Asset Protection

Maryland Living Trust: Is it Right for You?

Concept art of an article about a Maryland Living Trust: A smart looking house with lush garden (AI Art)

How to Set Up a Living Trust in Maryland [2024 Edition]

Are you thinking about how best to pass your assets onto your family, friends, or chosen charity? If so, a Maryland Living Trust might be worth a closer look.

Unlike a traditional will, a living trust (also called a “revocable trust” or “revocable living trust”) makes passing our assets to the next generation smoother, faster and cheaper. How? Because it avoids the court process known as probate.

In this article, we’ll discuss the advantages and disadvantages of this tool, as well as alternatives, costs and whether it’s the right choice for the estate planning piece of your wealth protection strategy.

What is a Maryland Living Trust?

A Maryland Living Trust is a legal document created during your lifetime to hold assets. It avoids probate and provides other benefits.

Important Terms to Know

The settlor, also known as the grantor in some places, is the person who transfers assets into a trust. If you’re thinking about setting up a trust, that’s you.

In Maryland, settlor is the proper term and the one we will use for the rest of this article.

The trustee is the person who’s responsible for managing the settlor’s assets on behalf of the beneficiaries— the person, charity or organization that will receive the assets when the settlor dies.

In a living trust, the settlor transfers some or most of their assets to the trust and then serves as the trustee. When the settlor dies or becomes disabled, a successor trustee named in the trust will take over and administer the trust and its assets.

Living trusts only control assets formally put into them. They make it very easy to pass assets on to heirs and can be drafted to provide protection for dependents with special needs after you’re gone.

However, living trusts in Maryland do not provide asset protection or tax savings.

The Legal Basis

In Maryland, the legal basis is found in the Maryland Trust Act, which covers Trusts.

Who needs a living trust?

Not everyone needs a living trust in Maryland, but for those who have at least $50,000* in assets subject to probate, it makes sense to give it some serious thought.

If you have an estate smaller than $50,000*, it can pass to your beneficiaries without a probate process. Certain assets, such as life insurance benefits and your interest in a retirement plan, aren’t subject to probate.

Under Maryland law, there is a simpler probate process if your net estate exposed to probate adds up to less than $50,000, or $100,000 if a surviving spouse is the sole heir.

Generally, though, our clients often fall into one or more of the following groups:

  1. High-net-worth individuals with substantial assets. They use a living trust to be able to transfer their assets to the next generation in a private way.
  2. Business owners. Shares or interest in a company can be moved into a living trust to easily pass them onto the next generation.
  3. Parents of minor children. The trust can be drafted to ensure the children are properly supported until they reach adulthood. (And, in some cases, even longer depending on your wishes.)

Pros and Cons of a Maryland Living Trust


  • Avoid probate. Many people use wills to set out their last wishes. However, not only is this process public, it can take years to complete, and cost the beneficiaries a fair bit of money. It also opens the door to fights between heirs. A living trust avoids all that. It’s fast, private, and often cheaper than a will after all costs are considered.
  • Control. During your lifetime, you keep control over all your assets in the trust.
  • Benefits for the beneficiaries. A living trust can be written so that after you pass, the trust changes form in a way that offers strong asset protection for your beneficiaries.


  • Upfront costs and fees. Setting up the trust involves more legal fees than preparing a will. Attorney fees and administrative expenses may be greater.
  • Transfer process can take time. Formally changing title to move assets into the trust can take time and effort. Assets left outside the trust may still need to go through probate.
  • Doing business with those assets can be harder. Dealing with trust assets can be more complicated and require extra paperwork. This is especially true if you need to borrow money for assets held within the trust.
  • It can’t cover everything. Certain assets like retirement accounts, health savings accounts, and life insurance cannot be transferred into the trust.

Alternatives to a Living Trust in Maryland

  • A Will: This is the standard. However, probate will be involved, which takes time and is very public.
  • Joint Ownership / Joint Tenancy: Certain accounts and assets owned jointly with rights of survivorship automatically pass to the surviving owner(s) if you die. This avoids probate.
  • Gift Transfers: You can give assets away during your lifetime. This will reduce the size of your estate over time. However, there are some important tax considerations with this strategy, so be sure to check with your tax advisor before setting up such a program.

Each alternative has its own pros and cons, and the best choice depends on your individual circumstances and goals.

Maryland Living Trust vs Maryland LLC

A Maryland Living Trust and a Maryland Limited Liability Company (LLC) are both legal tools. They can both be used to manage assets. However, they do different things.

A Maryland Living Trust is a legal entity mainly used for estate planning.

The settlor — the person creating the trust — transfers assets to the trust. These assets can be distributed to beneficiaries without going through probate. This can save time and costs.

Trusts themselves are private and do not become part of the public record. They can hold many types of assets. However, a Maryland Living Trust does not offer any asset protection.

On the other hand, a Maryland LLC is a legal business structure. It offers limited liability to its owners (called “members” under the law) and managers. In most cases, this protects them from personal responsibility for the company’s debts or liabilities.

At the same time, an LLC can also make it difficult for personal creditors to grab assets held within the LLC.

However, it’s not as private as a trust. In some states, the name of every member must be filed with the state. Thankfully, though, Maryland is not one those states.

In Maryland, only the registered agent has to be listed. If you live in Maryland, you can serve as your own registered agent, but you can also pay a registered agent to serve in this capacity. And an organizer doesn’t have to be one of the members either. It can be the LLC’s lawyer, accountant, or even a family or friend.

In that way then, a Maryland LLC can offer some level of privacy.

But, that all said, at the end of the day, a living trust is mainly used for estate planning. An LLC is used to protect assets — either from claims from an active business the LLC owns, or from personal claims against assets protected by an LLC.

