Does a Trust Avoid Probate in Maryland?

Estate planning can be a complex process, and one of the key considerations is whether or not to create a trust. One of the most common questions is whether a trust can help to avoid probate in Maryland.

Probate is the legal process that takes place after someone passes away. This process is known to be time-consuming, expensive, and stressful for those involved. Creating a trust can potentially help to bypass probate by allowing you to transfer your assets to the trust during your lifetime. The assets in the trust can then be distributed to your beneficiaries according to the terms of the trust without having to go through probate.

For a free case review with our Maryland trust attorneys, call Rice, Murtha & Psoras at (410) 694-7291.

Can a Trust Avoid the Probate Process in Maryland?

Properly executed trusts set up in Maryland can be an effective way to bypass the probate process, which can be time-consuming and costly. By placing assets in a trust, the assets are no longer owned by the individual but by the trust.

This can help avoid the need for a probate court to distribute the assets upon the individual’s passing and can help ensure that the assets are distributed according to the individual’s wishes. Of course, this process might be challenging without the help of our experienced Annapolis trust attorneys. Additionally, trusts can help provide privacy for the individual and their family, as probate records are typically public.

What is Probate?

When a person passes away, their estate goes through a legal process known as probate. This process applies whether or not the deceased person left a will. During probate, a court determines the validity of the will and takes inventory of the estate’s assets. These assets are then assessed to determine which ones are subject to probate.

The purpose of probate is to ensure that any outstanding debts and taxes are paid off using the estate’s assets. Once these obligations are met, the remaining assets are distributed according to the will or Maryland intestate law in the absence of a will.

Of course, you might want to avoid the complexities of this process. To do so, setting up a trust will likely be your best option. There are a few different types of trust, each with its own benefits and drawbacks. A careful review of your case should be done to choose the trust that is right for you.

Revocable Trusts

One of the most effective ways for individuals to ensure that their assets do not go through probate upon their death is by transferring them into a revocable trust. This type of trust is an estate planning tool that allows individuals to maintain control over their assets during their lifetime while also ensuring that they are distributed according to their wishes after their death.

By creating a revocable trust, the individual transfers ownership of their assets to the trust, which then becomes the legal owner. This means that when the individual passes away, their assets are no longer part of their estate and are not subject to probate. Instead, the assets are distributed directly to the beneficiaries designated in the trust according to the terms of the trust document.

Irrevocable Trusts

An irrevocable trust is a legal arrangement where the grantor transfers assets to a trustee, who manages them on behalf of the beneficiaries. The grantor cannot change the terms of the trust or reclaim the assets once they have been transferred.

One of the primary benefits of an irrevocable trust is that the assets held within it are not considered part of the grantor’s probate estate. As a result, they can pass directly to beneficiaries upon the grantor’s death without going through probate. This can help reduce estate taxes and protect assets from potential creditors.

Living Trusts

A revocable living trust is a legal arrangement established and funded during the lifetime of a person, which allows them to retain control and ownership of their assets while they are alive. The trust is usually revocable and amendable by the creator, also known as the settlor, while they are alive and have the required capacity. During the lifetime of the settlor, the assets of the trust are often used for their support.

Assets that are pre-funded into a revocable living trust typically pass outside of the probate process, meaning that they do not have to go through the court-supervised process of distributing a person’s assets after they die. Instead, they pass according to the provisions of the trust.

However, many non-probate assets are still considered part of a person’s gross taxable estate for estate tax purposes. This means that assets funded into a living trust during the lifetime of the settlor might not necessarily be exempt from estate taxes.

Should I Avoid Probate in Maryland?

In Maryland, many individuals seek to avoid probate because of its potential costs, time delays, and the public nature of the proceedings. While there are many advantages to avoiding probate, there are also reasons to go through the process. However, determining the best choice for your situation will depend on numerous factors.

Reasons to Avoid Probate

Probate administration can provide an orderly and structured process for distributing an individual’s assets after their death, but there are also some potential drawbacks to consider. For instance, if an individual owns property in multiple states, the cost and time involved in probating the estate in each state might be significant, making it more advantageous to plan for avoiding probate in multiple jurisdictions.

Furthermore, avoiding probate can also provide an added layer of privacy for individuals who have concerns about their wishes for the distribution of their assets becoming part of the public record. By using alternative estate planning methods, such as living trusts, beneficiaries can receive their inheritance directly and privately without the need for court intervention. This can also potentially minimize the risk of family disputes and litigation.

Reasons to Go Through Probate

One of the benefits of the probate process in Maryland is that it commences the creditors’ period, which can reduce the time limit for filing a claim against the estate. It also grants certain courts authority over the named Personal Representative.

In many cases, it obligates the Personal Representative to seek advice from an attorney or the courts to become aware of other deadlines affecting the estate, such as estate tax deadlines, income tax filing deadlines, or other deadlines that might not be directly related to probate.

Our Maryland Trust Attorneys Can Help

Contact Rice, Murtha & Psoras today at (410) 694-7291 to receive your free case evaluation with our Bethesda, MD trust lawyers.