The benefits of a Revocable Trust are three-fold. Firstly, assuming that the Revocable Trust is properly funded with all of a person’s assets, a Revocable Trust helps avoid a state’s probate procedure, which can be costly depending on the state’s specific procedure. Secondly, a Revocable Trust is the most effective estate planning instrument for disability planning and the best tool to help navigate the cognitive decline of a person. Thirdly, a Revocable Trust provides privacy that cannot be offered through a Will. The probate procedure as required by each state, often requires numerous public filings during the probate administration when compared to a trust administration.
The probate process in Maryland is relatively simple when compared to the most difficult states (California and Florida are among the most difficult states to probate a Will). However, avoiding probate in Maryland still has its benefits. Avoiding probate avoids the probate fee assessed by the Register of Wills in the county the Estate is administered. As of October 1, 2022, if your Estate is less than $50,000.00 (classified as a Small Estate in Maryland), you avoid the probate fee entirely. For an Estate with a value between $500,000.00 and $1,000,000.00, you can save $1,000.00 by executing a Revocable Trust plan. If the value of your Estate is over $1,000,000.00, the probate fee increases to $2,000.00 and increases as your Estate increases in value.
As far as the disability planning aspect of a Revocable Trust is concerned, a Trust is more effective than a Power of Attorney when it comes to managing a person’s finances should they become disabled. A Revocable Trust grants legal title to all assets within the Trust upon titling them into the Trust. While the creator of the Trust (the “Settlor”) is alive and competent, he or she has full control over all Trust assets and can do with them what the Settlor desires. If the Settlor is declared incompetent and/or resigns as Trustee of his or her own Trust, the successor Trustee (which the Settlor would name in the Trust document upon its creation) would begin to administer the Trust on behalf of the Settlor. In general, financial institutions are more likely to recognize a successor Trustee than they are an agent under a Power of Attorney, which can help ease any transition upon a person’s disability.
Finally, with regard to privacy, a Will must be filed with the Register of Wills of the county in which you were a domiciliary of upon your death. The Will is then made public and can be found/downloaded by members of the general public. A Will can contain provisions that some people would prefer to keep private, like a specific bequest to a child or family member. As an example, a specific bequest of $1,000,000.00 to a family member would be made public. Alternatively, if you disinherit a child, the disinheritance will be a matter of public record after your death. With a Revocable Trust, you can accomplish these same estate planning goals in a document that is not made available to the public.
The above are some of the primary reasons that a Revocable Trust may be more suitable to a person when compared to a Will. That is not to say that a Revocable Trust should be used in all instances. These are discussions that should be had with an estate planning attorney and will be specific to the facts and circumstances of you and your family.