Living Trust vs a Will

Living trusts and wills are both estate planning tools. However, they offer different benefits and drawbacks. Here’s a quick summary:

Feature Living Trust Will
Purpose A flexible, tool to quickly and easily pass assets onto the next generation. A basic document that outlines your wishes after death.


There is no probate. Probate is often triggered, meaning a public (and sometimes expensive) court process
Privacy Private, not part of public record After death, becomes a public record, accessible to anyone


You maintain control during life and can make changes. Very difficult to contest if created properly. You can change any time. But can be contested after you pass.
Tax benefits No tax benefits to you but potentially can be to your beneficiaries. No tax benefits to you but potentially can be to your beneficiaries.


Typically more expensive to set up than a will Typically less expensive to set up than a living trust

How much does a living trust cost in Maryland?

The fees can vary widely depending on factors such as:

  • The type of assets to be moved into the trust.
  • How complicated the “Trust instrument” (i.e. the trust agreement) has to be.
  • Who will serve as the trustee.
  • The number of beneficiaries and planning around that group.
  • The lawyer you work with.

In general, though, a simple trust can start at anywhere from $1,000 – $1,500. A more complex trust involving higher value estates can cost anywhere from $3,000 – $5,000+.

Frequently Asked Questions

Does a living trust need to be recorded in Maryland?

In Maryland, a living trust does not need to be recorded or made part of the public record. The terms of the trust, beneficiaries, and assets are private and do not become public record. This privacy is one of the benefits of having a living trust in Maryland.

How do I transfer property into a living trust in Maryland?

To transfer property into a living trust in Maryland, you can follow these steps:

Create the Trust Instrument: This document will be the foundation of the trust and will contain all the legal language necessary. It should include the names of the settlor (the person creating the trust), the trustee (usually you) and the beneficiaries. It should also include the trust’s terms.

Transfer the Assets: Once the trust document is created, you can transfer the assets into the trust. Your best source will be who set it up for you.

Notify any relevant parties: Be sure you update anyone that needs to be updated about ownership changes of assets moved into the trust. That especially includes creditors of the transferred assets.

In practice, you will want to let parties know about your intention to “retitle” (i.e. change legal ownership over) the assets BEFORE you make the change. This is especially important when it comes to financial accounts or assets with debt on them.

What happens in a divorce?

Maryland law provides both spouses an “equitable interest” of property in a divorce. The property may be owned by either spouse in their own name, jointly, or in a trust (such as a living trust). Assets in a living trust aren’t treated any differently than other assets.

That said, here are some key points to consider:

Marital vs. Separate Property: Assets acquired during the marriage are typically considered marital property. Assets acquired before the marriage or through inheritance are considered the separate property of that spouse. If the trust holds marital property, it may be subject to division during the divorce.

Impact on Divorce Settlement: The property in a revocable living trust may or may not be considered marital property depending on what assets were transferred to it. Assets that are considered marital property can affect child support and alimony calculations in a divorce settlement.

Negotiation and Modification: In a divorce involving a living trust that holds marital property, those assets are subject to division between the spouses. The trust may need to be revoked or redrafted to ensure reflects their changed circumstances.

Your lawyer is best placed to evaluate your circumstances. This is especially important if you or your spouse is a beneficiary or settlor of a living trust.

Does a living trust avoid probate in Maryland?

Yes, assets within a living trust avoid probate in Maryland.

This saves time, maintains privacy, and can avoid thousands (even tens of thousands) of dollars in probate costs.

However, many (but not all) types of assets outside your trust will still have to go through probate.

Does it need to be notarized?

Yes, a living trust should be notarized in Maryland. Notarization is not always required, but it’s recommended to ensure the trust isn’t contested and that the successor trustee can manage the trust assets more easily. If the trust is going to transfer land, then it needs to be notarized.

Should you do it yourself?

Creating a living trust by yourself is possible, but we do not recommend it.

Especially if you have a lot of assets, it’s a good idea to seek professional help.

Does it provide asset protection?

A Maryland Living Trust does not provide any asset protection. The settlor, who creates the trust, can change or revoke it at any time.

In the event you lose a lawsuit, you can be forced to pull the assets out of the trust and give them to your creditor.

If I put my house into a living trust, do I still benefit from homestead protections?

A homestead exemption protects a certain amount of equity in your home from creditors. In Maryland, the homestead exemption applies to real or personal property used as a residence up to $22,975.

It is available to both homes built on a foundation and mobile homes, and it appears to apply to homes held in living trusts. But we suggest consulting with an attorney to make sure.

Is a living trust “revocable” or “irrevocable”?

A revocable trust is a flexible estate planning tool that lets you to keep control over your assets while you’re alive. You generally serve as trustee. You can change it at any time.

An irrevocable trust, on the other hand, is an inflexible planning tool designed for estate planning and asset protection. Once you set it up, it’s very difficult (sometimes impossible) to change. In essence, you give up those assets for the benefit of the beneficiaries, although you can continue to manage the assets on their behalf.

When we talk about a living trust, we refer to a revocable trust under the control of the person (the settlor) who first put assets into it.

Where do I find a Maryland Living Trust Lawyer / Attorney in my Area?

Our firm, the Nestmann Group, helps build complete plans for clients interested in wealth protection. A big part of that is helping with estate planning.

However, a proper wealth protection plan is more than that. A good one will look at other factors like asset protection, tax strategies, insurance, and available government protections.

If you’re interested in seeing what’s right for you, please schedule a free no-obligation consultation with one of our Wealth Protection Associates. You can do that here.

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