Maryland joins the District of Columbia and Virginia in enacting its version of the Uniform Trust Code (UTC)(HB 83). The Maryland Legislature passed the legislation on April 7, 2014, and Governor O’Malley has until May 27, 2014 to veto it. The new law takes effect on January 1, 2015.
Highlights of the new provisions include:
1. The flexibility for a settlor to require that trust reports (accountings) be given to a representative of a qualified beneficiary is not included, as allowed under the DC and Virginia versions of the UTC. So-called “silent trusts” are not permitted, which are allowed in neighboring Delaware.
2. Trusts may be created for specific noncharitable purposes, without having definite beneficiaries, thereby permitting so-called “purpose trusts.” DC and Virginia allow such trusts, but only for 21 years.
3. A trust may be modified or terminated with the consent of all beneficiaries, if a court concludes that the modification is not inconsistent with a material purpose of the trust or its continuation is not necessary to achieve a material purpose of the trust. Following Virginia’s model, the new rules do not allow for non-judicial modification of a trust as does DC’s version of the UTC. However, an individual or a corporate trustee may terminate a small trust of $100,000 or less without a court order, but subject to a cumbersome notice and objection period for qualified beneficiaries.