Frequently Asked Questions on How to Avoid Probate in Maryland
Q1: What is probate, and why would someone want to avoid it?
A: Probate is the legal process of administering a deceased person’s estate. It involves validating the will, paying off debts, and distributing assets according to the will or state law if there is no will. Many people want to avoid probate because it can be time-consuming, costly, and public. Additionally, the probate process can delay the distribution of assets to beneficiaries and may require paying attorney and court fees.
Q2: How can I avoid probate in Maryland?
A: There are several strategies to avoid probate in Maryland, which include:
1. Establishing a Revocable Living Trust:
A living trust allows you to transfer ownership of your assets into the trust while you’re still alive. Upon your death, the assets in the trust pass directly to your beneficiaries without going through probate. This is one of the most effective ways to avoid probate, though not always advisable to everyone. (See MD Code, Estates and Trusts § 14.5-201.) Learn more about our estate planning services.
2. Naming Beneficiaries for Assets:
Certain assets, like life insurance policies, retirement accounts, and payable-on-death (POD) or transfer-on-death (TOD) bank accounts, can be transferred directly to the named beneficiaries upon your death, bypassing probate. (See MD Code, Estates and Trusts § 4-405.)
3. Joint Ownership of Property:
Property owned jointly with right of survivorship automatically passes to the surviving joint owner(s) upon your death. This can be an effective way to avoid probate on real estate, bank accounts, and other property. (See MD Code, Estates and Trusts § 3-101.) For assistance with deeds and joint ownership, visit our Deeds page.
4. Gifting Assets During Your Lifetime:
You can reduce the size of your estate by gifting assets to your heirs while you’re still alive. This can minimize the amount of property that will go through probate after your death. Maryland has no state gift tax, but federal gift tax rules may still apply for larger gifts. (See IRS Form 709 (Federal Gift Tax).)
Q3: What is a revocable living trust, and how does it work in Maryland?
A: A revocable living trust is a legal document that allows you to place your assets into a trust during your lifetime. You can act as the trustee while you are alive, meaning you control the assets. After your death, a successor trustee takes over and distributes the assets to your beneficiaries according to the terms of the trust, avoiding probate. Since the trust is revocable, you can change it or dissolve it at any time while you are alive. However, this does not necessarily protect your assets from creditors.
(See MD Code, Estates and Trusts § 14.5-101.)
Q4: Are there any costs associated with setting up a trust or joint ownership?
A: Yes, there are costs associated with establishing a trust or joint ownership. A revocable living trust typically requires legal assistance to draft, which can cost anywhere from $1,000 to $3,000 or more, depending on the complexity. Joint ownership is relatively simple but may require changes to property deeds and legal documents. While these methods may incur some upfront costs, they can save money by avoiding the expenses of probate.
(See MD Code, Estates and Trusts § 14.5-202.)
Q5: Can I completely avoid probate by using these strategies?
A: While these strategies can help avoid probate for many assets, certain assets may still require probate under Maryland law. For example, assets that are not transferred to a trust or do not have designated beneficiaries, like personal property or real estate solely in your name, may still need to go through probate. Additionally, if there are disputes or complications regarding the estate, probate may still be necessary.
(See MD Code, Estates and Trusts § 5-101.)
Q6: What happens if I do nothing and die without planning to avoid probate?
A: If you die without a will or estate planning tools like a trust, your estate will go through probate by default. In this case, Maryland’s intestacy laws will determine how your assets are distributed. This can result in delays, court costs, and a distribution that may not align with your wishes.
(See MD Code, Estates and Trusts § 3-201.)
Q7: How can I ensure that my estate plan is set up correctly to avoid probate?
A: To ensure your estate is properly set up to avoid probate, consult with an experienced estate planning attorney in Maryland. They can guide you in creating a will, establishing a trust, setting up beneficiary designations, and transferring property into joint ownership. An attorney can also help you navigate the complexities of Maryland law to ensure your estate plan aligns with your goals.
(See MD Code, Estates and Trusts § 2-101.)
By utilizing these strategies and consulting with legal professionals, you can significantly reduce the likelihood of your estate going through probate in Maryland.
At Atkinson Law, we listen to all our clients and protect their interests so they can receive a positive legal outcome. We’ll work with you and give you the best possible recommendation for your future. To learn more about Wills, contact us today by calling (410) 882-9595 or visiting our Contact Us Page.