The Maryland Discretionary Trust Act includes forms for the creation of a trust under the act. Read the Law: Md. Code, Estates & Trusts § 14-402 Trusts under the Maryland Discretionary Trust Act with no designation will be assumed to be revocable. Trusts created under The Maryland Discretionary Trust Act have to say that the property is to be held in trust under the act. For example, real estate has its own rules for transfer. Though no specific words or actions are required to transfer property into trust, grantors still have to follow the laws for transferring property. The property to be held in trust must be specifically described in the declaration of trust. Read the Law: Md. Code, Estates & Trusts § 14-405 Trustees have a fiduciary duty to the beneficiary, which means they must use reasonable care in managing the property for the beneficiary. Trustees are empowered to manage and invest the property held in trust for the benefit for the beneficiaries. Read the Law: Md. Code, Estates & Trusts § 14-401 Trusts created under the Maryland Discretionary Trust Act assume that the grantor (called the “declarant”) will serve as the trustee. The trust can be set up with the grantor as the first trustee. The declaration can include a list of back-up trustees in the event a trustee cannot continue. A trustee may be a person, institution, or other organization. The trust does not exist until a trustee accepts receipt of the property. The grantor must be legally competent to make the trust. In the declaration, the grantor transfers legal ownership of the property to be placed in trust to the trustee and names the beneficiary. Read the Law: Md. Code, Estates & Trusts § 14.5-406 Technically, trusts do not need to be in writing, but execution of a trust is almost impossible unless it is in writing. In order to create a trust, the grantor writes a document called a Declaration of Trust. Read the Law: Md. Code, Estates & Trusts § 14.5-407 Trusts can even be set up to care for a beloved animal after the death of the owner. Trusts are often set up to provide for the health of an individual. Trusts can also be used to lower the estate tax due for married couples with larger estates. So, the fees related to probate are avoided. Examples of these purposes are the management of assets on behalf of family members or children in case their parents are disabled or die protection against creditors eliminating the need for probate minimizing estate and other property transfer taxes control over insurance policies and managing business matters Trusts are very popular in estate planning because property that is transferred by trust does not go through probate like a will. Trusts can be used for any legal purpose. Trusts can be created in the lifetime of the grantor (a “living” or “inter vivos” trust) or at the death of the grantor (a “testamentary” trust). Trusts can be for a charitable or private purpose. Read the Law: Md. Code, Estates & Trusts § 14-404 However, Maryland laws do not limit other means of declaring trusts. The law of trusts goes back hundreds of years and was mostly developed through judge- made law, or “common law.” In addition, Maryland also has the Maryland Discretionary Trust Act and Maryland Uniform Charitable Trusts Administration Act that give specific requirements and forms for trusts created under those laws. In some situations, trusts transfer property faster and cheaper than a will. Trusts are used for many reasons, but people often use them like wills to pass property to their beneficiaries. A trust is a legal arrangement where one person, (the “settlor,” “grantor,” or “transferor”) gives legal ownership of specific property to a second person (the “trustee”) to use to benefit a third person (the “beneficiary”).
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