Columbia, MD Wills + Estates Attorney
Trusts are incredibly versatile legal agreements. There are so many different uses for them that it really can boggle the mind. You can create a trust to obtain tax benefits, transfer property, help out friends and family, and so much more. Trusts are easy to set up, too. In fact, they are so easy to set up that sometimes people make mistakes and set up a trust that does not do what they want it to.
It is always a good idea to retain legal counsel when you are thinking about setting up or modifying a trust. We can work with you to figure out the right kind of trust for your situation that best accomplishes what you have in mind. Additionally, if you already have a trust and you want it modified, we can help with that, too.
Reach out to one of Rice, Murtha & Psoras’s trusts attorneys today by calling (410) 694-7291 and receive a free analysis of your situation.
What Can You Use a Trust for in Columbia, MD?
You can use a trust for anything that is legal. So, for example, you cannot set up a trust to fund an illegal methamphetamine operation. Apart from that, the world really is your oyster when it comes to what you can set up a trust to do. Some of the things you may set up a trust for include:
Paying for Education
One of the most common reasons people set up trusts is to help their children or other family members pay for an expensive education. When you set up this kind of trust, it is good practice to make sure that minor children cannot get their hands on these funds and that they are put to the correct use. To that end, our trust lawyers can put language in the trust document that prevents the beneficiaries from using the funds until they come of age and also language that ensures those funds go towards higher education or another fruitful endeavor.
Transfer Property
Another reason people frequently set up trusts is to transfer properly without as much of a hassle as there otherwise would be. For example, you can put real estate in a trust and, not only can this make it easier to transfer in certain circumstances, but it can provide tax benefits. This is one way that people who own lots of properties can afford to do so without paying an enormous amount in capital gains taxes.
Estate planning is another major reason that people set up trusts to transfer property. When you place property in a trust, it technically no longer belongs to you. It belongs to the trust. Therefore, it does not go through probate when the time comes. Trusts are a way to circumnavigate the wording in a will or create a more fluid asset that can be altered easily without having to go back and alter your will and other estate documents frequently.
People frequently will also set up trusts to transfer firearms in a legally expedient fashion. If you own an item regulated by the National Firearms Act, you are the only person who can possess it. NFA items are often expensive, so people who own them may want to decide where they go in a will. However, if someone “unauthorized,” like an heir, possesses that item, they can get in legal trouble. The way to deal with this is to set up a “gun trust” where all of the trustees “own” the NFA item and are allowed to possess it.
What Kinds of Trusts Are There in Columbia, MD?
There are three main kinds of trusts in Maryland: revocable trusts, irrevocable trusts, and testamentary trusts.
Revocable Trusts
Revocable trusts can be ended by the grantor at any time. Additionally, the grantor has a lot of control over what happens to trust assets and trust terms in a revocable trust. They may even also be the trustee or the beneficiary. However, because grantors have so much control over the assets in revocable trusts, the law treats it like they possess those assets, so there are basically no tax benefits in revocable trusts.
Irrevocable Trusts
Irrevocable trusts, however, have many tax benefits that are possible. The tradeoff, though, is that the grantor has much less control over what happens in irrevocable trusts. The grantor sets up the trust, appoints a trustee, names the beneficiaries, and then the trust is on “fire and forgets” until the grantor takes some significant legal steps to have the trust modified. One example of a reason that you may modify a trust is this: suppose a trust is set up to pay for a child’s college tuition, but when they grow up, they decide they want to pursue a career in a rock band. In that case, the grantor can modify the terms of the trust – with the help of an attorney – to benefit the beneficiary for another purpose besides going to college, which may no longer be in the cards.
Testamentary Trusts
Finally, testamentary trusts are made with the sole purpose of managing the distribution of assets after the grantor dies. In fact, testamentary trusts do not come into existence until a will is actually probated. These trusts operate similarly to irrevocable trusts in that their terms are not easy to change once they come into effect. However, the grantor can modify the terms of the trust by changing their will before they pass away. One advantage of a testamentary trust is that it can hold onto assets until a certain event happens. For example, you can set up a testamentary trust to benefit your minor children but make no distributions until they turn 18 years old. A disadvantage of a testamentary trust is that it does not avoid probate, so it will be subject to certain taxes.
Chat with Our Trusts Lawyers from Columbia, MD Today
Rice, Murtha & Psorasa’s trusts lawyers are ready to give you a free analysis of your situation when you call our offices at (410) 694-7291.