Estates and Trusts (GET) — Title 15. Fiduciaries

“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.

In this section the following words have the meanings indicated.

A fiduciary may perform the functions and duties enumerated in this section without application to, approval of, or ratification by a court.

Except as expressly limited in the governing instrument, the powers of a fiduciary under this section are in addition to those derived from common law, statute, or the governing instrument.

The powers listed in this section may be extended or limited by the appropriate court, and the court may also eliminate any limitation imposed by a court on a fiduciary.

A fiduciary may perform the contracts of the decedent or disabled person that continue as obligations of the fiduciary estate.

In performing an enforceable contract to convey or lease land the fiduciary may execute and deliver a deed or conveyance for cash payment of all sums remaining due, or for the note of the purchaser for the sum remaining due secured by a mortgage or deed of trust on the land, as the contract may provide.

Except as provided in the Maryland Rules, a fiduciary may prosecute, defend, or submit to arbitration any actions, claims, or proceedings in any jurisdiction for the protection of the fiduciary estate.

The fiduciary may request criminal injuries compensation, restitution, or any other financial property interest of a beneficiary who is a victim of a crime.

To comply with an environmental law, a fiduciary may:

If a fiduciary acts prudently and in good faith, the fiduciary is not liable to a person with an interest in assets of the fiduciary estate for a decrease in the value of the assets for taking action under this subsection or otherwise taking action to comply with an environmental law or reporting requirement.

Acceptance by the fiduciary of property or failure by the fiduciary to take action under this subsection does not imply that there is or may be any liability under an environmental law with respect to any property.

The governing instrument authorizes or directs the donation of a conservation easement on the real property; or

Each beneficiary who has an interest in the real property that would be affected by the conservation easement consents in writing to the donation.

Notwithstanding any other provision of law, a fiduciary holding securities in a fiduciary capacity, a bank or trust company holding securities as a custodian or agent, and a bank or trust company holding securities as custodian for a fiduciary, is authorized to deposit or arrange for the deposit of the securities in a securities clearing corporation, regardless of whether the depositor owns capital stock of the clearing corporation.

When securities are deposited in accordance with paragraph (1) of this subsection, certificates representing securities of the same class of the same issuer may be merged and held in bulk in the name of the nominee of the clearing corporation with any other securities deposited in the clearing corporation by a person regardless of the ownership of the securities, and certificates of small denomination may be merged into one or more certificates of larger denomination.

The records of the fiduciary and the records of the bank or trust company acting as custodian, as agent or as custodian for a fiduciary shall show at all times the name of the party for whose account the securities are deposited.

Title to the securities may be transferred by bookkeeping entry on the books of the clearing corporation without physical delivery of certificates representing the securities.

A bank or trust company depositing securities pursuant to this section is subject to the rules and regulations as, in the case of State chartered institutions, the Commissioner of Financial Regulation and, in the case of national banking associations, the Comptroller of the Currency may issue from time to time.

A bank or trust company acting as custodian for a fiduciary, on demand by the fiduciary, shall certify in writing to the fiduciary the securities deposited in accordance with this section by the bank or trust company in the clearing corporation for the account of the fiduciary.

Debentures issued by federal intermediate credit banks or by banks for cooperatives;

Bonds issued by federal land banks or by the Federal Home Loan Bank Board;

Mortgages, bonds, or notes secured by a mortgage or deed of trust, or debentures issued by the Federal Housing Administration;

Obligations of national mortgage associations;

Shares, free-share accounts, certificates of deposit, or investment certificates of any insured financial institution, as defined in § 13-301(h) of this article;

Bonds or other obligations issued by a housing authority pursuant to the provisions of Division II of the Housing and Community Development Article, or issued by any public housing authority or agency in the United States, when such bonds or other obligations are secured by a pledge of annual contributions to be paid by the United States or any agency of the United States;

Obligations issued or guaranteed by the International Bank for Reconstruction and Development;

Obligations issued or guaranteed by the African Development Bank;

Obligations issued or guaranteed by the International Finance Corporation; or

United States government obligations, whether invested in directly, or in the form of securities of, or other interests in, any open-end or closed-end management type investment company or investment trust registered under the provisions of the federal Investment Company Act of 1940, 15 U.S.C. § 80a-1 et seq., if:

In this subsection, “affiliate” has the meaning stated in 12 U.S.C. § 1841.

A trust company in its fiduciary capacity may deposit in the trust company or in a financial institution that is an affiliate of the trust company funds awaiting investment or distribution unless the agreement or instrument that gives the trust company investment authority provides to the contrary.

A trust company in its fiduciary capacity may purchase bonds of the State or of any political subdivision of the State underwritten in whole or in part by the trust company or a financial institution that is an affiliate of the trust company unless the agreement or instrument that gives the trust company investment authority provides to the contrary.

Subject to the provisions of paragraph (2) of this subsection, a corporate fiduciary may invest and reinvest fiduciary funds and other funds over which the corporate fiduciary has investment discretion in securities of, or other interests in, a no-load open-end or closed-end management type investment company or investment trust registered under the provisions of the federal Investment Company Act of 1940 that does not impose a contingent deferred sales charge or distribution charge on that investment or reinvestment.

The provisions of paragraph (1) of this subsection apply even if the corporate fiduciary or an affiliate of the corporate fiduciary provides services as investment adviser or manager, sponsor, distributor, custodian, transfer agent, registrar, or similar related services to the investment company or investment trust and receives reasonable compensation for those services if:

The register of wills may bring suit on the bond of the fiduciary to recover taxes and costs; and

If the register does not bring suit on the bond, and a new fiduciary is appointed, the new fiduciary may bring suit on the bond of the removed fiduciary.

A court shall remove a fiduciary who has:

A court may remove a fiduciary who has:

In this section the following words have the meanings indicated.

“Fiduciary” means:

“Fiduciary assets” means assets held by a fiduciary as trustee, guardian, conservator, committee, custodian under the Maryland Uniform Transfers to Minors Act, investment manager, or investment advisor.

“Investment advisor” means any company registered under the provisions of the federal Investment Advisers Act of 1940.

