICIARIES (people who benefit). While there are common kinds of trusts (a standard Revocable Living Trust), the options are nearly limitless as Trusts can be crafted to the planner’s unique stipulations.
Living Trust or "Inter Vivos Trust" - a living trust or "inter vivos" trust is simply one that comes into play while the Maker (Settlor) is still living. Oftentimes this will be a Revocable Trust. MOST common estate planning trusts are “living revocable trusts.” You can set up a living trust by talking to an attorney about what you’d like the trust to accomplish. For example, do you want children to get property when they hit a certain age? Or should disbursal be tied to certain life events, like graduating college? If you talk to a few firms you may find different approaches. We believe that trusts should be customized, straight-forward, affordable and understandable.
A: The short answer is that a properly created and funded trust should avoid probate. It is very important to make sure a trust is or will be funded (meaning the with the property that was supposed be governed by the trust actually transfers into it). Unfortunately we’ve seen some planners go through the effort of creating a trust without doing corresponding deeds which forces the real estate to go through probate. Our trust packages always include a deed for the owner’s Maryland home.
You know the old saying about there only being 2 certain things in life - death and taxes? A Trust does not automatically exempt from taxation. However, many estates are exempt from death taxes. If you meet with our planning attorney we will discuss taxes that may apply to your situation.
A: To form a Trust at the most basic level, one needs 3 separate roles - a TRUSTOR (also called a Grantor or Settlor), a TRUSTEE and a BENEFICIARY. The Trustor/Grantor is the person making the Trust, the Trustee is the person managing it and the beneficiary is (not surprisingly!) someone who benefits. Usually a Trust is formed by a written document (called the Trust Instrument or Trust Agreement or Declaration of Trust) that spells out these three roles and describes what happens to the property. While it is not unusual to see 75, 90 or 100 page trust documents, we aim to create clear, understandable trust instruments that fully outline clients’ wishes in a fraction of that length.
A: Both a Will and a Trust explain the planner’s wishes. It is possible to have trust language in a Will (a testimentary trust) but when people talk about Trusts usually they mean a separate Trust instrument (like a Revocable Living Trust) that operates outside of the Will. Both name someone to manage property after the planner’s death. The biggest difference is that a Will goes through the courts and the probate process, while a properly set up trust should avoid the probate process and transfer property without any court involvement.
As the names imply, a revocable trust can be revoked or changed by the planner, who typically maintains full control during their lifetime. In contrast an irrevocable trust cannot be changed after it is made. A planner does not need to get a separate tax identification number or file separate tax returns for a Revocable Trust while the planner is living. In contrast, an Irrevocable Trust will need to file its own tax returns each year (besides the planner’s personal income tax returns). Generally, most planners our firm sees who want a Trust as a part of their estate planning choose a Revocable Trust.
“Trusts have their place but a revocable trust is not always necessary for a comprehensive estate plan.”
- CL, Managing Attorney, Arden Law Firm
A: There are many different flavors of trusts. You may hear people talk about the following:
Living Trust or "Inter Vivos Trust"
Marital Trusts or “AB” Trusts
This isn’t an exhaustive list, but are some of the main types of trusts. Most common estate planning trusts are Revocable Living Trusts. If you are considering adding a Trust into your planning, you may find it helpful to sit down with an attorney to discuss your planning goals and whether a trust (or trust alternative) may be beneficial in your situation.
A: marital trusts were historically used to allocate property among spouses to minimize federal death taxes. A few decades ago these were very popular and useful tools to minimize taxation. Due to changes in federal taxation law and a huge increase in the thresholds for federal estate taxation, the current need for Marital Trusts or A/B Trusts is questionable for all but the largest estates. Married couples with estates over $11 Million might benefit. (of course, tax law could always change and these could at some point again become a good planning tool).
A: a trust written into the language of the planner's Last Will and Testament. Unlike a revocable trust, a testamentary trust only kicks in after the planner dies.
A: Trusts can be very effective tools in a variety of situation but they should not be considered a universal “best planning” strategy. It is helpful to sit down and talk about your specific planning goals but in our experience Trusts tend to be most useful when the following circumstances apply:
Minor beneficiaries (or special needs)
Blended Family (his/hers/our kids)
Property owned in different states
Desire to hold funds and disburse at set times rather than liquidate everything immediately
Need for a single individual to manage and/or liquidate assets
Privacy needs (desire to keep trust terms out of the public eye)
A: Each lawyer sets their own fees. Many law firms to do estate planning at set fees for particular types of documents / situations. Some offer a “free” seminar and charge thousands for a revocable trust package. Some form sits provide boilerplate planning documents for clients to sign on their own. Our trust packages start at around $1,000 for a single planner and $1,500 for married couples (2022 pricing at the time of writing this Answer), includes attorney meeting, pour-over wills, health care and financial powers of attorney and a deed for the planner’s principal residence in MD, but please check out our pricing guide or call our firm for current details.
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