Once thought of as only a tool for the very wealthy, many Maryland individuals are learning about the benefits of using trusts. This financial vehicle allows individuals to provide property and money to their heirs while also maintaining control and discretion over these distributions.
One reason why trusts are being created in more cases is because of the higher limits for tax-exempt gifts and estates. In 2013, the new tax-exempt limit was increased to $5.25 million. Portability was also created in new tax laws, allowing for a surviving spouse to absorb any unused portion of the federal estate tax exemption from his or her deceased spouse. Therefore, wealthier individuals who have estates larger than the tax-exempt limit can transfer funds out of their estate with an irrevocable trust in order to avoid a potential estate tax.
However, there are several other reasons to consider using a trust. For example, trusts help individuals control their wealth. They can create revocable trusts that allow them to have their medical needs provided for in case they become incapacitated. Upon death, this trust can also control who and when a distribution will be made from the trust. This characteristic makes a trust ideal for individuals who have children from previous marriages. Another advantage of a trust is that it can provide protection to the beneficiaries through spendthrift provisions. For individuals who value their privacy, trusts are generally carried out without the intervention or involvement of the court, making them a more private option than a will that is probated.
Individuals who would like assistance in establishing a trust may decide to discuss their options with an estate planning lawyer. By taking this action, individuals may be able to protect their heirs by creating trusts that put their needs first