Invest and manage fiduciary assets as a prudent investor would, considering the purposes, terms, distribution requirements, and other circumstances of the governing instrument and the nature of the fiduciary appointment;

Exercise reasonable care, skill, and caution regarding the anticipated effect on the fiduciary assets as a whole under the facts and circumstances prevailing at the time of any action by the fiduciary;

Invest and manage not in isolation but in the context of the fiduciary assets as a whole and as part of an overall investment strategy that incorporates risk and return objectives reasonably suitable under the terms of the governing instrument and the nature of the fiduciary appointment;

Diversify investments unless, under the circumstances, the fiduciary reasonably believes it is in the best interests of the beneficiaries or furthers the purposes for which the fiduciary was appointed not to diversify;

Review fiduciary assets within a reasonable time after acceptance of the fiduciary appointment and make and implement decisions concerning the retention or disposition of investments existing prior to the appointment in order to conform with this section;

Pursue an investment strategy that considers both the reasonable production of income and safety of capital, consistent with the fiduciary’s duty of loyalty and impartiality and the purposes for which the fiduciary was appointed;

Act with prudence in deciding whether and how to delegate authority and in the selection and supervision of agents; and

Incur only costs that are reasonable in amount and appropriate to the investment responsibilities of the fiduciary appointment.

No specific investment or course of action is, taken alone, prudent or imprudent;

The fiduciary may exercise reasonable business judgment regarding the anticipated effect on the portfolio of fiduciary assets as a whole under the facts and circumstances prevailing at the time of the decision or action;

The fiduciary shall have no liability for continuing to hold fiduciary assets existing at the time the fiduciary appointment was accepted or subsequently added pursuant to proper authority if, and as long as, the fiduciary, in the exercise of good faith and reasonable prudence, considers the retention to be in the best interests of the beneficiaries or in the furtherance of the goals of the governing instrument;

Subject to all other provisions of this section, the fiduciary may retain as fiduciary assets an interest in the fiduciary, if the fiduciary is a corporation, or in any corporation controlling, controlled by, or under common control with the fiduciary; and

In making an investment decision, the fiduciary may consider, without limitation:

Direct or permit a fiduciary to deviate from the terms of a governing instrument; or

Direct or permit a fiduciary to take, or to restrain a fiduciary from taking, any action regarding the making or retention of investments.

Is a trustee, guardian, conservator, committee, custodian under the Maryland Uniform Transfers to Minors Act, investment manager, or investment advisor; and

Files with the Commissioner of Financial Regulation a statement that the person elects to have this section apply to all fiduciary assets controlled by the person.

Unless waived by the client, a communication between an attorney and a client that acts as a fiduciary is subject to the attorney–client privilege even if fiduciary funds are used to compensate the attorney for legal services rendered to the client.

The existence of a fiduciary relationship between a fiduciary and a beneficiary does not constitute or give rise to a waiver of the attorney–client privilege for communications between the attorney and the fiduciary.

“Beneficiary” means a person who receives or is entitled as a matter of right to receive a current distribution of principal or income from a trust, estate, or fund with respect to which a substitution of a corporate fiduciary is made under this subtitle.

“Beneficiary” includes:

A bank;

A trust company; or

Any other corporate entity that is authorized to act as a fiduciary under the laws of this State.

A trustee;

An executor or executrix;

A personal representative;

A receiver;

A special administrator;

A guardian;

A conservator;

A committee;

A custodian under the Maryland Uniform Transfers to Minors Act; and

Any other person who has a fiduciary relationship the responsibilities of which are customarily performed by a corporate fiduciary.

A merger or consolidation of corporate fiduciaries;

The acquisition of the stock or assets of a corporate fiduciary by another corporate fiduciary;

The transfer by a corporate fiduciary of its trust and fiduciary business to another corporate fiduciary; or

The acquisition or formation by a corporate fiduciary of a subsidiary, which is itself a corporate fiduciary, in order to undertake the trust and fiduciary business of the subsidiary’s parent entity.

Bank, trust company, or bank holding company of which it is a direct or indirect subsidiary or affiliate; or

Corporation with its principal office in this State if the corporate fiduciary is:

Any bank, trust company, or bank holding company of which a successor fiduciary is a direct or indirect subsidiary or affiliate; or

Any corporation described in subsection (a) of this section with respect to a corporate fiduciary acting as a successor fiduciary.

Each cofiduciary of the successor fiduciary;

Each surviving settlor of a trust;

Each person who, alone or in conjunction with others, has the power to remove any corporate fiduciary; and

Personally delivered or mailed by registered mail, postage prepaid, return receipt requested, within 30 days before or after substitution of the successor fiduciary; and

Published once a week in 3 successive weeks in one or more newspapers of general circulation published in the county in which the principal place of business of the successor fiduciary is located.

The name of the predecessor corporate fiduciary;

The name of the successor fiduciary;

The effective date of substitution of the successor fiduciary; and

A summary of the provisions of this subtitle, including a statement of the rights and procedures available under subsection (d) of this section.

In this subsection, “interested party” means a person who:

A person entitled to notice under subsection (a) of this section who objects to the appointment of the successor fiduciary may, within 60 days after substitution of the successor fiduciary, file a complaint for removal of the successor fiduciary in the circuit court for the county in which the principal place of business of the successor fiduciary is located.

After notice to all interested parties and a hearing, the court:

Checks drawn by the fiduciary on an account in the name of the fiduciary as fiduciary;

Checks payable to the fiduciary as fiduciary;

Checks drawn by the fiduciary on an account in the name of the fiduciary’s principal, if the fiduciary is empowered to draw checks on the account;

Checks payable to the principal of a fiduciary and indorsed by the fiduciary, if the fiduciary is empowered to indorse the checks; or

Other funds held by the fiduciary as fiduciary.

In the case of a fiduciary appointed or qualified by a court, a certificate issued by or under the direction or supervision of that court or an officer thereof and dated within 60 days before the transfer; or

In any other case, a copy of a document showing the appointment or a certificate issued by or on behalf of a person reasonably believed by the corporation or transfer agent to be responsible or, in the absence of such a document or certificate, other evidence reasonably deemed by the corporation or transfer agent to be appropriate.

A person asserting a claim of beneficial interest adverse to the transfer of a security pursuant to an assignment by a fiduciary may give the corporation or transfer agent written notice of the claim.

