As a person in Maryland gets older, they may start to think of who they want to inherit their assets after their death. While one may initially think of executing a will, the possibility of executing a trust should not be ignored. There is the myth that trusts are only for the wealthy, but this is not true. Anyone who wishes to pass their assets on to loved ones or a favorite charity can benefit from executing a trust. The following is a brief overview of trust funds.
How do trust funds work?
A trust fund is an estate planning vehicle that holds a person’s assets until the person’s beneficiaries are able to receive them via the terms of the trust. For example, a beneficiary may be able to receive the trust funds upon reaching a certain age or once the previous owner of the trust assets (the grantor) passes away. The grantor’s assets are titled in the name of the trust, and then can be passed on to the trust beneficiaries.
It is important to make sure the transfer of ownership from the grantor to the trust happens before the grantor’s death. An empty trust offers nothing to distribute to the trust beneficiaries. Trusts also have the advantage of bypassing the probate process.
What kind of assets can be included in a trust?
Trusts can hold a variety of assets. Some examples include family heirlooms, jewelry, real estate, stocks and bonds. If you wish to include an automobile or life insurance policy in a trust, it is important to consult with a professional first. It is not advisable for retirement accounts to be placed in a trust, as retirement accounts already have beneficiaries named to them and already bypass probate.
Learn more about trusts and estate planning
Trusts can be a useful estate planning vehicle, but it is important to ensure you understand what they accomplish and how they can help you before proceeding. This post is for educational purposes only and does not contain legal advice. Those who want to learn more about trusts are encouraged to explore our firm’s website for further information.