Probate is the process in which the validity of the dead person’s – or decedent’s- will is determined as valid by the court. If you are the grantor and trustee, the IRS allows you to report such income on your tax return, rather than file a separate return for the trust. You must report income generated by the trust on your tax return.
Internal Revenue ServiceĪ living trust is not a tool for tax avoidance. Without a will, any non-trust property goes to your closest relative, as per Maryland intestate succession laws. Even if you place all known assets in a living trust, you still need a will. If you choose not to put certain assets in the trust or neglect to do so, those assets may go through probate, depending on how they are titled. You must sign any documents relating to the account as Jane Jones, Trustee. When you make any future transactions in the account, such as buying stock, you can’t use your name. For example, if you want to place your brokerage account in a living trust, the title would change from Jane Jones to the Jane Jones Trust. When you place any assets in a living trust, the ownership title must change. The trust officially exists once property is transferred into it. The trust states that property is transferred under the MDTA. You should name an alternate trustee – perhaps a close relative – to handle the assets after your death and ensure beneficiaries receive them. Under the MDTA, the declarant and trustee are the same. That’s the person or persons who will inherit the trust assets.
It must also identify the trust beneficiary. Under the Maryland Discretionary Trust Act (MDTA), you may create a living trust by “transferring property in writing to another person if the document transfers property in a legally recognized manner.” For practical purposes, when creating such a trust, you are the “declarant,” also known as the “grantor.” Under state law, the trust document names the property recipient as the trustee. Read on for more on creating a living trust in Maryland. Assets placed in a living trust do not go through the probate process after death. Once you die, the trust becomes irrevocable. These trusts are revocable, meaning you can change beneficiaries, buy and sell property, and otherwise treat the assets as you choose. However, you can name yourself as the trustee and make all decisions. Also known as inter vivos trusts, a living trust permits you to place your assets in the trust while still controlling the property during your lifetime. People are increasingly turning to living trusts because of the flexibility of these estate planning tools.
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