A corporation or transfer agent is not put on notice unless the written notice identifies the claimant, the registered owner, and the issue of which the security is a part, provides an address for communications directed to the claimant and is received before the transfer.

Nothing in this subtitle relieves the corporation or transfer agent of any liability for making or refusing to make the transfer after it is so put on notice, unless it proceeds in the manner authorized in subsection (b) of this section.

As soon as practicable after the presentation of a security for transfer pursuant to an assignment by a fiduciary, a corporation or transfer agent which has received notice of a claim of beneficial interest adverse to the transfer may send notice of the presentation by registered or certified mail to the claimant at the address given by the claimant.

If a corporation or transfer agent mails a notice as authorized under paragraph (1) of this subsection, the corporation or transfer agent shall withhold the transfer for 30 days after the mailing and shall then make the transfer unless restrained by a court order.

“Endowment fund” means an institutional fund or part of an institutional fund that, under the terms of a gift instrument, is not wholly expendable by the institution on a current basis.

“Endowment fund” does not include assets that an institution designates as an endowment fund for the use of the institution.

A person, other than an individual, organized and operated exclusively for charitable purposes;

A government or governmental subdivision, agency, or instrumentality, to the extent that the subdivision, agency, or instrumentality holds funds exclusively for a charitable purpose; or

A trust that had both charitable and noncharitable interests, after all noncharitable interests have terminated.

“Institutional fund” means a fund held by an institution exclusively for charitable purposes.

“Institutional fund” does not include:

May incur only costs that are appropriate and reasonable in relation to the assets, the purposes of the institution, and the skills available to the institution; and

Shall make a reasonable effort to verify facts relevant to the management and investment of the fund.

The provisions of this subsection apply except as otherwise provided by a gift instrument.

In managing and investing an institutional fund, the following factors, if relevant, shall be considered:

Management and investment decisions about an individual asset shall be made not in isolation but in the context of the portfolio of investments of the institutional fund as a whole and as a part of an overall investment strategy having risk and return objectives reasonably suited to the fund and to the institution.

Except as otherwise provided by law other than this subtitle, an institution may invest in any kind of property or type of investment consistent with this section.

An institution shall diversify the investments of an institutional fund unless the institution reasonably determines that, because of special circumstances, the purposes of the fund are better served without diversification.

Within a reasonable time after receiving property, an institution shall make and carry out decisions concerning the retention or disposition of the property or to rebalance a portfolio, in order to bring the institutional fund into compliance with the purposes, terms, and distribution requirements of the institution as necessary to meet other circumstances of the institution and the requirements of this subtitle.

A person that has special skills or expertise, or is selected in reliance on the representation by the person that the person has special skills or expertise, has a duty to use those skills or that expertise in managing and investing institutional funds.

Subject to the intent of a donor expressed in the gift instrument, an institution may appropriate for expenditure or accumulate so much of an endowment fund as the institution determines is prudent for the uses, benefits, purposes, and duration for which the endowment fund is established.

Unless stated otherwise in the gift instrument, the assets in an endowment fund are donor–restricted assets until appropriated for expenditure by the institution.

In making a determination to appropriate for expenditure or accumulate under paragraph (1) of this subsection, the institution shall exercise ordinary business care and prudence under the facts and circumstances prevailing at the time of the action or decision, and shall consider, if relevant, the following factors:

Create an endowment fund of permanent duration unless other language in the gift instrument limits the duration or purpose of the fund; and

Do not otherwise limit the authority to appropriate for expenditure or accumulate under subsection (a) of this section.

In this subsection, fair market value shall be calculated:

The appropriation for expenditure in any year of an amount greater than 7 percent of the fair market value of an endowment fund creates a rebuttable presumption of imprudence.

The institution shall notify the Attorney General of the appropriation for expenditure in any year of an amount greater than 7 percent of the fair market value of an endowment fund.

This subsection does not:

Subject to any specific limitation set forth in a gift instrument or in law other than this subtitle, an institution may delegate to an external agent the management and investment of an institutional fund to the extent that an institution could prudently delegate under the circumstances.

An institution shall exercise ordinary business care and prudence under the facts and circumstances prevailing at the time of the action or decision, in:

If the donor consents in a record, an institution may release or modify, in whole or in part, a restriction contained in a gift instrument on the management, investment, or purpose of an institutional fund.

A release or modification may not allow a fund to be used for a purpose other than a charitable purpose of the institution.

If written consent of the donor cannot be obtained by reason of the death, disability, unavailability, or impossibility of identification of the donor, a court of competent jurisdiction, on application of an institution, may modify a restriction contained in a gift instrument regarding the management or investment of an institutional fund if the restriction has become obsolete, inappropriate, or impracticable, or if, because of circumstances not anticipated by the donor, a modification of a restriction will clearly further the purposes of the fund.

If a particular charitable purpose or a restriction contained in a gift instrument on the use of an institutional fund becomes unlawful, impracticable, or impossible to achieve and written consent of the donor cannot be obtained by reason of the death, disability, unavailability, or impossibility of identification of the donor, a court of competent jurisdiction, on application of an institution, may modify the purpose of the fund or the restriction on the use of the fund if the donor manifested a general charitable intent.

The institution shall notify the Attorney General of the institution’s application under paragraph (1) of this subsection, and the Attorney General shall be given an opportunity to be heard.

The institutional fund subject to the restriction has a total value of less than $50,000;

More than 20 years have elapsed since the fund was established; and

The institution uses the property in a manner clearly consistent with the charitable purposes expressed in the gift instrument.

“Accounting period” means a calendar year unless another 12-month period is selected by a fiduciary.

“Accounting period” includes a portion of a calendar year or other 12-month period that begins when an income interest begins or ends when an income interest ends.

“Fiduciary” means a personal representative or a trustee.

“Fiduciary” includes an executor, administrator, successor personal representative, special administrator, and a person performing substantially the same function.

“Income” means money or property that a fiduciary receives as current return from a principal asset.

“Income” includes a portion of receipts from a sale, exchange, or liquidation of a principal asset, to the extent provided in Part IV of this subtitle.

