The Maryland Trust Act went into effect in 2015, passing a version of the Uniform Trust Code. Prior to that, most of Maryland’s trust laws were based on case law and not actually codified into a statute.
The Maryland Trust Act provided a set of default provisions that apply to all trusts. There are some provisions that are mandatory and apply regardless of what the trust terms states and there are also default provisions that can be drafted around.
The Maryland Trust Act provided consistency for estate planning attorneys, but also for trustees and beneficiaries.
Under the Maryland Trust Act, beneficiaries are now entitled to notice of the creation of an Irrevocable Trust and their entitlement to a copy of the trust and a trust accounting. This is a requirement that was not present in the common law of trusts, but is now a standard part of any estate planning practice and certainly through the course of estate administration.
Another nice thing about the Maryland Trust Act is that because the law is based on a version of Uniform Trust Code, dozens of other states have adopted something similar and it creates a situation where trust law has become fairly consistent, of course with some variations, throughout the country.
Some major features of the Maryland Trust Act that are important to note:
- As mentioned earlier, the Maryland Trust Act requires that notices be sent to all qualified beneficiaries. This provision provides more protection for beneficiaries.
- The beneficiary representative or “secret trust provisions” of the act provides that the trust can appoint a representative to receive notice on behalf of a beneficiary. This is narrow and needs to be looked at closely.
- There are provisions in the Act on how trust terms are treated in the event of divorce.
- The trust act somewhat changed the rules on creditor claims on a trust when someone passes away.
These are just some of the impacts of the Maryland Trust Act. If you have an existing trust, are administering a trust, or contemplating creating a trust, contact your estates and trust attorney today to discuss how it should be structured in light of the Maryland Trust Act.