What Assets Should Be in a Trust in Maryland?

Trusts offer individuals a structured means to efficiently manage and distribute their assets. However, only certain assets may be appropriate for inclusion in a trust. Meanwhile, other types of assets may be more suited to other mechanisms of distribution.

When considering what assets to include in a trust in Maryland, you should carefully evaluate your real estate holdings, financial accounts, personal property, business interests, life insurance, and outstanding debts. By incorporating these assets into a trust, you can create a robust estate plan that aligns with their wishes, streamlines the distribution process, and provides lasting benefits for their beneficiaries.

Seek support and guidance from our Maryland estate and trusts lawyers at Rice, Murtha & Psoras by calling (410) 694-7291.

Assets that Should (and Shouldn’t) Be Held in a Trust in Maryland

As previously mentioned, there are several different types of assets that are suitable for inclusion in a trust. Fortunately, if you wish to create a trust, then our Maryland estate and trusts attorneys can offer guidance on how to properly include any of the following:

Real Estate

Real estate is a pivotal asset that can be safeguarded through a trust arrangement in Maryland. By transferring property titles into a trust, individuals can ensure efficient management and distribution. Further, they may avoid potential probate complexities. This strategic approach provides a level of protection and facilitates the seamless transfer of real estate assets to designated beneficiaries.

Financial Accounts

Financial accounts may also be appropriate for inclusion in a trust. Bank accounts, investment portfolios, and other financial assets can be designated to pass directly to heirs, minimizing the impact of the probate process. Placing financial accounts within a trust structure enhances privacy and expedites the distribution of these assets to beneficiaries, contributing to an effective estate plan.

Personal Property

Furthermore, valuable personal items such as jewelry, art collections, or family heirlooms can be safeguarded within a trust in Maryland. Transferring ownership of personal property to a trust ensures a smooth transition to intended heirs, reducing the likelihood of disputes and simplifying the overall estate settlement process.

Business Interests

For individuals with business interests, incorporating these assets into a trust can be essential. Whether it involves shares in a company or ownership stakes, placing business assets in a trust helps maintain continuity and ensures a well-defined succession plan. This approach can be particularly beneficial in preserving family businesses or partnerships.

Life Insurance

Life insurance policies are another type of asset that can be strategically incorporated into a Maryland trust. By doing so, individuals can exercise greater control over the distribution of insurance proceeds, providing financial security to beneficiaries in a structured manner. Utilizing a trust for life insurance assets adds an additional layer of control and flexibility to one’s estate planning strategy.

Debts and Liabilities

Lastly, addressing debts and liabilities within a trust framework can be crucial in Maryland estate planning. A well-structured trust allows for the effective management of outstanding obligations, and it can provide guidance on how these financial responsibilities should be handled after the individual’s passing. This proactive approach helps in navigating potential complications and ensures a comprehensive estate plan.

Assets that May Not Be Suitable for a Trust in Maryland

Still, Maryland residents must exercise discretion when determining which assets are suitable for inclusion in a trust. The following are all examples of assets that may not benefit significantly from trust inclusion, as more straightforward mechanisms are available for their transfer and distribution:

Publicly Traded Securities

Maryland residents may find that publicly traded securities are not typically suited for inclusion in a trust. The ease of transfer and clear ownership documentation associated with these assets often makes the probate process straightforward. Placing publicly traded securities in a trust may introduce unnecessary complications, as the established mechanisms for transfer upon death are already efficient.

Retirement Accounts

Retirement accounts, such as 401(k)s and IRAs, are generally ill-suited for inclusion in trusts in Maryland. These accounts have designated beneficiaries, allowing for a direct transfer outside of probate. Placing retirement accounts in a trust could lead to adverse tax consequences and complicate the distribution process, making it more advisable to utilize the existing beneficiary designation structure.

Motor Vehicles

Motor vehicles, including cars and boats, are assets that may not be ideal for inclusion in a trust in Maryland. These assets can be transferred through mechanisms like transfer-on-death (TOD) for vehicles, which bypass probate. Including motor vehicles in a trust may add unnecessary complexity without providing significant advantages, as simpler alternatives are readily available.

Household Items and Personal Effects

While high-value personal property may be suitable for inclusion in a trust, household items and personal effects are generally not recommended. These items often have sentimental rather than monetary value, and their inclusion in a trust may lead to administrative complexities without substantial benefits. Handling the distribution of such items can be efficiently managed through other estate planning mechanisms.

Jointly Owned Property

Assets held jointly with rights of survivorship, such as joint bank accounts or real estate, are typically exempt from inclusion in a trust. The survivorship feature ensures that ownership automatically transfers to the surviving joint owner without the need for probate. Placing jointly owned property in a trust could complicate the established transfer mechanisms and is often unnecessary.

Life Insurance with Named Beneficiaries

Life insurance policies with named beneficiaries are generally excluded from the need for trust inclusion in Maryland. The proceeds from life insurance are designed to pass directly to the named beneficiaries, offering a straightforward and efficient transfer process. Establishing a trust for life insurance with named beneficiaries may introduce unnecessary complexity without substantial benefits.

Small Bank Accounts

Small bank accounts with relatively modest balances may not be the most practical assets for inclusion in a trust. Given the straightforward probate process for such accounts, the administrative complexities associated with trust management may outweigh the benefits. Simpler alternatives, like payable-on-death (POD) designations, can efficiently facilitate the transfer of these smaller assets.

Call Our Law Firm for Help Setting Up a Trust in Maryland

Get assistance from our Dundalk, MD estate and trusts lawyers by calling Rice, Murtha & Psoras today at (410) 694-7291.