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Tuesday, March 14, 2017

The Difficulties with Revocable Trusts

In order for revocable trusts to work for your average one home owner family, the deed for the home must be transferred into the trust itself. That can be a tricky process.

In Howard County, Maryland deed transfers are a two-step process, unlike most of the nation (and including elsewhere in the state) where the process is only one step. Howard County requires you to visit two separate government bodies in two different cities: Ellicott City and Columbia. The Finance Department in the Circuit Court House in Ellicott City is the first destination, and the second is the Land Records Office, which is in Columbia. There are also fees associated with the conveyance.

What happens if there’s a drafting error? The property becomes part of the grantor’s remainder estate when he dies, and all the carefully-written clauses in the revocable living trust are ignored. It’s a potential issue. And some assets like personal property and cars can’t be put into revocable trusts. It’s a lot of effort to simply save a few dollars in probate fees; probate fees in Maryland are often very reasonable.

With a will, none of this has to happen. While assets distributed through a will have to go through probate, they also don’t require “re-titling”, that is, they don’t need to be conveyed into a revocable living trust. But that means probate will probably still occur, albeit in a smaller, more efficient form.

Anything that requires to trips to separate government buildings in two separate cities can’t be easy! Don’t forget, after all that, it will still require you to still go through probate.

Revocable living trusts have become a way for estate planning attorneys to grab just a little bit more from their clients. I am asked occasionally to draft revocable trusts and I am also asked to retitle deeds for them. I do the work, but I warn the client to be careful and if they wish to do their estate plan in the future just to use a will for simplicity’s sake.


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The Law Offices of Rick Todd is located in Columbia, MD and Chevy Chase, MD (Friendship Heights) serve clients throughout Clarksville, Columbia, Ellicott City, Fulton, Rockville, Bethesda, Potomac, Laurel, Howard County, Montgomery County, and Washington D.C.



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