I recently received a marketing brochure for living trusts from a prominent Maryland attorney. His primary reason why a person in Maryland needs a living trust is that when you become incapacitated, the “successor trustee will immediately take control of [your] assets”. This statement is inaccurate for many reasons.
First, it assumes that the grantor’s bank account have been re-titled in the name of the Living Trust. Even so, the bank still will require proof that the grantor has become incapacitated or has signed a notarized document resigning as trustee. It can take several months for the bank’s legal department to review the documentation and transfer control of the account to the successor trustee.
But in most cases, a person’s primary bank account has not been retitled in the name of the Living Trust. In which case, it will take a great amount of time and effort to prove to the bank that the grantor is now incapacitated. It will take months for the bank accounts to be re-titled in the name of the successor trustee.
Secondly, it far easier and less expensive to add a person’s name to your bank account as a “convenient user” to pay your bills pursuant to Maryland Financial Institution Code § 1-204(a)(5). Likewise, the same can be accomplished with a durable power of attorney, which authorizes a person (usually a family member) to use your bank account to pay your bills.
Thirdly, a living trust does not guarantee immediate access to the grantor’s brokerage accounts. The brokerage firm will want definitive proof that the grantor has become incapacitated, such as notarized statements from treating physicians. It will take up to several months for the brokerage firm’s legal department to approve the transfer of control of the account to the successor trustee.
Even when the grantor dies, the brokerage firm will require that its legal department review both the death certificate and the Living Trust instrument. The brokerage firm will take at least several weeks to transfer control of the account to the successor trustee.
Practice pointer: The reality is Living Trusts are mostly a marketing scheme by lawyers who attempt to scare seniors with three words: death, taxes, and probate. Moreover, Living Trusts do not even offer their claimed advantages. See https://marylandprobatelawfirm.com/wills-trusts/
The bottom line is that 99% of Maryland residents do NOT need a living trust. Their estate planning needs can be satisfied with a simple Will. It costs only several hundred dollars for an attorney to draft a simple Will, compared to several thousand dollars to draft a Living Trust and re-titled your real property, bank accounts, vehicles, and brokerage accounts into the name of the Living Trust.
For the limited situations in which a Living Trust is entirely appropriate, see https://marylandprobatelawfirm.com/the-advantages-of-a-having-a-living-trust-in-maryland/
