Creating a family trust is one of the most effective and flexible ways to protect your legacy, avoid probate, and ensure your assets are distributed according to your wishes. While the concept of a trust can seem complex, with proper guidance from experienced estate planning attorneys, it becomes a powerful tool for long-term wealth preservation and family security.

At Frame & Frame Attorneys at Law, we’ve helped generations of Maryland families establish customized family trusts that fit their unique goals. In this complete guide, we’ll explain everything you need to know about setting up a family trust in Maryland—from the basics to the legal process, benefits, and ongoing management.

What Is a Family Trust?

A family trust is a legal entity that holds and manages assets on behalf of designated beneficiaries. It is created by the grantor (also called the settlor or trustor), who transfers ownership of certain assets into the trust. The trustee, who can be the grantor or another trusted individual or institution, is responsible for managing these assets according to the terms outlined in the trust agreement.

The primary goal of a family trust is to simplify asset management, minimize tax burdens, and distribute wealth efficiently, especially after the grantor’s death or incapacity.

Key Benefits of a Family Trust in Maryland

When structured properly, a family trust offers many advantages for Maryland residents:

• Avoids Probate: Assets placed in a trust pass directly to beneficiaries, bypassing the costly and time-consuming probate process.
• Maintains Privacy: Unlike a will, which becomes public during probate, a trust remains private and confidential.
• Ensures Control: You can dictate how, when, and to whom assets are distributed—even after your death.
• Provides for Incapacity: If you become incapacitated, your successor trustee can step in and manage the trust without court involvement.
• Supports Minor or Special Needs Beneficiaries: A trust can safeguard inheritances for minors or those who need long-term care planning.
• Reduces Estate Taxes: Certain types of trusts can help minimize estate and inheritance taxes.

Types of Family Trusts

Understanding the different types of trusts available is essential when deciding how to structure your estate plan. The most common types include:

1. Revocable Living Trust

A revocable trust can be altered, amended, or revoked by the grantor at any time during their lifetime. It offers flexibility and control, making it a popular choice for families who want to retain access to their assets while planning for incapacity and future distribution.

2. Irrevocable Trust

Unlike a revocable trust, an irrevocable trust cannot be changed or revoked after it is established. It’s often used for asset protection, Medicaid planning, and estate tax reduction. Once assets are transferred, the grantor relinquishes ownership and control.

3. Testamentary Trust

This type of trust is created through a will and goes into effect only after the grantor’s death. It can be useful for parents who want to provide for minor children or set restrictions on inheritance.

4. Special Needs Trust

Designed to provide for beneficiaries with disabilities, a special needs trust ensures that assets don’t disqualify the individual from receiving government assistance like SSI or Medicaid.

Who Should Consider a Family Trust?

A family trust is a smart option for many Maryland residents, including:

• Families with young children or dependents with special needs
• Homeowners or individuals with significant assets
• Business owners planning to pass down a company
• Individuals who want to avoid probate and ensure privacy
• Blended families who want to ensure fair distribution
• Retirees planning for long-term care or incapacity

Steps to Set Up a Family Trust in Maryland

Establishing a family trust is not a one-size-fits-all process. It requires careful planning, legal expertise, and a thorough understanding of your financial goals. Here’s a step-by-step breakdown of how to set up a family trust with Frame & Frame:

Step 1: Identify Your Goals

Before creating a trust, we work closely with you to identify your specific estate planning objectives. Do you want to protect your assets from creditors? Provide for children over time? Avoid estate taxes? Your goals will guide the type of trust and structure we recommend.

Step 2: Choose the Right Type of Trust

Based on your needs, we’ll help you determine whether a revocable or irrevocable trust (or another variation) is appropriate.

Step 3: Select a Trustee and Successor

You’ll need to name a trustee to manage the assets and carry out your instructions. This can be you (during your lifetime) and a successor trustee to step in upon your death or incapacity. Choose someone responsible, financially savvy, and trustworthy.

Step 4: Draft the Trust Agreement

We will draft a detailed trust agreement, a legal document that outlines your wishes, the role of the trustee, and how your assets should be managed and distributed. This is a critical step that ensures your trust is legally valid and enforceable in Maryland.

Step 5: Fund the Trust

Simply creating the trust is not enough. You must fund the trust by transferring ownership of your assets, such as real estate, bank accounts, investment portfolios, and life insurance, into the trust’s name. Any assets left outside the trust may still be subject to probate.

Step 6: Review and Maintain the Trust

Estate planning is not a “set it and forget it” strategy. Your trust should be reviewed regularly, especially after major life changes like marriage, divorce, births, deaths, or the acquisition of new assets. At Frame & Frame, we offer ongoing estate planning support to ensure your trust evolves with your life.

Common Assets Placed in a Family Trust

• Real estate (primary and vacation homes)
• Bank accounts (checking, savings, CDs)
• Investment accounts (stocks, bonds, mutual funds)
• Life insurance policies
• Business interests
• Personal property and heirlooms
• Vehicles (in some cases)

Note: Retirement accounts (like IRAs and 401(k)s) are usually not retitled in the name of a trust, but beneficiaries can be coordinated to align with your trust plan.

Mistakes to Avoid When Creating a Family Trust

To get the most value out of your trust, avoid these common pitfalls:

• Failing to Fund the Trust: Unfunded trusts are a frequent mistake that can result in assets going through probate.
• Not Updating Beneficiaries: Ensure that your trust aligns with your will, powers of attorney, and insurance policies.
• Choosing the Wrong Trustee: Your trustee will manage your assets and carry out your wishes. Make sure they are up to the task.
• Assuming a Trust Avoids All Taxes: Trusts can help reduce taxes, but they do not eliminate them entirely without proper planning.
• DIY Trusts Without Legal Advice: Online templates often miss Maryland-specific laws and can result in invalid or unenforceable documents.

How Family Trusts Fit into a Comprehensive Estate Plan

A family trust is just one piece of a comprehensive estate plan. At Frame & Frame, we also recommend combining your trust with:

• A last will and testament (for backup asset distribution)
• Powers of attorney (for financial and healthcare decisions)
• Advance healthcare directives (living will)
• HIPAA authorization forms
• Guardianship designations (for minor children)

Each of these documents works together to ensure your wishes are honored, your assets are protected, and your loved ones are cared for.

Why Maryland Residents Choose Frame & Frame

For over 70 years, Frame & Frame Attorneys at Law has helped individuals and families throughout Maryland build estate plans that reflect their values and secure their futures. Our personalized approach, deep legal knowledge, and client-first focus have made us a trusted resource for generations.

We don’t just draft documents—we offer guidance, education, and peace of mind.

Start Planning Your Legacy Today

Setting up a family trust is one of the most important steps you can take to protect your family and preserve your legacy. Whether you’re just getting started with estate planning or need to update an existing trust, Frame & Frame Attorneys at Law is here to help. Contact us today to schedule your estate planning consultation and learn how a family trust can fit into your long-term financial and legacy goals.