Is there a limit to how much money can be placed in a trust?

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A trust can ensure that your hard-earned assets are distributed in accordance with your wishes upon your death. Establishing trust can also provide peace of mind, knowing that the care you’ve provided for the people you love during your lifetime will continue after your departure. If you want assurance that your loved ones will be cared for after you pass away, you should consider adding a trust to your estate planning portfolio. You may also wonder how to ensure your loved ones receive as much financial support as possible. Even further, you may question whether there are any limits on how much money you can transfer into a trust. Please continue reading to learn if there is a limit to how much money can be placed in a trust and how a compassionate Montgomery County Trust Attorney can help you determine the type of trust best suits your needs. 

How much money should I place in a trust?

If you decide to establish a trust, this estate planning tool will ensure your assets are managed according to your wishes during and after your lifetime. This legal contract allows you to set specific parameters for how and when your assets will be used and distributed. There are various benefits to creating a revocable or irrevocable trust. However, the primary advantage of a trust is that it can provide tax benefits. When establishing a trust, you can “gift” your appointed beneficiaries a specific amount each year without being subject to the usual gift and estate taxes.

Is there a “cap” on how much can be transferred into your trust?

While there’s no “cap” on how much money you can transfer into your trust, there are enforced limits regarding annual gift and estate tax exemptions. Although Maryland has no gift tax, the federal tax exemption is $17,000. Under federal law, a grantor may only make a qualified transfer to each beneficiary up to $17,000 per year as of 2023. Moreover, if a grantor’s estate is significant enough, the federal estate tax that may apply is a much higher exemption. The federal estate tax exemption is $12.96 million in 2023. If the estate exceeds this amount, the tax rates will range from 18% to 40%. It’s crucial to remember these limits when establishing this fiduciary agreement.

If you’re looking to take care of the people you love when you’re no longer around, please don’t hesitate to contact a determined Montgomery County trust attorney from the legal team at JD Katz, who can help you establish trust and leave a lasting financial legacy. Schedule an initial consultation with us at JD Katz today to discuss the necessary steps to safeguard your hard-earned assets.