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Maryland does provide one special form of creditor protection for property owned by
spouses. When a married couple titles an asset as “tenants by the entirety,” the property is
protected from the individual creditors of either spouse. This protection can be applied to
assets like real estate and bank accounts and applies regardless of whether wills or
revocable trusts are used as the couple’s primary estate planning documents. This
protection used to be lost if the couple split the property into tenancy in common interests
for purposes of funding their separate revocable trusts, and subsequently, the credit
shelter and/or marital trust(s) of the first of them to die. However, Maryland law now
provides that under certain circumstances, property owned as tenants by the entirety and
subsequently conveyed to the trustees of one or more trusts will have the same immunity
from the claims of the separate creditors of the husband or wife as would exist if the
husband and wife had continued to hold the property as tenants by the entirety. If you are
seeking this type of protection, it is advisable to consult with an experienced estates and
trusts attorney.
CLAIM: Revocable trusts ensure privacy.
FACT: Revocable trusts ensure some but not complete privacy.
As mentioned above, the terms of your will, the inventory of your assets, and all estate
accountings become public documents as part of the probate process. With revocable
trusts, neither the trust agreement nor the assets passing under the trust are normally
made a part of the public record. Revocable trusts do not, however, guarantee that your
assets will remain completely confidential. For example, it may be necessary to disclose
the provisions of a trust after your death to your beneficiaries, or banks may require a
copy of the trust in order for the trustee to set up an account. Also, under certain limited
circumstances, the Register of Wills or Orphans’ Court may require a copy of the trust
but do not typically make the trust a public record.
CONCLUSION
In certain situations, revocable trusts may be useful estate planning vehicles. This may be
the case if you (i) own substantial assets in your name that would otherwise have to go
through a regular probate proceeding, (ii) own out-of-state real estate, (iii) desire to have
someone else manage your assets currently, (iv) anticipate a will contest, or (iv) do not
want your affairs to be made part of the public record. Nevertheless, in some cases, the
immediate costs and administrative burdens involved in setting up a revocable trust and
transferring assets to it outweigh any potential savings that may be realized by avoiding
probate in the future. As stated, the benefit of using a revocable trust will depend on the
nature, location, and titling of your assets and other facts and circumstances.
When deciding whether to use a revocable trust, it is advisable to consult with an
experienced estates and trusts attorney. Mass-marketing advertising and high-pressure
sales tactics should be avoided. Whoever you work with, ensure that he or she is a
Maryland attorney who specializes in estates and trusts law.