Revocable vs. Living Trusts in Maryland

In estate planning, trusts can be used to protect and designate assets for certain beneficiaries. When setting up this fiduciary arrangement, it is important to understand the difference between revocable trusts and living trusts.

A revocable trust is a type of living trust that can be amended or altered at any point during a settlor’s life. An irrevocable living trust can only be changed under certain circumstances. Revocable living trusts are often set up so that beneficiaries can avoid probate for specific assets after a settlor dies in Maryland. Our lawyers can help you set up a revocable living trust by executing a declaration of trust document and retitling your property. When making a revocable living trust, stipulate that it can be changed and include the method of alteration in your trust document. This will make it easier for you to amend your revocable living trust at any point in the future.

Call our Maryland wills and estate planning lawyers at (410) 694-7291 to get a free case assessment from Rice, Murtha & Psoras today.

Are Revocable Trusts and Living Trusts the Same in Maryland?

Revocable trusts are a type of living trust. They are used to classify and house certain assets to be used however settlors would like. According to Md. Code, Ests. & Trsts. Art., § 14.5-103(v), when specified that a living trust is revocable, the settlor can make changes to it when they are living.

When you set up a revocable living trust, that means that you can alter it in the future. If you set up an irrevocable living trust, it cannot be changed. Despite its restrictions, there are certain reasons why individuals might want to set up an irrevocable living trust. In certain situations, you can make changes to an irrevocable trust, provided all beneficiaries agree. Irrevocable trusts are typically created to take assets out of a grantor’s hands and put them into beneficiaries’ hands, reducing the value of the grantor’s estate and protecting their assets from creditors.

In many instances, the terms revocable trust and living trust are used interchangeably. It is important to stipulate within your trust document that you are creating a revocable trust so that you can alter it in the future if your circumstances change.

Reasons to Set Up Revocable Living Trusts in Maryland

Many individuals choose to set up revocable living trusts to protect their assets, designate beneficiaries for assets, and avoid probate.

Certain assets that do not pass through wills in Maryland may be placed in your revocable living trust. Individuals often set up revocable trusts to protect assets and designate them to their children so that their kids have financial power as they reach adulthood. For example, you might set up a living trust for your child that they gain authority over when they graduate college.

A major reason why people choose to set up revocable trusts is so that their beneficiaries can avoid probate after they die. Property in trusts does not pass through probate. Even if you are sure that you want certain beneficiaries to receive certain assets, you should most likely set up a revocable trust and not an irrevocable trust so that you can make changes should those relationships change.

How to Set Up a Revocable Living Trust in Maryland

Because a revocable trust is a living trust, the process for creating these trusts is the same. Our lawyers will guide you through the process so that you properly execute your trust document and retitle property as necessary.

We will begin by reviewing the assets that are currently in your will and those that are not. If you would like to place certain assets, like your car or home, in a living trust, you must first exclude them from your will. We can execute a codicil to do this.

Then, our Baltimore wills and estate planning lawyers will create a declaration of trust document that you will sign in front of a notary public. This document will contain descriptions of the assets to be placed within your trust, such as real estate, personal property, or bank accounts, and the designated beneficiaries of those assets. You may have to retitle the property placed in your trust to reflect its new ownership, which would be your living trust.

When creating your revocable living trust, you can make yourself the trustee so that you can more easily make any changes you need to in the future.

How to Amend a Revocable Living Trust in Maryland

In Maryland, grantors can change the terms of a revocable trust provided it is not expressly written in the trust document that it is an irrevocable trust.

In the terms of your revocable living trust, we can include a method through which you can revoke or amend the trust. Suppose a revocation method is not written into your living trust, but it is still a revocable trust. In that case, you can include changes to the trust in a will or codicil executed at a later date, according to Md. Code, Ests. & Trsts. Art., § 14.5-602(c)(2)(i). Once you have expressly made the changes you wish to make, the trustee must abide by those changes when distributing assets from your trust to beneficiaries.

A settlor can alter a revocable trust at any time during their life, provided they do not become incapacitated.

There may be several reasons why you want to amend a revocable living trust in Maryland. Major life changes, such as births, deaths, marriages, divorces, and moves, are good times to review your plans for your assets and alter those plans to reflect your current financial situation and relationships. A revocable trust will become irrevocable after a settlor’s death in Maryland.

Call Our Maryland Lawyers to Discuss Your Case Today

For a free and confidential case review, call the Annapolis wills and estate planning lawyers at Rice, Murtha & Psoras now at (410) 694-7291.