Trusts vs. Wills: What Maryland Families Need to Know
When it comes to protecting your assets and planning your legacy, one of the most common questions we hear is: “Do I need a will or a trust?”
The answer depends on your goals, your family structure, and how you want your estate handled after you’re gone.
Below, we’ll walk through what each tool does, how they differ, and how Maryland law treats them so you can make confident, informed decisions.
👉 Make better decisions about your legacy: Read “The 5 Estate Planning Mistakes.”
If You Die Without a Plan
In Maryland, if you pass away without a valid will or other estate planning documents, Maryland intestacy law determines who inherits your probate estate.
This process can be complicated, costly, and slow, especially when real estate is involved. Instead of following your personal wishes, Maryland law distributes your probate estate according to a statutory order of inheritance based on legally recognized family relationships.
This may include:
Spouse or registered domestic partner
Descendants
Parents
Siblings or their descendants
Other relatives under Maryland intestacy law
Without a plan in place, even well-intentioned families can face confusion, disputes, and avoidable legal hurdles.
👉 To learn more about how Maryland's intestacy laws work, visit the “Maryland Register of Wills' Intestate Succession Guide.”
What a Will Does and Doesn’t Do
A Last Will and Testament is a legal document that outlines your wishes after death.
It lets you:
Designate someone to manage your estate, also known as your personal representative
Nominate guardians for minor children
Direct how your probate assets are distributed
However, a will generally must go through probate, which is a court-supervised process for administering the estate.
Probate can take months or even longer, depending on the estate, family circumstances, creditor claims, and court requirements. Beneficiaries may not receive distributions until debts, expenses, and required estate administration steps are handled.
A will does not control:
Life insurance or retirement accounts with named beneficiaries
Jointly owned property with rights of survivorship
Payable-on-death accounts
Assets properly held in a trust
👉 Learn more about wills: Read “Do I Really Need a Will? What Every Maryland Resident Should Know.”
What Is a Trust?
A trust is a legal arrangement where one person, called the trustee, manages assets for someone else, called the beneficiary.
Think of it like placing your assets in a private envelope and giving instructions for how and when they’re used.
Trusts can be customized to your needs, and they may:
Help avoid probate for assets properly transferred into the trust
Offer privacy
Help manage your assets during life and after death
Support incapacity planning
Provide estate tax planning opportunities, especially for larger Maryland estates
👉 Learn more about trusts: Read “Should You Include a Trust in Your Estate Plan?”
👉 Want to see how a living trust fits into the bigger picture of protecting what you’ve built? Check out our latest blog: “Learn How a Living Trust Fits Into the Asset Protection Landscape.”
Comparing Common Trust Types
Revocable Living Trust “The Flexible Envelope”
You can change it during your lifetime
Helps manage assets while you’re alive
Helps avoid probate after death for assets properly titled in the trust
Recognized in Maryland and offers control and flexibility
Irrevocable Trust “The Sealed Envelope”
Usually cannot be changed easily once created
May offer stronger asset protection when properly structured
May provide estate tax planning benefits
Assets may be removed from your taxable estate depending on how the trust is drafted and funded
Special Needs Trust
Designed to provide for a beneficiary with special needs
Helps protect eligibility for programs like Medicaid or SSI
Helps ensure long-term care without unintentionally disqualifying public benefits
Charitable Trust
Allows you to support a charitable cause
May offer tax planning benefits when properly structured
Can be created during life or as part of a legacy plan after death
Spendthrift Trust
Helps protect assets from a beneficiary’s poor financial habits
May protect trust assets from certain creditor claims, depending on the trust structure and applicable law
Gives the trustee control over when and how distributions are made
Life Insurance Trust
Holds life insurance policies
May help keep proceeds out of your taxable estate when properly created and maintained
Can be helpful for larger estates in Maryland
The Probate and Tax Picture in Maryland
Maryland has its own estate tax, with an exemption amount of $5 million.
Even if you don’t think your assets reach that level now, home equity, life insurance, business interests, retirement accounts, and investment growth can add up over time.
Maryland also has an inheritance tax that may apply to certain beneficiaries, although many close family members are exempt.
Without proper planning, your heirs may:
Face unexpected taxes
Be forced to sell property to cover obligations
Lose significant value to delays and court fees
A properly structured estate plan, including a trust when appropriate, can help minimize these risks.
👉 Learn more about trusts: Read “Your Complete Guide to Probate”
Understanding Step-Up in Basis
One of the lesser-known but powerful estate planning concepts is the step-up in basis.
When certain assets, such as real estate or stocks, are inherited, their tax basis is generally adjusted to the fair market value on the date of the owner's death.
This adjustment can reduce the amount of capital gains tax an heir may owe if the asset is sold later.
Example:
Suppose you purchased a home for $100,000. By the time of your death, the home is worth $500,000.
If your heirs inherit the home, its tax basis may generally be stepped up to $500,000, which is its fair market value at the time of inheritance.
If they later sell the home for $520,000, they may generally owe capital gains tax only on the $20,000 increase in value after inheritance, rather than on the $420,000 appreciation that occurred during your lifetime.
While a step-up in basis can provide significant tax benefits, the actual tax consequences depend on several factors, including the type of asset, ownership structure, applicable federal and state tax laws, and the circumstances of the sale.
Because every situation is different, it's important to consult with a qualified attorney or tax professional before making decisions based on potential tax savings.
Here is a simple way to compare the two:
| Feature | Will | Trust |
|---|---|---|
| Goes through probate | Yes | Usually no, if assets are properly funded into the trust |
| Effective while alive | No | Yes |
| Private | No, generally part of the probate record | Yes, generally private |
| Incapacity planning | No | Yes, for assets held in the trust |
| Can hold non-probate assets | No | Yes |
| Flexibility | Moderate | High, if revocable |
Most families benefit from a combination of both:
A trust for asset management, privacy, incapacity planning, and probate avoidance
A will to nominate guardians and cover anything outside the trust
Additional documents like Powers of Attorney and Healthcare Directives for full protection
We're Here to Help
At DK Law Group, we help Maryland families build estate plans that actually work.
Customized to your life, your goals, and your assets. Whether you're starting from scratch or reviewing an outdated plan, we’re here to guide you step by step.
📞 Contact DK Law Group to schedule your consultation and take the next step toward protecting your family, your assets, and your legacy.
Disclaimer
This blog is for informational purposes only and does not constitute legal advice. Estate planning laws can vary based on your specific circumstances, assets, family structure, and goals. For guidance about your situation, please consult a qualified Maryland estate planning attorney before making legal or financial decisions.
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