This title may be cited as the Maryland Trust Act.

This title applies to express charitable or noncharitable trusts and trusts created in accordance with a statute (including the Maryland Discretionary Trust Act, unless otherwise provided by the statute), judgment, or decree that requires the trust to be administered in the manner of an express trust.

In this title the following words have the meanings indicated. “Action”, with respect to an act of a trustee, includes a failure to act. “Ascertainable standard” means a standard relating to an individual’s health, education, support, or maintenance within the meaning of § 2041(b)(1)(A) or § 2514(c)(1) of the Internal Revenue Code of 1986, as in effect on January 1, 2015. “Beneficiary” means a person that: Has a present or future beneficial interest in a trust, vested or contingent; or In a capacity other than that of a trustee, holds a power of appointment over trust property. “Charitable trust” means a trust, or portion of a trust, created for a charitable purpose described in § 14–301(b) of this article. “Delivery address” means: The last known place of residence or place of business of a person; A facsimile number provided by a person for the purpose of receiving notice; or An e–mail address provided by a person for the purpose of receiving notice. “Discretionary distribution provision” means a provision in a trust that provides that the trustee has discretion, or words of similar import, to determine one or more of the following: Whether to distribute to or for the benefit of an individual or a class of beneficiaries the income or principal or both of the trust; The amount, if any, of the income or principal or both of the trust to distribute to or for the benefit of an individual or a class of beneficiaries; Which, if any, among a class of beneficiaries will receive income or principal or both of the trust; Whether the distribution of trust assets is from income or principal or both of the trust; or When to pay income or principal, except that a power to determine when to distribute income or principal within or with respect to a calendar or taxable year of the trust is not a discretionary distribution provision if the distribution must be made. “Discretionary distribution provision” includes a provision in a trust instrument that: Provides one or more standards or other guidance for the exercise of the discretion of the trustee; or Contains a spendthrift provision. “Environmental law” means a federal, State, or local law, rule, regulation, or ordinance that relates to the protection of the environment. “Environmental law” includes Title 16 of the Environment Article. “General power of appointment”, subject to § 14.5–507(b)(7) of this title, means a power of appointment that: By the terms of the trust specifically authorizes the holder to direct trust property to the holder, the estate of the holder, or the creditors of the holder; Is held in a capacity other than as a trustee; Is not limited by an ascertainable standard; and Is exercisable by the holder or holders without the consent of another person. “Guardian of the person” means a person appointed by the court or, in the case of a minor with no living parent, by the probated will of a parent of the minor, to make decisions regarding the support, care, education, health, and welfare of a minor or an adult individual. “Guardian of the person” does not include a guardian ad litem. “Guardian of the property” means a person appointed by the court to administer the estate of a minor or an adult individual. “Incapacitated” means the state of having an incapacity. “Incapacity” means the inability of an individual to manage the individual’s property or financial affairs effectively due to: Physical or mental disability; Disease or illness; Habitual drunkenness; Drug addiction; Imprisonment; Compulsory hospitalization; Detention by a foreign power; or Disappearance. “Interests of the beneficiaries” means the beneficial interests provided in the terms of the trust. “Jurisdiction”, with respect to a geographic area, includes a state or country. “Mandatory distribution provision” means a provision in a trust that requires the trustee to make a distribution of income or principal to a beneficiary, including a distribution on termination of the trust. “Mandatory distribution provision” does not include a provision in a trust that allows the trustee to make a distribution subject to the exercise of the discretion of the trustee even if: The discretion is expressed in the form of a standard of distribution; or The terms of the trust authorizing