Many Maryland residents prefer not to talk about topics related to death, which is why estate planning is often not a popular task. However, common sense dictates that one's assets be protected in the event of one's death in the future. A trust is one item that many individuals incorporate into their estate plans for multiple reasons.
Trusts are particularly valuable for people with children who have not yet reached adulthood or other beneficiaries who might not have the ability to manage their own inheritances. If a child is designated as an IRA beneficiary, he or she might quickly deplete the IRA account. Instead, a parent may simply designate a trust to be the IRA beneficiary.
In this way, the trustee, instead of the beneficiaries, can access and control the IRA. The trustee can then decide to take the minimum distributions from the IRA over a period of time or withdraw all assets and simply hold them in the created trust. Distributions from the trust to the designated beneficiaries occur based on the terms of the trust.
Estate planning is immensely helpful for ensuring that one's assets end up in the hands of the proper beneficiaries when the time comes. A trust is especially valuable for controlling the management as well as the transfer of such assets. An applied understanding of the law may help Maryland residents to proactively and comprehensively set up trusts and complete other important estate planning documents in a way that will protect their best interests as well as those of their future beneficiaries.
Source: nasdaq.com, "Trust Company Corner: Prevent Beneficiary Designation Mishaps", Diane E. Lederman, Jan. 28, 2016