Shall administer a trust or estate in accordance with the terms of the trust or the will, even if there is a different provision in this subtitle;

May administer a trust or estate by the exercise of a discretionary power of administration given to the fiduciary by the terms of the trust or the will, even if the exercise of the power produces a result different from a result required or permitted by this subtitle;

Shall administer a trust or estate in accordance with this subtitle if the terms of the trust or the will do not contain a different provision or do not give the fiduciary a discretionary power of administration; and

Shall add a receipt or charge a disbursement to principal to the extent that the terms of the trust and this subtitle do not provide a rule for allocating the receipt or disbursement to or between principal and income.

In exercising a discretionary power of administration regarding a matter within the scope of this subtitle, whether granted by the terms of a trust, a will, or this subtitle, a fiduciary shall administer a trust or estate impartially, based on what is fair and reasonable to all of the beneficiaries, except to the extent that the terms of the trust or the will clearly manifest an intention that the fiduciary shall or may favor one or more of the beneficiaries.

A determination in accordance with this subtitle is presumed to be fair and reasonable to all of the beneficiaries.

The trustee receives a written request from a beneficiary to exercise the power conferred by this subsection to convert to a unitrust;

The trustee invests and manages the trust assets in the manner set forth in § 15–114(b) and (c) of this title;

The trustee determines that the conversion will enable the trustee to better carry out the intent of the person who created the trust and the purposes of the trust; and

The nature, purpose, and expected duration of the trust;

The intent of the creator of the trust;

The identity and circumstances of the beneficiaries;

The needs for liquidity, regularity of income, and preservation and appreciation of capital;

The assets held in the trust and:

Whether and to what extent the terms of the trust give the trustee the power to invade principal or accumulate income and the extent to which the trustee has exercised a power from time to time to invade principal or accumulate income;

The actual and anticipated effect of economic conditions on principal and income and the effects of inflation and deflation; and

The anticipated tax consequences of a unitrust conversion.

The income of the trust that the income beneficiary is entitled to receive under the governing instrument shall be an annual unitrust distribution equal to a payout percentage of 4% of the net fair market value of the trust’s assets, whether those assets would be considered income or principal under any other provision of this subtitle, averaged over the lesser of:

Expenses that would be deducted from income if the trust were not a unitrust may not be deducted from the unitrust distribution;

Any provision in the governing instrument directing or authorizing the trustee to distribute principal or authorizing a beneficiary to withdraw a portion or all of the principal may not be affected by the conversion to a unitrust;

Unless otherwise provided by the governing instrument, the unitrust distribution shall be paid first from net income of the trust, as net income would be determined if the trust were not a unitrust, and then from principal; and

The trustee may determine to account for the unitrust distribution in accordance with the following rules:

The effect of other payments from or contributions to the trust on the trust’s valuation;

How frequently to value nonliquid assets and whether to estimate their value; and

Whether to omit from the calculations trust property occupied or possessed by a beneficiary.

The payout percentage is different than 4%;

A distribution of net income, as would be determined if the trust were not a unitrust, shall be made if in excess of the unitrust distribution and if that distribution is necessary to preserve a tax benefit; or

Valuation of the trust’s net assets shall be averaged over a period other than 3 years.

The conversion would result in the disallowance of an estate tax or gift tax marital deduction that would be allowed, in whole or in part, if the trustee did not have the power to convert;

Payment of the unitrust distribution would change the amount payable to a beneficiary as a fixed annuity or a fixed fraction of the value of the trust assets;

The unitrust distribution would be made from any amount that is permanently set aside for charitable purposes under the governing instrument and for which a federal estate or gift tax deduction has been taken, unless both income and principal are so set aside;

Possessing or exercising the power to convert would cause an individual to be treated as the owner of all or part of the trust for federal income tax purposes and the individual would not be treated as the owner if the trustee did not possess the power to convert;

Possessing or exercising the power to convert would cause all or part of the trust assets to be subject to estate or gift tax with respect to an individual and the assets would not be subject to estate or gift tax with respect to the individual if the trustee did not possess the power to convert; or

The trustee is a beneficiary of the trust.

If subsection (f)(4), (5), or (6) of this section applies to a trustee and there is more than one trustee, a cotrustee to whom the provision does not apply may convert the trust to a unitrust under subsection (a) of this section, unless exercise of the power by the remaining trustee or trustees is prohibited by the governing instrument.

If subsection (f)(4), (5), or (6) of this section applies to all the trustees, the trustees may petition a court under § 15–502.3 of this subtitle to direct a conversion under subsection (a) of this section.

A trustee may release the power conferred by subsection (a) of this section to convert to a unitrust if:

A release described in paragraph (1) of this subsection may be permanent or for a specified period, including a period measured by the life of an individual.

The trustee complies with the notice requirements of § 15–502.3 of this subtitle and all qualified beneficiaries consent to reconvert from a unitrust; or

A court reviews a petition filed under § 15–502.3 of this subtitle and approves the proposed decision to reconvert from a unitrust.

The trustee receives a written request from a beneficiary to exercise the power conferred by this subsection to make an adjustment;

The trustee invests and manages the trust assets in the manner set forth in § 15-114(b) and (c) of this title;

The terms of the trust describe the amount that may or must be distributed to a beneficiary by referring to the trust’s income;

The trustee determines, after applying the rules in § 15-502(a) of this subtitle, that the trustee is unable to comply with § 15-502(b) of this subtitle;

The trustee determines that conversion of the trust to a unitrust in accordance with § 15-502.1(a) of this subtitle is an inappropriate method to comply with § 15-502(b) of this subtitle based on a review of all factors relevant to the trust and its beneficiaries; and

The nature, purpose, and expected duration of the trust;

The intent of the creator of the trust;

The identity and circumstances of the beneficiaries;

The needs for liquidity, regularity of income, and preservation and appreciation of capital;

The assets held in the trust and:

The net amount allocated to income under other provisions of this subtitle and the increase or decrease in the value of the principal assets, which the trustee may estimate as to assets for which market values are not readily available;

Whether and to what extent the terms of the trust give the trustee the power to invade principal or accumulate income and the extent to which the trustee has exercised a power from time to time to invade principal or accumulate income;

The actual and anticipated effect of economic conditions on principal and income and the effects of inflation and deflation; and

The anticipated tax consequences of an adjustment.

