If you’re beginning to formulate your estate plans, the paths you can take are numerous. One method of protecting your assets for your family is to form a living trust. While a living trust has its pros and cons like anything else, it can be a great way to make things easier on your descendants after you’re gone. As probate and inheritance laws vary from state to state, the considerations that come into play when creating a trust will depend on where you live. This article specifically looks at the considerations and process for Maine residents.
If you’re thinking of creating a living trust or you just want some general financial planning help, getting a financial advisor is probably a good idea. You can find one who suits your needs using SmartAsset’s free advisor matching tool.
How to Create a Living Trust in Maine
Creating a living trust in Maine is generally a six-step process:
- Decide on the kind of trust you want. If you’re unmarried, you’ll probably want to go with a single trust. If you’re married, a joint trust might be best for you. You and your spouse can use a joint trust to store property that you and your spouse own independently, as well as jointly held property like homes, cars and furniture.
- Decide what will go in your trust. You can store almost anything in a living trust, including investments, family heirlooms, vehicles and jewelry. If your property has any corresponding documents, like certificates of ownership or car titles, you’ll want to get those together as well.
- Pick a trustee. Many people choose to name themselves at first. If you go that route, you’ll also need a successor trustee who can take over when you die. This person will be responsible for managing your assets and handing them over to your beneficiaries when you pass.
- Create the trust document. This is doable through either a computer program or the help of a lawyer.
- Sign the trust in front of a notary public.
- Put your assets inside the trust. This is called funding the trust. While you can do it yourself, it might make sense to hire a lawyer to help with the specifics of the paperwork.
What Is a Living Trust?
A living trust is a legal framework into which property and assets can be transferred. It is established by a physical document and has a trustee who is tasked with managing it and distributing the property within it to beneficiaries when the time comes. The creator of the trust, also known as the grantor, can serve as trustee; it can also be someone else, likely a trusted relative or friend.
Two basic types of living trusts exist: irrevocable and revocable.
Irrevocable living trusts are permanent. The grantor can’t modify the trust or its contents without written permission from everyone named in the trust. The trust takes full ownership of the assets inside. Thus, taxes are paid on the trust property through the trust.
Revocable living trusts are easier to modify after creation. The grantor can alter the trust as needed and remove property when he or she wants. Additionally, the grantor maintains ownership of the property in the trust and pays any relevant taxes on it.
How Much Does It Cost to Create a Living Trust in Maine?
The price of making a living trust depends on the method you use to actually put it together. One way is to use an online program and create the trust document yourself. This will cost you a few hundred dollars or so. Another viable option is to go through a lawyer, for which you’ll probably pay $1,000 or more.
Though it is cheaper to make your trust document yourself, there are problems that can arise with DIY estate planning. If you’re not comfortable doing the research that comes with properly establishing a living trust, you should strongly consider hiring a lawyer. Make sure the lawyer is a trust expert, not just an estate planner, and has fairly priced fees.
Why Get a Living Trust in Maine?
One of the main reasons to get a living trust is to make life easier for your family once you’ve died. Property stored inside a living trust doesn’t have to go through the probate process, which can potentially save your beneficiaries time and stress.
In Maine, however, this might not be as prominent a benefit as it is in other states. That’s because the state uses the Uniform Probate Code, which significantly streamlines the probate process. Additionally, Maine offers a simplified probate process to estates valued at less than $20,000. Because of these two factors, a living trust simply might not be worth it, especially for smaller or less complicated estates.
There are other reasons to get a living trust, though. For instance, a living trust may be especially useful if you want to leave property to a child. You can store that property in the trust, under the ownership of the trustee, until the child comes of age.
Who Should Get a Living Trust in Maine?
Living trusts are not reserved for the wealthy, but those with especially large or complex estates are more likely to benefit from a living trust. But because Uniform Probate Code is in effect in Maine, along with a simplified probate process for estates worth less than $20,000, a living trust simply may not be worth it for residents of Maine.
While living trusts boast a number of benefits, there are downsides. They tend to be more expensive and difficult to set up than wills, which can add a bit of a headache to what’s supposed to be your most relaxing years. They also give families more time to contest an estate than wills, which can inevitably lead to problems.
Living Trusts vs. Wills
Even if you make a living trust, you should still get a will. This is because the instructions you put in a will will determine the fate of any property that’s not placed in your trust. Wills also allow you to:
- Name an executor
- Provide instructions on how to pay taxes and debts
- Establish guardianship for children who are minors
- Select managers for children’s property
To get a better sense of how these estate planning documents differ, take a look below:
|Living Trusts vs. Wills|
|Names a property beneficiary||Yes||Yes|
|Allows revisions to be made||Depends on type||Yes|
|Avoids probate court||Yes||No|
|Requires a notary||Yes||No|
|Names guardians for children||No||Yes|
|Names an executor||No||Yes|
Living Trusts and Taxes in Maine
Your living trust is unlikely to impact your tax situation. Still, if you’re in the middle of planning your estate, it probably makes sense to get a basic idea of the taxes in Maine that could affect your plans.
Maine has an estate tax on estates worth more than $5.7 million. An 8% tax applies to the first $3 million over that threshold, with a 10% tax applying to the next $3 million and a 12% tax applying to anything above that amount.
There’s also a federal estate tax for estates worth more than $11.4 million. For couples, this limit is $22.8 million.
A living trust is one way of planning your estate, and it’s a particularly useful option if you don’t want your estate to go through probate once you’ve died. You can make a living trust yourself or you can hire a lawyer to guide you through some of the more difficult aspects of the process. Regardless of which method you utilize, remember that an estate plan should be an essential part of your overall financial plan.
Estate Planning Tips
- Everyone needs help sometimes, and estate planning is no different. Luckily, finding the right financial advisor that fits your needs doesn’t have to be hard. SmartAsset’s free tool matches you with financial advisors in your area in 5 minutes. If you’re ready to be matched with local advisors that will help you achieve your financial goals, get started now.
- One asset you can’t store in a living trust is a 401(k) plan. You can name the trust as a beneficiary, though, so make sure to take that step if you want the money in your account to pay out to your trust once you die.
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