• Estates And Trusts
  • August 10, 2017 | Authors: Christia A. Pritts; Lawrence D. Coppel; Andrew D. Bulgin; Marjorie A. Corwin; Peter B. Rosenwald; D. Robert Enten; David S. Musgrave; Robert A. Gaumont; Christopher R. Rahl; Bryan M. Mull; Chastity E.C. Threadcraft
  • Law Firm: Gordon Feinblatt LLC - Baltimore Office
  • Conditions of Disability and Incapacity – Confinement
    HB81 (Chapter 666)
    (effective October 31, 2017)

    Under Maryland law, a court may appoint a guardian of the property of an individual if the individual is unable to manage his or her property or financial affairs for various reasons, such as physical or mental disability, illness, or imprisonment. Prior to this Act, confinement was a condition included in the statutory definition of incapacity and required the appointment of a guardian. As a result of this Act, an individual under confinement is no longer automatically deemed to be incapacitated and in need of a guardian.

    Share of Intestate Estate Inherited by Surviving Spouse
    HB735 / SB73 (Chapters 626 and 627)
    (effective October 31, 2017)

    Prior to these Acts, if a married individual died without a will and was survived by adult descendants (or had no surviving descendants, but was survived by either or both of his or her parents), the surviving spouse was entitled to receive the first $15,000 of the estate, plus one-half of the residue. The remaining one-half of the residue would then be distributed to the decedent’s surviving adult descendants or parents, as applicable. These Acts increase the amount that the surviving spouse is entitled to take prior to the division of the residue from $15,000 to $40,000.

    Maryland Trust Act – Representatives of Beneficiaries
    HB753 / SB793 (Chapters 354 and 355)
    (effective October 31, 2017)

    The Maryland Trust Act contains virtual representation provisions, which allow certain individuals to serve as representatives of trust beneficiaries, provided there is no conflict of interest between the representative and the beneficiary. For example, a parent may serve as representative for his or her minor child, and a guardian may serve as representative for a disabled person. The representative has the authority to receive notice from the trustee of the trust on behalf of the beneficiary and to bind the beneficiary with respect to trust matters that require the beneficiary’s consent. These Acts expand the virtual representation statute to permit the settlor of a trust to designate an individual to serve as the representative of a beneficiary and designate one or more individuals to serve as successor representatives of a beneficiary, or to give another person the authority to designate representatives and/or successor representatives of a beneficiary. The designated representative may not be someone who is serving as the trustee of the trust.

    Practice Point: This provision will be especially helpful for administering trusts with qualified beneficiaries who are old enough to receive trustee reports and notices but who are not yet mature enough to know all of the details concerning the trust. The settlor can name someone else to receive such reports and notices on behalf of the beneficiary.

    Maryland Trust Act – Notice and Reporting Requirements – Exemptions
    HB754 / SB792 (Chapters 356 and 357)
    (effective October 31, 2017)

    Under the Maryland Trust Act, a trustee is required to provide notice to the qualified beneficiaries of the trust upon the occurrence of certain events, such as the creation of an irrevocable trust, a revocable trust becoming irrevocable, or the acceptance by a trustee of his or her appointment as trustee. A trustee is also required to provide an annual report to a qualified beneficiary upon his or her request. These Acts clarify that, if the trustee of a trust is also a qualified beneficiary of the trust, the trustee is not required to provide reports or notices of any such events to himself or herself.

    Inheritance Tax – Exemption – Evidence of Domestic Partnership
    HB1104 (Chapter 503)
    (effective July 1, 2017)

    This Act clarifies the evidence that is required for purposes of claiming the inheritance tax exemption for real property held in joint tenancy passing from a decedent to his or her domestic partner. Under prior law, the surviving domestic partner was required to provide a signed affidavit stating that there was a domestic partnership and proof of two additional documents, such as joint liability on a mortgage, lease, or loan, a designation of one partner as primary beneficiary under a will, life insurance policy, or retirement plan of the other partner, or joint ownership of a bank account or motor vehicle. This Act removes the requirement to provide a signed affidavit of domestic partnership so that any two non-affidavit proofs of the domestic partnership will be sufficient in order to claim the inheritance tax exemption.