That is greater than 4% of the net fair market value of the trust assets on the first business day of that accounting period, if the net income for that accounting period is less than 4% as determined under this subtitle before application of the provisions of subsection (a) of this section; or

That is less than 4% of the net fair market value of the trust assets on the first business day of that accounting period, if the net income for that accounting period is greater than 4% as determined under this subtitle before application of the provisions of subsection (a) of this section.

That diminishes the income interest in a trust that requires all of the income to be paid at least annually to a spouse and for which an estate tax or gift tax marital deduction would be allowed, in whole or in part, if the trustee did not have the power to make the adjustment;

That reduces the actuarial value of the income interest in a trust to which a person transfers property with the intent to qualify for a gift tax exclusion;

That changes the amount payable to a beneficiary as a fixed annuity or a fixed fraction of the value of the trust assets;

From any amount that is permanently set aside for charitable purposes under a will or the terms of a trust unless both income and principal are so set aside;

If possessing or exercising the power to make an adjustment causes an individual to be treated as the owner of all or part of the trust for income tax purposes, and the individual would not be treated as the owner if the trustee did not possess the power to make an adjustment;

If possessing or exercising the power to make an adjustment causes all or part of the trust assets to be subject to estate or gift tax with respect to the individual and the assets would not be subject to estate or gift tax with respect to the individual if the trustee did not possess the power to make an adjustment;

If the trustee is a beneficiary of the trust; or

If the trust has been converted to a unitrust in accordance with § 15-502.1 of this subtitle.

A trustee may release the entire power conferred by subsection (a) of this section or may release only the power to adjust from principal to income if the trustee is uncertain about whether possessing or exercising the power will cause a result described in subsection (d)(1), (2), (3), (4), (5), or (6) of this section or if the trustee determines that possessing or exercising the power will or may deprive the trust of a tax benefit or impose a tax burden not described in subsection (d) of this section.

The release authorized under paragraph (1) of this subsection may be permanent or for a specified period, including a period measured by the life of an individual.

A person who, on the date that notice is given by the trustee in accordance with subsection (b) of this section:

If an individual described in paragraph (1) of this subsection is a minor, the individual’s natural or legal guardian; or

If an individual described in paragraph (1) of this subsection is a disabled person, as defined in § 13-101 of this article, any person acting on behalf of the individual under a guardianship, conservatorship, or committee.

Section 15-502.1(a) of this subtitle to convert a trust to a unitrust;

Section 15-502.1(i) of this subtitle to reconvert from a unitrust; or

Section 15-502.2(a) of this subtitle to adjust between principal and income.

All qualified beneficiaries, except that notice of the proposed decision need not be given to any qualified beneficiary who consents in writing to the proposed decision at any time before the notice is mailed; and

The creator of the trust, if living.

The name and mailing address of the trustee, together with the name and telephone number of a person who may be contacted for additional information;

A description of the decision proposed to be taken and, if the proposed decision also includes an action that requires an order of a court in accordance with § 15-502.1 or § 15-502.2 of this subtitle, a description of that action;

The time within which written consents to the proposed decision may be given to the trustee, which shall be at least 30 days after the mailing of the notice of proposed decision; and

The date on or after which the proposed decision may be taken or is effective, which shall be after the end of the time within which consents to the proposed decision may be given to the trustee.

In a proceeding under subsection (f) of this section:

Notice of the proceeding shall be given by the petitioner to the trustee and to all qualified beneficiaries.

In the case of an estate, after a decedent dies; or

After an income interest in a trust ends.

A fiduciary of an estate or of a terminating income interest shall:

If the income and principal receipts from the specific property are not sufficient to pay the taxes, ordinary repairs, and other expenses of management and operation relating to the property, or if there are no income or principal receipts, then expenses in excess of income and principal receipts shall be charged to and paid by the beneficiary who is to receive the specific property immediately on written demand of the personal representative, or at the option of the beneficiary, charged against a share of the estate to which the beneficiary may be entitled.

Including in net income all income from property used to discharge liabilities;

Paying from income or principal, in the fiduciary’s discretion, fees of attorneys, accountants, and fiduciaries; court costs and other expenses of administration; and interest on death taxes, but the fiduciary may pay those expenses from income of property passing to a trust for which the fiduciary claims an estate tax marital or charitable deduction only to the extent that the payment of those expenses from income will not cause the reduction or loss of the deduction; and

Paying from principal all other disbursements made or incurred in connection with the settlement of a decedent’s estate or the winding up of a terminating income interest, including debts, funeral expenses, disposition of remains, family allowances, and death taxes and related penalties that are apportioned to the estate or terminating income interest by the will, the terms of the trust, or applicable law.

A fiduciary may not reduce principal or income receipts from property described in subsection (b) of this section because of a payment described in § 15–523 or § 15–524 of this subtitle to the extent that the will, the terms of the trust, or applicable law requires the fiduciary to make the payment from assets other than the property or to the extent that the fiduciary recovers or expects to recover the payment from a third party.

The net income and principal receipts from the property are determined by including all of the amounts the fiduciary receives or pays with respect to the property, whether those amounts accrued or became due on or after the date of a decedent’s death or an income interest’s terminating event, and by making a reasonable provision for amounts that the fiduciary believes the estate or terminating income interest may become obligated to pay after the property is distributed.

Each beneficiary described in § 15–503(d) of this subtitle is entitled to receive a portion of the net income equal to the beneficiary’s fractional interest in undistributed principal assets, using values as of the distribution date.

If a fiduciary makes more than one distribution of assets to beneficiaries to whom this section applies, each beneficiary, including one who does not receive part of the distribution, is entitled, as of each distribution date, to the net income the fiduciary has received after the date of death or terminating event or earlier distribution date but has not distributed as of the current distribution date.

The beneficiary is entitled to receive a portion of the net income equal to the beneficiary’s fractional interest in the undistributed principal assets immediately before the distribution date, including assets that later may be sold to meet principal obligations;

The beneficiary’s fractional interest in the undistributed principal assets shall be calculated without regard to property specifically given to a beneficiary and property required to pay pecuniary amounts not in trust;

The beneficiary’s fractional interest in the undistributed principal assets shall be calculated on the basis of the aggregate value of those assets as of the distribution date without reducing the value by any unpaid principal obligation; and

The distribution date for purposes of this section may be the date as of which the fiduciary calculates the value of the assets if that date is reasonably near the date on which assets are actually distributed.

