Revocable Trusts in Maryland Versus Nevada
Compare the benefits and legal nuances of revocable trusts in Maryland versus Nevada, focusing on asset protection and tax implications.
When setting up a revocable trust, most people focus on what goes into the trust—but where the trust is based can matter just as much. Different states treat trusts differently, especially when it comes to taxation, privacy, and legal protections. Here’s a comparison of revocable trusts in Maryland versus Nevada.
Both states allow revocable living trusts, but there are a couple things to keep in mind.
Maryland taxes revocable trusts as grantor trusts, which means income from the trust is taxed to the person who created it. Meanwhile, the state levies income, estate, and inheritance taxes. In fact, Maryland is the only state in the union that has both an estate tax and an inheritance tax. Therefore, there are no state-specific tax benefits to establishing a revocable trust in Maryland.
Meanwhile, Nevada is a trust and tax powerhouse. It offers flexible trust administration rules, some of the best trust privacy protections in the country, strong asset protection, and easy trust modification through its decanting laws. Meanwhile, the state does not levy an income, estate, or inheritance tax. The state is the best choice for many people setting up trusts, even if they don’t live in the state. (Yes, you can set up a trust in Nevada no matter where you live in the United States.)
Revocable Trusts in Maryland Versus Nevada in More Detail
Nevada is considered one of the most trust-friendly states in the country. Here’s how it stacks up:
1. Superior Privacy Protections
Nevada doesn’t require public filings for revocable trusts, and it offers strong laws around trust confidentiality. If privacy is a major concern, Nevada is often the state of choice.
2. Stronger Asset Protection (for Irrevocable Trusts)
While revocable trusts in Nevada don’t offer creditor protection (just like in Maryland), Nevada shines when it comes to irrevocable trust protections. Many people who set up revocable trusts in Nevada later convert them into irrevocable ones to take advantage of these laws.
3. No Income, Estate, or Inheritance Tax
Nevada has no state income, estate, or inheritance tax, unlike Maryland which has all three. Some people choose Nevada as a trust situs for long-term tax planning.
4. Flexible Decanting Laws
Nevada makes it easy to modify or restructure trusts through a process called decanting. This flexibility is helpful if your estate plan needs to adapt over time.
A Real-World Example: Maryland Versus Nevada
Let’s say you live in Maryland and set up a revocable trust to avoid probate and organize your assets. The trust works well, but you want stronger privacy and long-term flexibility. You learn that Nevada offers better privacy laws and decanting options, so you move the trust there by naming a Nevada trustee and transferring trust administration.
Now, your trust remains revocable, but it’s governed by Nevada law. You’ve gained greater privacy—and positioned yourself to convert the trust later if you want tax advantages or creditor protection.