a distribution couple language of discretion with language of direction. “Person” means: An individual; A corporation; A business trust; An estate; A trust; A partnership; A limited liability company; An association; A joint venture; A government; A governmental subdivision; An agency; An instrumentality; A public corporation; or Any other legal or commercial entity. “Power of appointment” means the authority to designate the recipient or recipients of beneficial interests in property. “Power of withdrawal”, subject to § 14.5–507(b) of this title, means a presently exercisable power to withdraw trust property from a trust for the use or benefit of the power holder, other than a power: Exercisable by a trustee and limited by an ascertainable standard; Exercisable by another person only on consent of the trustee or a person holding an adverse interest; or Exercisable only with respect to trust property having a value that is less than or equal to the greatest of: The amount specified in § 2041(b)(2) or § 2514(e) of the Internal Revenue Code of 1986, as amended; The amount specified in § 2503(b) of the Internal Revenue Code of 1986, as amended, if the donor of the property subject to the power of withdrawal is unmarried at the time of the transfer of the property to the trust; or Twice the amount specified in § 2503(b) of the Internal Revenue Code of 1986, as amended, if the donor of the property subject to the power of withdrawal is married at the time of the transfer of the property to the trust. “Property” means anything that may be the subject of ownership, whether real or personal, legal or equitable, or an interest in the thing. “Qualified beneficiary” means a beneficiary that on the date the qualification of the beneficiary is determined: Is a distributee or permissible distributee of trust income or principal; Would be a distributee or permissible distributee of trust income or principal if the interests of the distributees described in item (i) of this paragraph terminated on that date without causing the trust to terminate; or Would be a distributee or permissible distributee of trust income or principal if the trust terminated on that date and no power of appointment was exercised. “Qualified beneficiary” does not include an appointee under the will of a living person or the object of an unexercised inter vivos power of appointment. “Revocable”, as applied to a trust, means revocable by the settlor without the consent of the trustee or a person holding an adverse interest. “Settlor” means a person, including a testator, that creates or contributes property to a trust. “Settlor” includes a person that, with other settlors, creates or contributes property to a trust in which case each such person is a settlor of the portion of the trust property attributable to the contribution of that person except to the extent another person has the power to revoke or withdraw that portion. “Spendthrift provision” means a term of a trust that: Restrains both voluntary and involuntary transfer of the interest of a beneficiary; or Restrains involuntary transfer of the interest of a beneficiary and permits voluntary transfer of the interest of a beneficiary only with the consent of a person that is not a beneficiary. “State” means a state of the United States, the District of Columbia, Puerto Rico, the United States Virgin Islands, or any territory or insular possession subject to the jurisdiction of the United States. “State” includes a Native American tribe or band recognized by federal law or formally acknowledged by a state. “Support provision” means a mandatory distribution provision in a trust that provides that the trustee shall distribute income or principal or both for the health, education, support, or maintenance of a beneficiary, or language of similar import. “Support provision” does not include a provision in a trust that provides that a trustee has discretion whether to distribute income or principal or both for the purposes under paragraph (1) of this subsection or to select from among a class of beneficiaries to receive distributions in accordance with the trust provision. “Terms of a trust” means the manifestation of the intent of the settlor regarding the provisions of a trust as expressed in the trust instrument or as may be established by other evidence that would be admissible in a judicial proceeding. “Trust instrument” means an instrument executed by the settlor that contains terms of the trust, including amendments to the trust. “Trustee” includes an original, an additional, and a successor trustee and a cotrustee.