An income beneficiary is entitled to net income from the date on which the income interest begins.

An income interest begins on the date specified in the terms of the trust or, if no date is specified, on the date an asset becomes subject to a trust or successive income interest.

On the date it is transferred to the trust in the case of an asset that is transferred to a trust during the transferor’s life;

On the date of a testator’s death in the case of an asset that becomes subject to a trust by reason of a will, even if there is an intervening period of administration of the testator’s estate; or

On the date of an individual’s death in the case of an asset that is transferred to a fiduciary by a third party because of the individual’s death.

A trustee shall allocate an income receipt or disbursement to income if its due date occurs on or after the date on which a decedent dies or an income interest begins and it is a periodic due date.

An income receipt or disbursement shall be treated as accruing from day to day if its due date is not periodic or it has no due date.

The portion of the receipt or disbursement accruing before the date on which a decedent dies or an income interest begins shall be allocated to principal and the balance shall be allocated to income.

An item of income or an obligation is due on the date the payer is required to make a payment.

If a payment date is not stated, there is no due date for the purposes of this subtitle.

Distributions to shareholders or other owners from an entity to which § 15–508 of this subtitle applies are deemed to be due on the date fixed by the entity for determining who is entitled to receive the distribution or, if no date is fixed, on the declaration date for the distribution.

A due date is periodic for receipts or disbursements that must be paid at regular intervals under a lease or an obligation to pay interest or if an entity customarily makes distributions at regular intervals.

In this section, “undistributed income” means net income received before the date on which an income interest ends.

“Undistributed income” does not include an item of income or expense that is due or accrued or net income that has been added or is required to be added to principal under the terms of the trust.

Except as provided in paragraph (2) of this subsection, when a mandatory income interest ends, the trustee shall pay to a mandatory income beneficiary who survives that date, or the estate of a deceased mandatory income beneficiary whose death causes the interest to end, the beneficiary’s share of the undistributed income that is not disposed of under the terms of the trust.

If a beneficiary has an unqualified power to revoke more than 5% of the trust immediately before the income interest ends, the undistributed income from the portion of the trust that may be revoked shall be added to principal.

Property other than money;

Money received in one distribution or a series of related distributions in exchange for part or all of a trust’s interest in the entity;

Money received in total or partial liquidation of the entity; and

Money received from an entity that is a regulated investment company or a real estate investment trust if the money distributed is a capital gain dividend for federal income tax purposes.

To the extent that the entity, at or near the time of a distribution, indicates that it is a distribution in partial liquidation; or

If the total amount of money and property received in a distribution or series of related distributions is greater than 20 percent of the entity’s gross assets, as shown by the entity’s year–end financial statements immediately preceding the initial receipt.

If the trustee makes an irrevocable written election to have this subsection apply, distributions per share or unit made in any calendar year by a regulated investment company or an investment fund from realized or unrealized capital gains occurring in the calendar year shall be allocated by the trustee to income to the extent required in order for the sum of the distributions per share or unit from ordinary income and from realized or unrealized capital gains to equal an amount determined by multiplying the net asset value of a share or unit of the regulated investment company or investment fund on January 1 of such calendar year (or on such later date of acquisition by a trustee during such calendar year) by the annual federal mid–term rate applicable to January 1 of such calendar year (or to such later date of acquisition) established by the Secretary of the Treasury under § 1274(d)(1) of the Internal Revenue Code of 1986, adjusted to reflect the proportion of the calendar year in which the share has been held by a trustee.

A trustee who accounts separately for a business or other activity may determine the extent to which its net cash receipts must be retained for working capital, the acquisition or replacement of fixed assets, and other reasonably foreseeable needs of the business or activity, and the extent to which the remaining net cash receipts are accounted for as principal or income in the trust’s general accounting records.

If a trustee sells assets of the business or other activity, other than in the ordinary course of the business or activity, the trustee shall account for the net amount received as principal in the trust’s general accounting records to the extent the trustee determines that the amount received is no longer required in the conduct of the business.

Retail, manufacturing, service, and other traditional business activities;

Farming;

Raising and selling livestock and other animals;

Management of rental properties;

Extraction of minerals and other natural resources;

Timber operations; and

Activities to which § 15-521 of this subtitle applies.

A trustee shall allocate to principal an amount received from the sale, redemption, or other disposition of an obligation to pay money to the trustee more than 1 year after it is purchased or acquired by the trustee, including an obligation whose purchase price or value when it is acquired is less than its value at maturity.

If the obligation matures within 1 year after it is purchased or acquired by the trustee, an amount received in excess of its purchase price or its value when acquired by the trust shall be allocated to income.

Allocate to principal the proceeds of a life insurance policy or other contract in which the trust or its trustee is named as beneficiary, including a contract that insures the trust or its trustee against loss for damage to, destruction of, or loss of title to a trust asset; and

Allocate dividends on an insurance policy:

This subsection applies to any obligation for the payment of money at a future time, provided the obligation was held as an asset of a trust that was irrevocable on October 1, 2000 (regardless of whether the asset was acquired before or after October 1, 2000), and provided the trustee makes an irrevocable election on the first year–end accounting of the trust’s principal and income stated after September 30, 2000 to allocate distributions in accordance with this subsection, including:

Unless otherwise provided in the trust instrument or in this subtitle, the increment in value of an obligation for the payment of money payable at a future time in accordance with a fixed, variable, or discretionary schedule of appreciation in excess of the price at which it was issued shall be distributable as income.

For purposes of this subsection, the increment in value of an obligation for the payment of money shall be available for distribution only when the trustee receives cash on account of the obligation.

If a trustee determines that an allocation between principal and income required by § 15-516, § 15-517, § 15-518, § 15-519, or § 15-522 of this subtitle is insubstantial, the trustee may allocate the entire amount to principal unless one of the circumstances described in § 15-502.2(d) of this subtitle applies to the allocation.

This power may be exercised by a cotrustee in the circumstances described in § 15-502.2(e) of this subtitle, and may be released for the reasons and in the manner described in § 15-502.2(f) of this subtitle.

