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Unannotated Code of Maryland (Last Updated: May 16, 2014) |
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ESTATES AND TRUSTS |
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TITLE 14. TRUSTS |
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SUBTITLE 1. GENERAL PROVISIONS |
§ 14-107. Termination of certain trusts without an order of court
Latest version.
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(a) Definitions. --
(1) In this section the following words have the meanings indicated.
(2) (i) "Beneficiary" means an ascertainable person who has a present or future interest in a trust estate.
(ii) "Beneficiary" includes:
1. If the beneficiary is a minor, the beneficiary's natural or legal guardian; or
2. If the beneficiary is a disabled person, as defined in § 13-101 of this article, any person acting on behalf of the beneficiary under a guardianship, conservatorship, or committee.
(3) "Corporate fiduciary" has the meaning stated in § 15-1A-01 of this article.
(4) "Life expectancy" means the life expectancy published in the life tables issued by the U.S. Department of Health and Human Services from time to time.
(5) "Net annual income" means the gross income of a trust estate during a fiscal year minus trust commissions and expenses attributable to income for that fiscal year.
(b) In general. -- Subject to the provisions of this section, a corporate fiduciary acting as a trustee may terminate a trust without an order of court if the fair market value of the trust as of the trust's last anniversary date is $ 100,000 or less.
(c) Notice. --
(1) A corporate fiduciary trustee proposing to terminate a trust under this section shall send notice of the proposed termination to each cotrustee and each beneficiary of the trust at the cotrustee's or beneficiary's last known address. The notice shall be:
(i) Personally delivered; or
(ii) Mailed by certified mail, postage prepaid, return receipt requested.
(2) The notice required under paragraph (1) of this subsection shall contain:
(i) The name of the trust;
(ii) The name of the person who created the trust;
(iii) The date on which the trust was established;
(iv) The name and address of the corporate fiduciary trustee seeking to terminate the trust;
(v) The name of any cotrustee;
(vi) A statement that the effective date of the termination shall be at least 90 days after the date on which notice under paragraph (1) of this subsection has been received by each cotrustee and each beneficiary;
(vii) A statement of the reasons for termination of the trust;
(viii) The approximate amount and the manner of calculation of each distribution of the trust estate; and
(ix) A statement of the right to object and the procedures to follow under subsection (d) of this section.
(d) Objections. --
(1) A person entitled to notice under subsection (c) of this section who objects to the termination of a trust shall send written objection to the termination.
(2) The written objection shall be personally delivered or mailed by certified mail, postage prepaid, return receipt requested, within 60 days after the date on which notice that is sent under subsection (c)(1) of this section is received by the objecting party, to the corporate fiduciary trustee proposing to terminate the trust at the address in the notice.
(e) Termination of trust. --
(1) If no beneficiary or cotrustee delivers a timely objection in accordance with the provisions of subsection (d) of this section, the trust shall be terminated and the trust estate shall be distributed in accordance with the provisions of subsection (f) of this section.
(2) If a beneficiary or cotrustee delivers a timely written objection in accordance with the provisions of subsection (d) of this section, the trust shall not be terminated unless the objection is withdrawn in writing by the objecting party within 90 days after receipt of the notice by the objecting party.
(f) Distribution of trust estate. --
(1) A trust estate that is terminated under this section shall be distributed in any manner unanimously agreed upon by all beneficiaries.
(2) (i) If the beneficiaries do not unanimously agree to a manner of distribution, the distribution shall be made in accordance with the provisions of this paragraph.
(ii) A beneficiary who has a present interest in the trust estate shall receive an amount equal to the present value of an annuity equal to the beneficiary's proportionate share of the average net annual income of the trust as of its last 3 anniversary dates for a term equal to the life expectancy of the beneficiary, at the interest rate for valuing vested benefits provided by the Pension Benefit Guaranty Corporation for the month immediately preceding the date of which the notice under subsection (c)(1) of this section is sent.
(iii) The amount of the trust estate remaining after distribution to beneficiaries having a present interest in the trust estate shall be distributed to any beneficiaries having a future interest in the trust estate in whatever proportions are provided for under the terms of the governing instrument under which the trust was created.
(g) Effect of "spendthrift" language. -- The existence of spendthrift or similar protective language in the governing instrument under which the trust was created may not prevent termination under this section.
(h) Expenses. -- All expenses incurred by the trustee incident to the termination of a trust under this section shall be borne by the trust estate.
(i) Distribution to minor. -- A distribution to a minor beneficiary shall be made to the minor's custodian under the Maryland Uniform Gifts to Minors Act or the Maryland Uniform Transfers to Minors Act.
(j) Construction of section. -- This section may not be construed to limit the right of any trustee to terminate a trust in accordance with applicable provisions of the governing instrument under which the trust was created.
(k) Termination permitted. -- A trust may be terminated under this section if:
(1) The trustee has determined that termination of the trust is in the best interests of the beneficiaries; and
(2) The governing instrument does not expressly prohibit termination of the trust regardless of its size.
(l) Conditions preventing terminations. -- A trust may not be terminated under this section if:
(1) The provisions of the governing instrument make the trust eligible to qualify for the marital deduction for United States estate tax or for United States gift tax purposes under the Internal Revenue Code, unless all beneficiaries agree that all of the trust estate shall be distributed to the spouse of the creator of the trust; or
(2) The provisions of the governing instrument make the trust qualify, in whole or in part, for a charitable deduction for United States estate tax, United States gift tax, or United States income tax purposes under the Internal Revenue Code, unless all beneficiaries agree that all of the trust estate shall be distributed to one or more beneficiaries that qualify for the charitable deduction under the Internal Revenue Code.