How Do I Put My House in a Trust in Maryland?

In law, trusts are a way to set up a fund to benefit someone else. However, trusts can be used for more than just generating income. You can also put property in a trust for the benefit of another party. This can be used to have more effective estate planning, have more beneficial tax arrangements, or for any other reason. That being said, many people may not know exactly how to place their house in a trust in Maryland.

The good news is that placing your house in a trust in Maryland is very much the same as creating a trust for any other purpose. You need to figure out the purpose of the trust, transfer ownership of the property to be placed in trust to the trustor, and have the trustor take some action that is permitted under the terms of the trust.

For help with your needs, call Rice, Murtha & Psoras’s Maryland estate and trusts attorneys at (410) 694-7291 for a free analysis of your situation.

Can You Put a House in Trust in Maryland?

You are absolutely able to place your house in a trust in Maryland. A trust can hold things besides money or stocks. You do, however, need to transfer ownership of the house/property from yourself to the trust.

There are some important things to remember about placing a house in trust. First, the property being placed into the trust must be specifically denoted in the trust. The trust is created when property is transferred in a legal manner per Md. Code, Ests. & Trusts Art., §14–404.

How to Set Up A Trust for Your House in Maryland

There are a number of steps that you need to take to put your house in trust – or set up any trust for that matter – in Maryland. Luckily, the process for placing a house in a trust is extremely similar to placing anything else in a trust. We’ll go into the steps you need to take to put your house in trust below.

Figure Out What You Want Your Trust to Do

Every trust needs a purpose. The purpose of the trust needs to be stated either orally or in writing. This is important because the whole point of a trust is to, well, trust another party to carry out your wishes as they pertain to a certain thing (in this case, a house). If you do not know exactly how to convey what the purpose of the trust for your house is, our lawyers can help work out the options for you when we discuss your case.

Declaration of Trust

The first “real” step in setting up a trust is a declaration of trust. This is a formal way of saying that a trust is being created and what the trust is for. This is called a declaration of trust. A declaration of trust denotes the “trustor,” or the person who creates the trust, the “trustee,” the person in charge of the trust, and the “beneficiary,” the person who benefits from the trust. The trustor, trustee, and beneficiary can also all be groups, companies, or other entities instead of individual people.

In Maryland, a declaration of trust does not need to be in writing per Md. Code, Ests. & Trusts Art., § 14.5-406. However, our lawyers would very strongly recommend that a writing called a “trust instrument,” is created that memorializes the declaration of trust. It is significantly harder to prove that a trust exists without writing denoting that it exists. This is especially true for trusts involving real property. Real estate and real property are treated with particular reverence in the legal world across the United States, so courts may be very unwilling to recognize that a trust involving real property exists if it is not in writing.

Trustee Takes Action

Trusts begin to function when the trustee takes any action denoted in the trust that benefits the trustee under Md. Code, Ests. & Trusts Art., § 14.5-401. In the case of property in trust, this could include renovations specifically allowed for in the trust or allowing the beneficiary to live in the house or use it as a vacation home.

Why Would You Put Your House in a Trust in Maryland?

Now that you understand how to place your house in a trust, it may be useful to understand why you may want to decide to put your house or another property in a trust. There are several different reasons why you may decide to put your house in a trust.

Tax Purposes

One of the main reasons that people place real property in a trust is to have more favorable tax outcomes. Generally, this comes in the form of managing estate taxes. An estate tax is a tax levied against property that is transferred to someone after its owner passes away. Normally, this can be a nonnegligible expense. However, when you place a property in a trust, depending on how the trust is structured, the tax could be much less.

Have Another Party Manage Your Property

Another advantage of placing your house in a trust is that it allows someone else to manage your property. This can be beneficial if you suddenly become unable to manage your own affairs because of an injury or any other reason.

Transfer Ownership Quickly

In some cases, placing a house in trust can help speed up the process of property transfer. For example, suppose you want to transfer your house to a family member who is a minor. Instead of waiting for them to come of age, you can place the house in trust with instructions to be transferred to the minor family member when they turn 18.

Call Our Maryland Estate and Trusts Lawyers Today

Rice, Murtha & Psoras has Columbia Estate and Trusts attorneys ready to talk about your situation when you call (410) 694-7291.