What if I die without a will?

When someone passes away without a will or an estate plan, they are said to have died “intestate.” As a result, the assets of the person who passes away are subject to Maryland’s intestacy laws. These are default laws that determine who assets will be distributed to and the corresponding amount that each eligible person is entitled to. However, these laws do not account for your specific wishes, relationships, taxes, or asset protection from creditors. Proper estate planning allows you to direct assets in the specific manner you provide so the correct people receive the appropriate share, and you can minimize taxes, costs, and fees.  

What is probate?

Probate is a court-supervised process to distribute assets of a decedent pursuant to the terms of a will or if a decedent passes away without any estate plan.  It is a public process that can be time consuming and costly.  There are two types of probate in Maryland: administrative probate and judicial probate. Administrative probate is managed by the Register of Wills while judicial probate is handled by the Orphan’s Court and is utilized when a will is being contested or there is some other issue that doesn’t allow for Administrative probate.  During probate, a personal representative is determined so the decedent’s assets are identified, necessary fees are paid, and the assets can be distributed.  

What is a will?

A will is a written document that directs how a person’s assets will be distributed after they pass away. There are requirements for a will to be valid in Maryland.  A will can be changed and updated although certain guidelines should be followed when doing so. Wills are subject to probate. 

What is a trust?

A trust is a fiduciary arrangement created by someone who appoints a trustee to hold assets on behalf of a beneficiary. Generally, trusts can be revocable or irrevocable although there are many types of trusts. Some trusts are designed to care for minor children while others can be better for reducing estate tax liability and/or asset protection. Trusts, especially revocable living trusts, can be used by individuals and families regardless of their wealth status. One of the primary benefits of trusts is they avoid probate. 

What is a revocable trust?

Revocable trusts, often referred to as living trusts or revocable living trusts, provide flexibility to the person creating the trust because that person can retain control of the assets, and the trust can be modified easily. Control is retained because the person who creates the revocable living trust is also often the trustee and beneficiary. Although assets in a revocable living trust avoid probate, they do not reduce your estate tax liability.  

What is an irrevocable trust?

Irrevocable trusts typically transfer assets out of the control of the person creating the trust and are therefore difficult to modify. Irrevocable trusts are primarily used to reduce estate tax liability and/or protect assets from creditors.

Should I use a will or trust?

Utilizing will-based planning or trust-based planning is a personal decision based on your unique circumstances. Wills can be beneficial for those with modest estates who want to limit initial costs and are comfortable with probate. Trusts are often preferred by those who want to avoid probate, are willing to retitle assets to fund the trust, or reduce estate tax liability.