What Is the Difference Between a Maryland Will and a Trust

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

http://www.sinclairprosserlaw.com/

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.


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.


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.


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.


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.


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.


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/

http://www.americanbar.org/groups/real_property_trust_estate/resources/estate_planning.html

http://www.americanbar.org/groups/real_property_trust_estate/resources/estate_planning.html

http://www.aarp.org/money/estate-planning/


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.

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