New Maryland Trust Act Incorporates Uniform Trust Code

The Maryland legislature recently revised a key area of Maryland’s estate planning laws, enacting a version of the “Uniform Trust Code. Maryland’s Trust Act won’t go into effect until January 1, 2015, but when it does, the state will be one of thirty that follow the same standard, with some variations. The reform accompanies another legislative change that will bring Maryland’s estate tax exemption into line with that of many other states and the federal government.

Trusts have long been used by the affluent as an estate planning tool, but increasingly people in all walks of life rely on them as an alternative to a simple “last will and testament.” Trusts can be a way to avoid probate and delay or avoid estate taxes.

Maryland’s new law does not provide detailed rules for every kind of trust imaginable and carries over some provisions from the old law. It also does not always override the terms of a trust. There are thirteen provisions that prevail over the language of a trust instrument, but in other areas, the trust instrument overrides the Code when there is inconsistency.

Like the Uniform Trust Code, Maryland’s Trust Act includes eleven sections. The first is a general introduction, while the ninth is left blank for the later insertion of other laws. The nine remaining “subtitles” cover such areas as the creation, validity, modification, and termination of a trust; creditor’s claims, spendthrift, and discretionary trusts; revocable trusts; the duties and powers of a trustee; and the liability of trustees and rights of people dealing with trustees.

Marylands Trust Act adopts the Uniform Trust Code’s definition of “qualified beneficiary” and a number of other key terms. At the same time, Maryland’s code differs from that of neighboring states in a variety of ways. So-called “purpose trusts” — created not for a person but for a non-charitable purposeare allowed in Maryland, though the District of Columbia and Virginia limit them to 21 years.

The Maryland code does not permit silent trustsin which the trustee does not have to, or sometimes is not allowed to, provide notice to a beneficiarythough they are allowed in neighboring Delaware.

Estate planning with trusts is a profoundly complex area, and the new Maryland Trust Act creates many new nuances and variations. Because it does not go into effect immediately, there is still time to plan and make sure the new law works to your advantage. The experienced estate planning attorneys at Longman & Van Grack can help you assess your finances and goals to determine the best vehicles to preserve your wealth and your legacy. Contact us at (301) 291-5027 for a consultation today.