A person has knowledge of a fact if the person: Has actual knowledge of the fact; Has received a notice or notification of the fact; or From all the facts and circumstances known to the person at the time, knows or should know the fact.

The terms of a trust prevail over a provision of this title, except: The requirements for creating a trust; The duty of a trustee to act reasonably under the circumstances and in accordance with the terms and purposes of the trust and the interests of the beneficiaries; The requirement that a trust and the terms of the trust be for the benefit of the beneficiaries of the trust and that the trust have a purpose that is lawful, not contrary to public policy, and possible to achieve; The prohibition under § 14.5–306 of this title against a person serving as a representative of a beneficiary of a trust when that person is serving as a trustee of the same trust; The power of the court to modify or terminate a trust under §§ 14.5–410, 14.5–411, 14.5–413, and 14.5–414 of this title; The rights of certain creditors and assignees to reach a trust as provided in Subtitle 5 of this title; The power of the court under § 14.5–702 of this title to require, dispense with, modify, or terminate a bond; The subject matter jurisdiction and venue for commencing a proceeding as provided by the laws of this State; The power of the court under § 14.5–708(a) of this title to increase or decrease the commissions of a trustee; The duties to provide information, copies, and notices specified under § 14.5–813(a) and (c) of this title; The duty under § 14.5–813(a) and (b) of this title to: Notify qualified beneficiaries of an irrevocable trust who have attained 25 years of age of the existence of the trust, the identity of the trustee, and their right to request trustee’s reports and a copy of the trust; and Respond to the request of a qualified beneficiary of an irrevocable trust for reports by the trustee and other information reasonably related to the administration of the trust; The effect of an exculpatory term under § 14.5–906 of this title; The rights under §§ 14.5–908 through 14.5–910 of this title of a person other than a trustee or beneficiary; The power of the court to take an action and exercise jurisdiction as may be necessary in the interests of justice; and Periods of limitation for bringing a judicial action.

The common law of trusts and principles of equity supplement this title, except to the extent modified by this title or another statute of this State.

The meaning and effect of the terms of a trust are determined by: The law of the jurisdiction designated in the terms unless the designation of that jurisdiction’s law is contrary to a strong public policy of the jurisdiction having the most significant relationship to the matter at issue; or In the absence of a controlling designation in the terms of the trust, the law of the jurisdiction having the most significant relationship to the matter at issue.

Without precluding other means for establishing a sufficient connection with the designated jurisdiction, terms of a trust designating the principal place of administration are valid and controlling if: The principal place of business of a trustee is located in or a trustee is a resident of the designated jurisdiction; or All or part of the administration of the trust occurs in the designated jurisdiction. A trustee is under a continuing duty to administer the trust at a place appropriate to its purposes, its administration, and the interests of the beneficiary. Without precluding the right of the court to order, approve, or disapprove a transfer, the trustee, in furtherance of the duty under subsection (b) of this section, may transfer the principal place of administration of the trust to another state or a jurisdiction outside the United States. The trustee shall notify the qualified beneficiaries of a proposed transfer of a trust’s principal place of administration not less than 60 days before initiating the transfer. The notice of proposed transfer under paragraph (1) of this subsection must include: The name of the jurisdiction to which the principal place of administration is to be transferred; The address and telephone number at the new location at which the trustee can be contacted; An explanation of the reasons for the proposed transfer; The date on which the proposed transfer is anticipated to occur; and The date, not less than 60 days after the giving of the notice, by which the qualified beneficiary must notify the trustee of an objection to the proposed transfer. The authority of a trustee under this section to transfer a trust’s principal place of administration terminates if a qualified beneficiary notifies the trustee of an objection to the proposed transfer on or before the date specified in the notice.

