Are Living Trusts Recorded in Maryland?

In law, a trust is a way to set up some of your own assets to benefit someone else or to benefit an entity like a company or charitable group. Most people probably think of trusts in the context of wills and probate, proceedings that happen when someone passes away. However, trusts can also be set up by living people. These are called “living trusts.” Living trusts offer many benefits, such as being able to be modified or done away with entirely by the trustor since they are still alive. However, people may be concerned about their privacy with living trusts since many trusts are recorded in the public record.

In Maryland, living trusts are not necessarily recorded. There is no legal requirement to record a living trust. However, there are benefits to recording a living trust, such as having much stronger proof that the trust exists at all. Additionally, depending on what the trust is set up for, there may be a larger body of recorded documents present that confirm the existence of the trust. For example, there will likely be more recorded documents for a living trust involving real estate than for a living trust involving stocks, bonds, or charitable donations.

For help with your living trust needs, call Rice, Murtha & Psoras’s Maryland estate and trusts lawyers at (410) 694-7291.

Do Living Trusts Get Recorded in Maryland

Living trusts are not necessarily recorded in Maryland. This is because they do not automatically get placed in a Register of Wills. Testamentary trusts, on the other hand, do get placed in that record because they must be outlined in a will or attached documents. One of the benefits of living trusts is that they allow for more privacy than irrevocable trusts because they are not in the public record.

Living Trusts vs. Testamentary Trusts in Maryland

It may be useful to have an understanding of what exactly a “living trust” is. Trusts are legal frameworks that allow people to give someone else a right to hold onto property or funds for the benefit of a third party. The person who creates the trust is called the “trustor,” the person in charge of maintaining the trust is the “trustee,” and the person who reaps the benefits of the trust is the beneficiary.

There are two main kinds of trusts: living trusts and testamentary trusts. We’ll go over testamentary trusts first because they are somewhat easier to understand.

Testamentary Trusts

A testamentary trust is a trust that is created after the trustor is deceased. Testamentary trusts, as the name would suggest, are created in the deceased’s last will and testament. An example of a testamentary trust would be a provision in a will that $5,000 be placed in a trust to benefit the deceased’s children.

Testamentary trusts are considered “irrevocable.” This means that they cannot be done away with by the trustor. In the context of a testamentary trust, this makes sense because the trustor is dead.

Living Trusts

Living trusts, on the other hand, are set up when the trustor is still alive. These trusts are sometimes called “inter vivos” trusts in older legal documents.  Unlike testamentary trusts, living trusts are revocable and changeable by the trustor. This means that if circumstances change, the trust can change with them. However, once the trustor passes away, a living trust automatically becomes a testamentary trust, and therefore, it is no longer revocable or modifiable.

How are Living Trusts Set Up in Maryland

Setting up a trust in Maryland is not particularly complicated. It generally involves a series of documents and an exchange of funds, both of which our Columbia estate and trusts lawyers can help you out with. However, living trusts can be more complicated than other trusts, so there may be more steps you need to take.

Declaration of Trust

The first step in setting up a trust is a declaration of trust. This is a document written by the trustor that explains the purpose of the trust, who the trustee is, and who the beneficiary is. This document is very important for ensuring that it is known how any given trust is supposed to work. There is a sample form available under the Maryland Discretionary Trust Act.

Transfer of Assets

In order to set up a living trust, the trustor must also transfer assets or property into the trust. This can be done in any way that is permitted by law. This is different from a testamentary trust, since the trust does not exist until the trustor passes away, and at that point they cannot transfer things into the trust because they are deceased.

Generally, trusts that transfer real property will have a larger recorded paper trial than trusts for other kinds of assets. This is because property law virtually always requires land transfers to be in writing. Moreover, land and deed transfers are usually in a database accessible to the public should they choose to go looking. However, a living trust for real estate will still have a smaller footprint than a testamentary trust for the same piece of real property.

Acceptance by Trustee

Finally, the trustee must accept the assets transferred into the trust as well as the responsibilities placed on them by the declaration of trust and other documents. While this acceptance can be oral, it is often memorialized in a document, and it is probably a good idea to do so so that there is more evidence that the trust exists at all.

Call Our Maryland Estate and Trusts Attorneys Now

Our Gaithersburg, MD estate and trusts attorneys are ready to go over and analyze your situation when you call Rice, Murtha & Psoras at (410) 694-7291.