The new Maryland Trust Act (hereinafter “MARYLAND TRUST ACT”) took effect on January 1, 2015 and is applicable to existing and new trusts. Therefore, it is retroactive to all trusts, regardless of whether the documents were executed prior to this date. Maryland now joins a large number of other jurisdictions, including Virginia and the District of Columbia, in enacting its statutory authority to the Uniform Trust Code (“UTC”). The MARYLAND TRUST ACT is intended to provide a codified source for all trusts, instead of being scattered amongst various statutes, rules and case law.
The MARYLAND TRUST ACT does not provide sweeping changes to existing law, but there are certain aspects which are relevant to consider for estate planning and administration. Also, it is noteworthy that although the MARYLAND TRUST ACT has been adopted through statute, the terms of your trust may still prevail over the MARYLAND TRUST ACT, except for certain mandatory provisions. This is important as each person has different goals in estate planning, and we can discuss the options to accomplish your goals. Thus, the terms of your trust will typically prevail where there are differences between your document and the default provisions of the MARYLAND TRUST ACT.
One significant provision of the MARYLAND TRUST ACT is the duty of the trustee to inform and report to beneficiaries. As adopted from the UTC, a trustee who accepts such a position now has a duty and responsibility to all “qualified beneficiaries” as defined in the MARYLAND TRUST ACT. Specifically, within 60 days after accepting trusteeship, a trustee must notify all qualified beneficiaries of the trustee’s acceptance of the trust and the trustee’s contact information. Furthermore, a trustee has an affirmative duty to provide notice to all qualified beneficiaries within 90 days of a trust’s existence, the identity of the settlor(s), the beneficiary’s right to receive a copy of the trust instrument, and the right to receive annual reports regarding the assets and liabilities of the trust. Therefore, this underscores the need for careful selection of a trustee that is able to communicate with beneficiaries and adhere to such reporting requirements.
Another important provision of the MARYLAND TRUST ACT allows the trustee to furnish a certification of trust to a person other than a beneficiary, instead of a copy of the entire document. The certification is a short form that states specific information, including basic aspects of the trust creation and the identities of the settlors and trustees. The certificate of trust is a valuable document that your attorney should draft, which may be prepared when you execute your trust, or upon the death of a trustee to assist with estate administration. In addition, this certification may help keep your trust a private document such that third parties do not learn who will, or will not, receive trust assets.
Other highlights of the MARYLAND TRUST ACT include the following: virtual representation where certain individuals are able to bind or represent other persons under a trust, such a parent for a minor child; modification or termination of a trust by a Maryland court under certain circumstances, and potentially with beneficiary and trustee consents; the duty to act “reasonably under the circumstances” versus the UTC standard of “in good faith”; and the presumption that trusts are revocable, unless expressly stated otherwise.
We can discuss the legal requirements imposed by the MARYLAND TRUST ACT and ensure that your estate planning and administration goals work with the changes in the law.