Notice to a person under this title or the sending of a document to a person under this title shall be accomplished in a manner reasonably suitable under the circumstances and likely to result in receipt of the notice or document. Permissible methods of notice to a person or for sending a document to a person under this title include first–class mail, personal delivery, or delivery to the person’s delivery address. This paragraph applies to: The proposed termination of a trust; The proposed modification of the administrative or dispositive terms of a trust; The proposed combination of two or more trusts into a single trust; The proposed division of a trust into two or more separate trusts; The proposed resignation of a trustee or cotrustee; The proposed transfer of the principal place of administration of a trust; or The notice required to be given to a qualified beneficiary under § 14.5–813 of this title. Notwithstanding paragraphs (1) and (2) of this subsection, a trustee shall provide notice to a person under this title: By personal service; By certified mail or first–class mail, postage prepaid, return receipt requested; By courier delivery service, delivery service prepaid, delivery confirmation requested; or If a person entitled to receive notice under this title agrees, in writing, to accept an alternative method of notice: By first–class mail, postage prepaid; By facsimile transmission from a facsimile device that produces a confirmation page that specifies the date and time of a successful facsimile transmission; or By e–mail, acknowledgment requested. A person may revoke the trustee’s authorization to provide notice by an alternative method under subparagraph (ii)4 of this paragraph by providing notice to the trustee in a method specified under subparagraph (ii)1 through 3 of this paragraph. A trustee authorized to provide notice by an alternative method under subparagraph (ii)4 of this paragraph may continue to provide notice by an alternative method until the person entitled to receive notice revokes authorization. If a trustee who provides notice by an alternative method under subparagraph (ii)4 of this paragraph knows or should know that the person did not receive notice, the trustee shall provide notice to the person by a method specified under subparagraph (ii)1 through 3 of this paragraph. Except as expressly provided in this title, notice required under this title or a document required to be sent under this title need not be provided: To a person whose identity, location, or delivery address is unknown to and not reasonably ascertainable by the trustee; or By a person to himself or herself. Notice under this title or the sending of a document under this title may be waived in writing by the person to be notified or sent the document. Notice of a judicial proceeding under this title shall be given as provided in the applicable rules of civil procedure.

Whenever notice to qualified beneficiaries of a trust is required under this title, the trustee shall also give notice to any other beneficiary that has sent the trustee a request for notice. A charitable organization expressly designated to receive distributions under the terms of a charitable trust has the rights of a qualified beneficiary under this title if the charitable organization on the date the qualification of the charitable organization is being determined: Is a distributee or permissible distributee of trust income or principal; Would be a distributee or permissible distributee of trust income or principal on the termination of the interests of other distributees or permissible distributees then receiving or eligible to receive distributions; or Would be a distributee or permissible distributee of trust income or principal if the trust terminated on that date. A person appointed to enforce a trust created for the care of an animal as provided in § 14.5–407 of this title or another noncharitable purpose as provided in § 14.5–408 of this title has the rights of a qualified beneficiary under this title. The State’s Attorney General has the rights of a qualified beneficiary with respect to a charitable trust having the principal place of administration of the charitable trust in this State.

In this section, “interested person” means a person whose consent would be required in order to achieve a binding settlement were the settlement to be approved by the court. Except as otherwise provided in subsection (c) of this section, on or after October 1, 2016, interested persons may enter into a binding nonjudicial settlement agreement with respect to a matter involving a trust. A nonjudicial settlement agreement is valid only to the extent the settlement does not violate a material purpose of the trust and includes terms and conditions that could be properly approved by the court under this title or other applicable law. Matters that may be resolved by a nonjudicial settlement agreement include: The interpretation or construction of the terms of the trust; The approval of a report or accounting of a trustee; Direction to a trustee to refrain from performing a particular act or the grant to a trustee of a necessary or desirable power; The resignation or appointment of a trustee and the determination of the compensation of a trustee; Transfer of the principal place of administration of a trust; and Liability of a trustee for an action relating to the trust. An interested person may request the court to: Determine whether the representation as provided in Subtitle 3 of this title was adequate; and Determine whether the agreement contains terms and conditions the court could have properly approved.

In the absence of express language to the contrary, the rules contained in §§ 1–202, 1–203, 1–204, 1–205, 1–206, 1–207, 1–208, 1–209, and 1–210.1 of this article shall be applied in construing the terms of an inter vivos trust. Whenever a provision in §§ 1–202, 1–203, 1–204, 1–205, 1–206, 1–207, 1–208, 1–209, and 1–210.1 of this article refers to a “will”, “estate”, or a similar term relevant primarily to wills and estates or a taker under a will or an estate, the term shall be modified to mean “trust instrument”, “trust”, or a similar term to reflect the application of the principles of those provisions to an inter vivos trust.

If probable cause exists for instituting proceedings, a provision in a trust purporting to penalize an interested person for contesting the trust or instituting other proceedings relating to the estate is void.