When you put together a Maryland estate plan, you may worry first about your will. A will is an important and fundamental part of any estate plan, but there are limits to what a will does. For this reason, many people who have specific estate planning needs choose to supplement their plans by creating one or more types of trusts.
According to Kiplinger, there are many reasons you may want to establish a trust, or a fiduciary arrangement between you, the settlor, and the person who oversees the management of the trust, who becomes the trustee. Here are just a few.
1. You want to protect assets from creditors
You probably want to leave as much of a legacy behind for your beneficiaries as possible, but if a beneficiary is in some type of debt, the money you leave in a traditional will may wind up going toward those debts. If you leave assets to that individual in a trust, though, doing so protects those assets in the event that creditors come after your beneficiary.
2. You want control over distributions and spending
A trust is also a wise idea if you want your trustee to make distributions under conditional terms, such as when a beneficiary marries or reaches a certain age. You may also instruct your trustee to make periodic distributions to help control a beneficiary’s spending.
3. You want to maintain privacy
When you die and your assets go through probate, the details become public. However, trusts avoid the probate process, helping keep your private and financial affairs private.
Different types of trusts have different rules and powers, so it is important that you explore your options and find the type most suitable for your specific needs and goals.