Germantown, MD Wills and Estates Attorney
Trusts are legal agreements that can be set up for a wide variety of purposes. People set up a trust for tax benefits, to pay for college for their children, to manage estate planning and countless other things. Because there is such a wide variety of things you can do with trust, it can be easy to either get lost in the number of choices you have or accidentally mess things up.
That is where we come in. Our lawyers know how to handle and set up trusts, and we can find the framework that fits the best for your circumstances and your goals.
Contact Rice, Murtha & Psoras’s trust lawyers at (410) 694-7291 and get a free review of your claim today.
Trusts in Maryland: Explained
Trusts are legal agreements where someone (the grantor) creates a trust administered by another person (the trustee) to benefit another group of people or an entity (the beneficiary).
The grantor determines the purpose and scope of the trust. Depending on the type of trust, the grantor may have a lot of control over what happens in the trust or not very much at all. The trustee is the one that administers the trust and ensures that the grantor’s wishes are carried out. Finally, the beneficiary is the group that reaps the benefits of the trust. A beneficiary can be one person, a group of people, or an entity like a company or philanthropic organization.
Trusts can be set up for any legal purpose. You can set up a trust to set aside money to pay for a loved one’s education. You can set up a trust to get tax benefits for property you possess. You can set up a trust to ensure property goes where you want it to when you pass away. If you can dream it up and it is legal, you can set up a trust for it.
Grantors can also set up the terms and conditions of a given trust. For example, suppose you have a trust to set aside money for a young child’s education. You can put stipulations in that trust that the beneficiary cannot get access to any of the money in the trust until they turn 18, and even then, that money can only be used to pay for their education.
How Are Trusts Set Up in Maryland?
Generally, trusts are created when the grantor writes something called a “declaration of trust.” This is a formal document that governs how the trust will work. Technically, a trust does not need to be in writing to exist. However, our trusts lawyers strongly recommend that you write down the declaration of any trust you make so that it is easier to reference and reinforce.
There are different kinds of trusts you can set up, but the two main ones are irrevocable and revocable trusts.
Irrevocable trusts are the less flexible of the two. The grantor sets up the trust, and then can do very little to influence what happens to it. The trustee simply does what the trust document says and things go from there. However, with that inflexibility comes certain benefits. Many irrevocable trusts are set up for income and property tax benefits.
Revocable trusts, on the other hand, can be manipulated by the grantor after they are created. However, they do not have the tax benefits of irrevocable trusts, and they can be harder to administer because the grantor needs to take a more hands-on role. In fact, the grantor may also be the trustee in a revocable trust.
Another kind of trust is a testamentary trust. These are specifically meant for estate planning so the recipient of the deceased’s estate gets the money in a trust fund instead of all at once. This can help provide money and support to children, spouses, family members with disabilities, and more without paying them a large sum at one time.
Can Trusts End in Maryland?
There are a couple of things that can terminate a trust in Maryland. First, if all of the beneficiaries pass away, there is no one around to benefit from the trust, so it ceases to exist. The same can be true if a trust is meant to benefit a specific company and it dissolves or goes out of business. Second, if the trust says in its governing documents that it will end at a certain date or time, then the trust automatically ends at that time. There may be certain actions that are also specified in trust documents that happen at that point. For example, a trust can be set up to end when the beneficiary turns 18 and transfers ownership of all assets therein to the beneficiary at the same time.
Third, the trustee can determine that trust assets will have their ownership transferred to the beneficiary. This requires other legal mechanisms to be in place, though, so you should discuss with our attorneys if this is a concern or something you want to do.
In addition to ending, trusts can also be modified. This can be important if a beneficiary’s wishes or desires change. For example, suppose you set up a trust to pay for one of your children to go to college. As that child grows older, they decide that they want to serve their country in the armed forces instead of going to college. As the grantor, you can elect to change the purpose of the trust instead of getting rid of it altogether, and our trust’s lawyers can walk you through that process to make sure you do everything correctly.
Our Germantown, MD Trusts Lawyers are Ready to Help
Rice, Murtha & Psoras has trusts attorneys ready to help you out when you call us at (410) 694-7291.