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2014 Maryland Legislative Update Estate and Trust related legislation

 

The 2014 legislative session included significant legislation affecting the estate and trust laws of Maryland.  A new Maryland Trust Code encompassing approximately 70 pages was passed.  While many of the code provisions retain existing Maryland law, it includes other provisions which significantly change the way trusts will be administered in Maryland for the foreseeable future.  The act requires all beneficiaries who are 25 at the time the trust becomes irrevocable to receive notice of the trust and their right to receive information relating to the trust. This will include even remote, potential beneficiaries. The act now recognizes “virtual representation” whereby one individual may consent to a proposed action by the trustee or to trust modifications on behalf of another individual so long as there is no conflict between the individuals represented.  For example, parents will be able to consent on behalf of their children and minor children will not have to be separately represented by an attorney. The act also allows the court to approve the termination or modification of an irrevocable trust with the consent of the Trustee and all beneficiaries so long as the termination or modification is not inconsistent with a stated purpose of the trust.  Maryland discretionary trusts and Maryland Pet Trusts continue to be recognized under the new code provisions.  

The legislature passed an increase to the Maryland exemption amount which sets the floor for the application of the Maryland Estate Tax.  The exemption will increase over time with the initial increase from $1 million to $1.5 million for individuals dying in 2015.  Ultimately, unless changed by future legislation, in 2019 the exemption will match the Federal exemption which is currently $5,340,000.  Maryland residents with assets in excess of the exemption level will owe a Maryland Estate Tax.  Non-Maryland residents with any real or tangible personal property in Maryland will pay a Maryland Estate Tax if there gross assets exceed the Maryland exemption amount regardless of the value of the property.

The legislature also extended the Homestead real estate tax credit for any residence owned by a trust (revocable or irrevocable) so long as the residence is occupied as a principal residence by the beneficiary without payment of rent.

The Registers of Wills were successful in obtaining legislation which allows them to retain only a digital file of the probate records instead of eternally holding onto a paper file.  All original wills must continue to be maintained in paper form but 180 days after an estate is closed, the Register may return the paper file to the Personal Representative.  

Lastly, the legislature confirmed that the guardian, personal representative or fiduciary of a crime victim has the right to seek compensation and restitution.