The amount of the allocation would increase or decrease net income in an accounting period, as determined before the allocation, by less than 10 percent; or

The value of the asset producing the receipt for which the allocation would be made is less than 10 percent of the total value of the trust’s assets at the beginning of the accounting period.

In this section the following words have the meanings indicated.

“Separate fund” includes a private or commercial annuity, an individual retirement account, and a pension, profit–sharing, stock–bonus, or stock–ownership plan.

To the extent that a payment is characterized as interest, a dividend, or a payment made in lieu of interest or a dividend, a trustee shall allocate the payment to income.

The trustee shall allocate to principal the balance of the payment and any other payment received in the same accounting period that is not characterized as interest, a dividend, or an equivalent payment.

If no part of a payment is characterized as interest, a dividend, or an equivalent payment, and all or part of the payment is required to be made, a trustee shall allocate to income 10% of the part that is required to be made during the accounting period and the balance to principal.

If no part of a payment is required to be made or the payment received is the entire amount to which the trustee is entitled, the trustee shall allocate the entire payment to principal.

For purposes of this subsection, a payment is not “required to be made” to the extent that it is made because the trustee exercises a right of withdrawal.

A trust to which an election to qualify for a marital deduction under § 2056(b)(7) of the Internal Revenue Code of 1986 has been made; or

A trust that qualifies for the marital deduction under § 2056(b)(5) of the Internal Revenue Code of 1986.

A trustee shall determine the internal income of each separate fund for the accounting period as if the separate fund were a trust subject to this subtitle.

On request of the surviving spouse, the trustee shall demand that the person administering the separate fund distribute the internal income to the trust.

The trustee shall allocate:

On request of the surviving spouse, the trustee shall allocate principal to income to the extent the internal income of the separate fund exceeds payments made from the separate fund to the trust during the accounting period.

If a trustee cannot determine the internal income of a separate fund but can determine the value of the separate fund, the internal income of the separate fund is deemed to equal 4% of the fund’s value, according to the most recent statement of value before the beginning of the accounting period.

If the trustee cannot determine both the internal income of the separate fund and the fund’s value, the internal income of the fund is deemed to equal the product of the interest rate and the present value of the expected future payments, as determined under § 7520 of the Internal Revenue Code of 1986 for the month preceding the accounting period for which the computation is made.

In this section, “liquidating asset” means an asset whose value will diminish or terminate because the asset is expected to produce receipts for a period of limited duration.

“Liquidating asset” includes a leasehold, patent, copyright, royalty right, and right to receive payments during a period of more than 1 year under an arrangement that does not provide for the payment of interest on the unpaid balance.

“Liquidating asset” does not include a payment subject to § 15-516 of this subtitle, resources subject to § 15-518 of this subtitle, timber subject to § 15-519 of this subtitle, an activity subject to § 15-521 of this subtitle, an asset subject to § 15-522 of this subtitle, or any asset for which the trustee establishes a reserve for depreciation under § 15-525 of this subtitle.

If received as nominal delay rental or nominal annual rent on a lease, a receipt shall be allocated to income;

If received from a production payment, a receipt shall be allocated:

If an amount received as a royalty, shut–in–well payment, take–or–pay payment, bonus, or delay rental is more than nominal, 90% shall be allocated to principal and the balance to income; and

If an amount is received from a working interest or any other interest not provided for in paragraph (1), (2), or (3) of this subsection, 90% of the net amount received shall be allocated to principal and the balance to income.

An amount received on account of an interest in water that is renewable shall be allocated to income.

If the water is not renewable, 90% of the amount shall be allocated to principal and the balance to income.

If a trust owns an interest in minerals, water, or other natural resources on October 1, 2000, the trustee may allocate receipts from the interest as provided in this subtitle or in the manner used by the trustee before October 1, 2000.

If the trust acquires an interest in minerals, water, or other natural resources after October 1, 2000, the trustee shall allocate receipts from the interest as provided in this subtitle.

To income to the extent that the amount of timber removed from the land does not exceed the rate of growth of the timber during the accounting periods in which a beneficiary has a mandatory income interest;

To principal to the extent that the amount of timber removed from the land exceeds the rate of growth of the timber or the net receipts are from the sale of standing timber;

To or between income and principal if the net receipts are from the lease of timberland or from a contract to cut timber from land owned by a trust, by determining the amount of timber removed from the land under the lease or contract and applying the rules in paragraphs (1) and (2) of this subsection; or

To principal to the extent that advance payments, bonuses, and other payments are not allocated pursuant to paragraph (1), (2), or (3) of this subsection.

If a trust owns an interest in timberland on October 1, 2001, the trustee may allocate net receipts from the sale of timber and related products as provided in this subtitle or in the manner used by the trustee before October 1, 2000.

If the trust acquires an interest in timberland after October 1, 2000, the trustee shall allocate net receipts from the sale of timber and related products as provided in this subtitle.

If a marital deduction is allowed for all or part of a trust whose assets consist substantially of property that does not provide the spouse with sufficient income from or use of the trust assets, and if the amounts that the trustee transfers from principal to income under § 15-502.2(a) of this subtitle and distributes to the spouse from principal in accordance with the terms of the trust are insufficient to provide the spouse with the beneficial enjoyment required to obtain the marital deduction, the spouse may require the trustee to make property productive of income, convert property within a reasonable time, or may request the trustee exercise the power conferred by § 15-502.2(a) of this subtitle.

The trustee may decide which action or combination of actions to take.

If a trustee grants an option to buy property from the trust, whether or not the trust owns the property when the option is granted, grants an option that permits another person to sell property to the trust, or acquires an option to buy property for the trust or an option to sell an asset owned by the trust, and the trustee or other owner of the asset is required to deliver the asset if the option is exercised, an amount received for granting the option shall be allocated to principal.

An amount paid to acquire the option shall be paid from principal.

A gain or loss realized on the exercise of an option, including an option granted to a settlor of the trust for services rendered, shall be allocated to principal.

In this section, “asset-backed security” means an asset whose value is based upon the right it gives the owner to receive distributions from the proceeds of financial assets that provide collateral for the security.

