While many residents of Maryland may have put some thought towards creating a will, they may not have given much thought to the creation of another type of estate planning document -- a trust. Trusts aren't just for the wealthy; in fact, many people can benefit from a trust.
What is a trust? It is a legal document that allows a person to pass property on to the beneficiaries of the trust. However, control of the property until the distribution is made will usually be in the hands of another person or entity. The trustee is the person or entity that retains the legal title to the assets contained in the trust until the assets are distributed. There are three types of trusts that Maryland residents may find especially useful: revocable trusts, life insurance trusts and charitable remainder trusts.
In a revocable trust, the creator of the trust is able to alter the terms of the trust or even scrap the trust completely. But, once the creator of the trust passes away, the trust can no longer be changed, and a trustee will carry out the instructions of the trust regarding the passing of the trust assets to the intended beneficiaries.
Life insurance trusts are another popular type of trust, because they provide a means for the creator of the trust to avoid certain types of taxes that the life insurance proceeds may normally be subject to. Assets contained in a life insurance trust are used to obtain a life insurance policy. A life insurance trust cannot be revoked after it is created.
If the creator of a trust wants to make a donation to a favorite non-profit organization, a charitable remainder trust can be established. A person can place assets in a charitable remainder trust, while still collecting a monthly income on the trust assets and retaining the ability to take advantage of any pertinent tax deductions.
These are only three types of trusts Maryland residents may want to consider. The world of trusts is varied, encompassing the many unique needs of the individuals hoping to create one.