Maryland Trust Act
There are laws in place that are meant to regulate trusts. These laws are known as the Maryland Trust Act and they outline proper procedures for creating and distributing trusts. Therefore, it is extremely important to understand these laws and how they apply in your case.
A well-versed trusts lawyer can discuss the laws with you. With their help, you can create a plan that both works for your family and closely follows the law.
The Trust Act
Maryland enacted the Maryland Trust Act in 2014 and it became effective January of 2015. This act was drawn from a 2005 version of the Uniform Trust Code, however, it is not a uniform act. They made changes to the Trust Code specifically for Maryland.
The Act primarily governs items such as the duty of a trustee, the power of the court to modify a trust, right of creditors or assignees to attach trust property, the requirement of the consideration for the creation and the validity of the trust and the trustees, and most significantly, the trustee’s duty to provide certain information to beneficiaries and other addressing parties. An attorney can further explain the role of the Maryland Trust Act.
Rules of Representation in Maryland
The general rule of representation is a concept used to address which individuals should be considered or allowed to be considered to qualify as a beneficiary. Whether someone is a qualified beneficiary in Maryland determines what their rights are and what information they are entitled to receive pursuant to the trust.
The idea of representation is that for some trusts classes it is possible that not all of the beneficiaries are even alive or anticipated yet. For example, if modification is required that requires the consent all of the qualifying beneficiaries such as the consent of all children and grandchildren, it would be impossible to get the consent of an unborn child or a child that has not even been anticipated yet.
When discussing conflict of interest, it is a discussion of the rules of representation that could apply. Maryland Code Section 14.5-303 says guardians can represent a ward and agents can present principles, but only if the agents have specific authority to act with respect to trust matters. Trustees or personal representatives whose fiduciary estates are the beneficiaries of other trusts can represent their own beneficiary with respect to matters concerning other trusts. A parent can represent a child who has no guardians and who is a minor, incapacitated, unborn, unknown, or missing. Finally, a court can appoint a representative for one or more of the beneficiaries, if needed.
There are a number of ways that an individual in that class can be represented and there are a number of ways that an individual may be able to act on behalf of a class. A common example would be a guardian or a legal parent that can represent a child or can represent a ward. An attorney can further explain the rule of representation.
The Maryland Trust Act Title 145-110 defines a qualified beneficiary as a current distributee of income or principal. A person would be a current distributee if either the interest of the current distributee is terminated or the trust is terminated.
The new Will and Trust Act requires that a trustee send two proactive notices to a beneficiary, even if they are not requested. The trustee must notify all the qualified beneficiaries of the creation of a trust or the death of the settlor of a revocable trust, and that notification must be placed within 90 days. Even if the trust language says that such notice is not required, Maryland law requires this.
Ask an Attorney About the Maryland Trust Acy
Following the Maryland Trust Act is critical. If you fail to follow these guidelines, the trust may not be considered valid. To discuss the law and how it applies to your case, call today for a consultation with a well-versed attorney.