“Asset-backed security” includes an asset that gives the owner the right to receive from the collateral financial assets only the interest or other current return or only the proceeds other than interest or current return.

“Asset-backed security” does not include an asset to which § 15-508 or § 15-516 of this subtitle applies.

If a trust receives one or more payments in exchange for the trust’s entire interest in an asset–backed security in one accounting period, the trustee shall allocate the payments to principal.

If a payment is one of a series of payments that will result in the liquidation of the trust’s interest in the security over more than one accounting period, the trustee shall allocate 10% of the payment to income and the balance to principal.

The remaining one–half of the disbursements described under § 15–523(1) and (2) of this subtitle;

All of the trustee’s compensation calculated on principal as a fee for acceptance, distribution, or termination, and disbursements made to prepare property for sale;

Payments on the principal of a trust debt;

Expenses of a proceeding that concerns primarily principal, including a proceeding to construe the trust or to protect the trust or its property;

Premiums paid on a policy of insurance not described in § 15–523(4) of this subtitle of which the trust is the owner and beneficiary;

Estate, inheritance, and other transfer taxes, including penalties, apportioned to the trust; and

Disbursements related to environmental matters, including reclamation, assessing environmental conditions, remedying and removing environmental contamination, monitoring remedial activities and the release of substances, preventing future releases of substances, collecting amounts from persons liable or potentially liable for the costs of those activities, penalties imposed under environmental laws or regulations and other payments made to comply with those laws or regulations, statutory or common law claims by third parties, and defending claims based on environmental matters.

Of that portion of real property used or available for use by a beneficiary as a residence or of tangible personal property held or made available for the personal use or enjoyment of a beneficiary;

During the administration of a decedent’s estate; or

Under this section if the trustee is accounting under § 15-510 of this subtitle for the business or activity in which the asset is used.

An amount chargeable to income but paid from principal because it is unusually large, including extraordinary repairs;

A capital improvement to a principal asset, whether in the form of changes to an existing asset or the construction of a new asset, including special assessments;

Disbursements made to prepare property for rental, including tenant allowances, leasehold improvements, and broker’s commissions;

Periodic payments on an obligation secured by a principal asset to the extent that the amount transferred from income to principal for depreciation is less than the periodic payments; and

Disbursements described in § 15–524(a)(7) of this subtitle.

From income to the extent that receipts from the entity are allocated only to income;

From principal to the extent that receipts from the entity are allocated only to principal;

Proportionately from principal and income to the extent that receipts from the entity are allocated to both income and principal; and

From principal to the extent that the tax exceeds the total receipts from the entity.

Elections and decisions, other than those described in subsection (b) of this section, that the fiduciary makes from time to time regarding tax matters;

An income tax or any other tax that is imposed upon the fiduciary or a beneficiary as a result of a transaction involving or a distribution from the estate or trust; or

Subject to subsection (b) of this section, the ownership by an estate or trust of an interest in an entity whose taxable income, whether or not distributed, is includable in the taxable income of the estate, trust, or a beneficiary.

If the amount of an estate tax marital deduction or charitable contribution deduction is reduced because a fiduciary deducts an amount paid from principal for income tax purposes instead of deducting it for estate tax purposes, and as a result estate taxes paid from principal are increased and income taxes paid by an estate, trust, or beneficiary are decreased, each estate, trust, or beneficiary that benefits from the decrease in income tax shall reimburse the principal from which the increase in estate tax is paid.

The total reimbursement must equal the increase in the estate tax to the extent that the principal used to pay the increase would have qualified for a marital deduction or charitable contribution deduction but for the payment.

The proportionate share of the reimbursement for each estate, trust, or beneficiary whose income taxes are reduced must be the same as its proportionate share of the total decrease in income tax. An estate or trust shall reimburse principal from income.

Each person with whom a user has had an electronic communication;

The time and date of the communication; and

The electronic address of the person.

Has been sent or received by a user;

Is not readily accessible to the public.

“Digital asset” means an electronic record in which an individual has a right or interest.

“Digital asset” does not include an underlying asset or liability unless the asset or liability is itself an electronic record.

“Guardian” means a guardian of the property appointed by a court under Title 13, Subtitle 2 of this article to manage the property of a disabled person or minor or a guardian of the person appointed by a court under Title 13, Subtitle 7 of this article, according to the context in which it is used.

“Guardian” includes a limited guardian.

“Protected person” means an individual for whom a guardian has been appointed.

“Protected person” includes an individual for whom an application for the appointment of a guardian is pending.

“Trustee” means a fiduciary with legal title to property under an agreement or a declaration that creates a beneficial interest in another.

“Trustee” includes an original, additional, or successor trustee or cotrustee, whether or not appointed or confirmed by a court.

A user may use an online tool to direct a custodian to disclose to a designated recipient or not disclose some or all of the user’s digital assets, including the content of electronic communications sent or received by the user.

If the online tool allows the user to modify or delete a direction at any time, a direction under paragraph (1) of this subsection overrides a contrary direction by the user in a will, trust, power of attorney, or other record.

A user;

Federal law; or

A terms–of–service agreement if the user has not provided direction under § 15–603 of this subtitle.

Grant a fiduciary or designated recipient full access to the user’s account;

Grant a fiduciary or designated recipient partial access to the user’s account sufficient to perform the tasks with which the fiduciary or designated recipient is charged; or

Provide a fiduciary or designated recipient a copy in a record of a digital asset that, on the date that the custodian received the request for disclosure, the user could have accessed if the user were alive or had full capacity and had access to the account.

If a user directs or a fiduciary requests a custodian to disclose only a portion of the user’s digital assets under this subtitle, the custodian need not disclose the assets if segregation of the digital assets would impose an undue burden on the custodian.

If the custodian believes under paragraph (1) of this subsection that the direction or request imposes an undue burden, the custodian or fiduciary may seek an order from a court to disclose:

A number, username, address, or other unique subscriber or account identifier assigned by the custodian to identify the user’s account;

Evidence linking the account to the user; or

A finding by the court that:

A number, username, address, or other unique subscriber or account identifier assigned by the custodian to identify the user’s account;

Evidence linking the account to the user;

An affidavit stating that disclosure of the user’s digital assets is reasonably necessary for administration of the estate; or

A finding by the court that: