2017 Maryland Legislative Updates to Estate Planning

The Maryland General Assembly passed a handful of bills this year that have significant effects on estate planning. Here is a breakdown of the bills and how they could affect you.

Requirement for Trustees to Provide Notice to Self

This is from SB792 and is an amendment to the Maryland Trust Act from 2014. This bill exempts a trustee from the requirement to notify him or herself if they are also a qualified beneficiary. Such notifications also include annual trustee's reports. Trustees are also not required to send notice to "a person whose identity or location is unknown to and not reasonably ascertained by the trustee." This means that if a trustee doesn't know the location or identity of a beneficiary and cannot easily find them after placing a notice in a county newspaper once a week for at least three successive weeks, as stipulated by the bill, then they are not now required to provide notices or reports to that beneficiary until they are located or identified. This bill goes into effect on October 1, 2017.

How Does This Bill Affect You?

By and large, this bill only affects the trustees mentioned. It has no real effect on grantors or beneficiaries. This means a bit less work for the trustees who is also a qualified beneficiary in that they do not have to create and give reports to themselves, which seems rather redundant. In essence, this bill eliminates a redundant requirement.

"Secret Trusts"

SB793 is also an amendment to the Maryland Trust Act and could have interesting ramifications in the years to come. This bill allows for grantors to designate someone else to receive information on behalf of a beneficiary. This means the beneficiary may not be informed at all about the trust's performance or even the existence of the trust. In theory, under SB793, a beneficiary may not know about a trust until they are due to receive distributions. The bill also states a defined standard of care that the person receiving notices on behalf of the beneficiary owes to that beneficiary. Under current law, a qualified beneficiary is entitled to receive notices and reports and other information about the trust.

SB793 also allows the creator of a trust to prohibit a trustee from acting as a representative of a certain beneficiary in certain situations. The bill goes into effect on October 1, 2017.

How Does This Bill Affect You?

There may be situations in which you don't always want the beneficiary of a trust to know that they are a beneficiary, or to know all of the details of a trust. This bill allows for those situations. One such situation may be that the beneficiary is a minor or otherwise too young to handle that information in a mature fashion and you would prefer that an older party receive the information on their behalf until the beneficiary is older. This means that a so-called "secret trust" is, in theory, possible now in Maryland.

Transferring Vehicles Under Trust

Under SB0449, excise taxes and title fees are now exempted when a vehicle is transferred to or from a trust. These vehicles may include motor vehicles, trailers, semitrailers, mopeds, motor scooters, and even off-highway recreational vehicles. The taxes are waived if the transfer is made into the trust or if the transfer is made from a trust to a beneficiary who would be exempted from the tax under Title 12 or Title 13 of the tax itself. The tax may also be waived if the transfer from the trust to a beneficiary is made during the life of the trust's creator and the tax was already paid when the vehicle was originally bought.

Vehicles may also be exempt from the tax if they're acquired by a qualified charity, religious organization, local department or social organization that would normally be exempt from taxation by the IRS, or if the vehicle is a rental. This bill goes into effect on July 1, 2017.

In addition, HB0492 was also passed this year and allows the owner of a vehicle with proper certificate of title to stipulate a TOD beneficiary, or transfer-upon-death beneficiary. By doing this, the vehicle avoids becoming part of an estate and its administration. To create the designation, the owner of the vehicle has to send an application to the MVA and receive a new certificate of title. The designation can be removed or changed at any time by ordering a new certificate of title.

How Does This Bill Affect You?

Both of these bills make things somewhat easier for transferring ownership of motor vehicles upon the death of the owner. SB0449 helps in a financial sense by making certain transfers exempt from excise and title taxes. HB0492 helps ease the transfer of ownership by allowing the owner of a vehicle to designate a beneficiary and, upon the death of the owner, the vehicle goes to that beneficiary without being subject to estate administration. It simply eases the transference of property from one person to another.