A living trust is a powerful estate-planning tool, and in Maryland it can help your heirs avoid the time and expense of probate. But not every asset automatically bypasses probate just because you created a trust. Here are five common Maryland scenarios where assets may still end up in the probate process:
1. Assets Not Properly Transferred Into the Trust
In Maryland, if a bank account, real estate deed, or other asset remains titled solely in your individual name rather than in the trust’s name, the Register of Wills will likely require probate. To avoid this, you must retitle assets into the trust or use proper beneficiary designations.
2. Payable-on-Death (POD) and Transfer-on-Death (TOD) Accounts Without Beneficiaries
Maryland allows POD and TOD designations on many accounts, including bank and investment accounts. But if you don’t list beneficiaries—or if a listed beneficiary has died—the account will revert to your estate, meaning probate is required.
3. Life Insurance and Retirement Accounts Without Proper Beneficiaries
Life insurance proceeds and retirement accounts like 401(k)s, IRAs, and Maryland state pensions usually avoid probate if a living beneficiary is named. But if you leave the “estate” as the beneficiary, or if your beneficiary passes away before you update the form, the funds will have to be probated.
4. Maryland Real Estate Titled Improperly
Maryland recognizes “tenancy by the entirety” for married couples and “joint tenancy with right of survivorship” for others. Property titled this way automatically passes to the surviving owner outside probate. However, property titled solely in your name or as “tenants in common” will require probate unless it’s held in your trust.
5. Newly Acquired Property Never Added to the Trust
Even if you’ve established a trust, any new property—such as a vehicle, vacation home, or financial account—that isn’t retitled into the trust (or assigned with a beneficiary) will go through probate in Maryland. A pour-over will can help catch these assets, but it still means probate will be required.
✅ Key Takeaway for Maryland Residents:
A living trust is an excellent probate-avoidance tool, but it only works if it’s funded and coordinated properly. Maryland residents should carefully check titles, deeds, and beneficiary designations, and revisit their estate plans after major life events to keep everything aligned.