Maryland Trust Modification and Determination

When a trust no longer meets its original goals, it may be able to be modified. However, before you can begin the modification process, you have to determine the type of trust. An attorney can guide you through the process of Maryland trust modification and determination.

With the help of a dedicated trusts lawyer, you can change your trust to reflect your family’s current needs. Reach out today to learn more about how an attorney can help.

When Can a Trust Be Modified?

When a trust may be modified depends on the nature of the trust. For example, a revocable living trust can be modified or amended at any time as long as the grantor is alive and still retains the requisite capacity to amend or change the trust.

On the other hand, an irrevocable trust can only be modified under specific situations. There are situations where the trustee can choose to terminate the irrevocable living trust if the trust has assets that total less than $100,000. A trustee may also seek or terminate an irrevocable trust without the court order when the trust has become “unlawful contrary to public policy or impossible to achieve.” However, when a trust meets those specific requirements is unclear, the trustee often will seek court interference to be certain that they are acting within the scope of their fiduciary duty.

There are other times when a trust can be modified by the court. The court can modify a trust when there is clear and convincing evidence of a mistake. The court can also modify a trust to enhance the material purpose when a situation arises that may not have been anticipated. In that case, the modification would be used to further enact the person’s original wishes. This is outlined in the Maryland Code under Section 14.5-411 to 413.

The other times that a trust may be modified with court approval include when all of the trustees and beneficiaries agree to modify or terminate the trust to the extent that the modification or the termination does not interfere with the settlor’s original material purpose of the trust. The material purpose of the trust is the reason the trust was created. That can be a tax objective, a saving objective, or to provide support.

Pooled Trusts in Maryland

The concept of a pooled trust versus a separate share trust is the notion that trust proceeds are held together for the benefit of multiple beneficiaries. For example, it is not uncommon for an individual to create a pool of trusts for their children, meaning that all of the assets are held together. This can be beneficial because the trustee has the discretion to allocate the assets for minor children and use it where they may need it the most.

A separate share of a trust is the opposite. For a separate share of a trust, each child gets his or her own trust. For example, instead of all the assets being held together at the death of the second parent, the assets will be divided into equal shares. In this scenario, each child can only use the amount in their trust, they cannot use any of their siblings’ assets.

The concept of a pooled trust is often discussed in special needs situations. There are some charitable 501(c)(3)s that Maryland law has allowed to be established that are allowed to pool trust assets for special needs individuals and manage them accordingly. For example, a 501(c)(3) may manage millions of dollars for several different, unrelated individuals in a pooled trust so that they can maximize the returns on investment while keeping administrative costs to a minimum or less than what they would be if those individuals had trusts of their own.

Discuss Maryland Trust Modification and Determination Today

There are certain requirements that must be met for Maryland trust modifications and part of that is determining the type of trust. Depending on the type of trusts, the modification process will be different. To learn more about the process of modifying a specific trust, call today for a consultation.