what is the difference between a maryland will and a trust
TRANSCRIPT
WHAT IS THE DIFFERENCE BETWEEN
A MARYLAND WILL AND A TRUST
“There are different types of asset transfer vehicles that can be used in the field of estate planning. The most commonly used estate planning document is the device called a last will or last will and testament.”
Colleen Sinclair Prosser
Annapolis, Maryland Estate Planning Attorney
What is the Difference Between a Maryland Will and a Trust www.sinclairprosserlaw.com 2
There are different types of asset transfer vehicles that can be used in the field
of estate planning. The most commonly used estate planning document is the
device called a last will or last will and testament.
With a last will, you are stating your wishes regarding property that was in your
sole and direct personal possession at the time of your passing. In your will, you
name an executor to administer your estate after you are gone. After you pass,
the executor would admit the will to probate, and the court would supervise the
administration of the estate.
What is the Difference Between a Maryland Will and a Trust www.sinclairprosserlaw.com 3
The court would examine the will to make sure that it is valid. Final debts would
be paid during probate, including taxes. Ultimately, if everything was in order, the
executor would prepare the assets for distribution to the heirs that are named in
the last will.
When the estate is closed by the court, the executor would be empowered to
distribute the resources to the inheritors in accordance with the terms that are
recorded in the will.
TRUSTS
Things are different with trusts. At the outset, we should point out the fact that
there are revocable trusts, and
there are irrevocable trusts.
First, let's look at how
revocable living trusts differ
from last wills.
If you establish a revocable
living trust, you are called the
grantor of the trust. The person
or entity that administers the
trust is called the trustee. As the grantor of the trust, you can act as the trustee
while you are alive and well.
What is the Difference Between a Maryland Will and a Trust www.sinclairprosserlaw.com 4
The beneficiaries are the individuals who can receive distributions from the trust.
Once again, you can act as the beneficiary while you are living.
You want the trust to serve as an estate planning device, so you name a
successor trustee to administer the trust after you pass away, and you name
successor beneficiaries who will receive monetary distributions.
One major difference between a revocable living trust and a last will is the
matter of probate. The successor trustee could distribute resources to the
successor beneficiaries outside of the probate process after your death.
What is the Difference Between a Maryland Will and a Trust www.sinclairprosserlaw.com 5
This is a positive, because probate can be quite time-consuming. Even if things
are relatively simple and straightforward, it will take eight or nine months to a
year in most areas. There are also expenses that accumulate during probate.
Another difference would be the ability to include spendthrift protections. If you
allow for lump sum distributions through the utilization of a last will, a spendthrift
heir could burn through his or her inheritance recklessly. As a result, this
individual could have nothing to draw from later on.
With a revocable living trust, you can leave behind instructions that the trustee
would be compelled to
follow regarding the nature
of the asset distributions.
For example, you could
allow for monthly
distributions of a certain
amount for an extended
period of time.
With a living trust, you can
also account for latter life
incapacity. Many elders become unable to handle their own decision-making at
some point in time, so you could empower a disability trustee to administer the
trust in the event of your incapacitation.
What is the Difference Between a Maryland Will and a Trust www.sinclairprosserlaw.com 6
Trusts that are irrevocable can satisfy different objectives. Irrevocable trusts are
used by high net worth individuals who are exposed to estate taxes, and these
trusts can provide asset protection.
There are also irrevocable trusts that can benefit a loved one with a disability
without causing a loss of need-based government benefits like Medicaid and
Supplemental Security Income.
These are a few of the reasons why you may want to use a trust instead of a
will, but there are others. The optimal asset transfer strategy will vary depending
upon the circumstances.
What is the Difference Between a Maryland Will and a Trust www.sinclairprosserlaw.com 7
SUMMARY
A will is used to state your wishes regarding how you want property that was in
your direct personal possession transferred after you pass away. On the other
hand, you convey personally held property into a trust, and the trust becomes
the owner of the property.
There are different types of trusts, and there are varying respective objectives
that can be accomplished through the utilization of a trust of some kind. If you
would like to explore all of your options, schedule a consultation with a licensed
estate planning attorney.
What is the Difference Between a Maryland Will and a Trust www.sinclairprosserlaw.com 8
REFERENCES
American Bar Association
http://www.americanbar.org/groups/real_property_trust_estate/resources/estate
_planning.html
AARP
http://www.aarp.org/money/estate-planning/
What is the Difference Between a Maryland Will and a Trust www.sinclairprosserlaw.com 9
About the Author
Colleen Sinclair Prosser Currently the owner and manager of SinclairProsser Law, LLC, Colleen steers her firm with both a guiding hand and direct involvement with the clients, bringing to the table a wealth of Estate Planning experience from many years spent at the helm of a busy law practice. In the past Colleen has served on the Board of Trustees for By Their Side, Lifelong Advocates for
Marylanders with Developmental Disabilities and on the Board of Governors of the American Academy of Estate Planning Attorneys in the past. EXPERIENCE An established member of the American Academy of Estate Planning Attorneys, Colleen offers years of experience in estate preservation and transfer. A strong proponent of the living trust, she also focuses on wills, powers of attorney, living wills, probate, trust administration, prenuptial agreements, nursing home planning, and special needs planning. She strongly endorses long-term care insurance and, in certain cases, life insurance and some annuities as valuable estate preservation vehicles, and strives to assure the compatibility of her clients’ estate plan and financial plan. Sensitive to the challenges presented by lifestyle and circumstance, Colleen addresses each situation with personal attention, wisdom, and skill.
SinclairProsser Law, LLC www.sinclairprosserlaw.com
ANNAPOLIS 900 Bestgate Road Suite 103 Annapolis, MD 21401 Phone: (410) 573-4818 Fax: (410) 573-2802
MILLERSVILLE 1520 Jabez Run Rd, Suite 300 Millersville, MD 21108 Phone: (410) 573-4818 Fax: (410) 573-2802
BOWIE 14300 Gallant Fox Lane, Suite 204 Bowie, MD 20715 Phone: (301) 970-8080 Fax: (410) 573-2802
WALDORF Waldorf Business Suites, LLC 3195 Old Washington Rd, Ste 102 Waldorf, MD 20601 Phone: 800-366-4615