Do You Have to Register a Trust in Maryland?

Setting up a trust can be a somewhat complicated process. There are several considerations that must be made when establishing a trust. Further, some jurisdictions mandate that trusts are registered with state agencies.

However, in Maryland, there is no mandatory requirement to register a trust, as the state lacks a centralized trust registry. The governance of trusts is primarily guided by the terms outlined in the trust document itself. While registration is not obligatory, you should still maintain accurate records documenting the existence of your trust.

Seek help from our Maryland estate and trusts lawyers at Rice, Murtha & Psoras by calling (410) 694-7291.

Registering a Trust in Maryland

In Maryland, there is no mandatory requirement to register a trust with a state agency. Unlike some jurisdictions, Maryland does not have a centralized trust registry. The state law does not impose a specific obligation on individuals to formally register their trusts with any government entity. Instead, the administration and governance of trusts in Maryland are primarily guided by the terms outlined in the trust document itself.

Individuals who create trusts in Maryland should be aware that the lack of a registration requirement does not diminish the importance of properly drafting and executing a trust document. A well-drafted trust document should comprehensively address the distribution of assets, appointment of trustees, and other pertinent details. It is crucial to ensure that the trust conforms to Maryland state laws in order to avoid potential issues in the future.

As previously discussed, trustees and beneficiaries should still maintain accurate records of their trust’s existence, terms, and amendments. This documentation is important for legal and administrative purposes, as it helps establish the legitimacy of the trust and facilitates the resolution of any disputes that may arise.

Our Silver Spring, MD estate and trusts lawyers can help you navigate the intricacies of creating, managing, and administering trusts in accordance with our state’s law. Our experienced team can offer valuable insights into state-specific requirements and assist in safeguarding your interests during the creation of your estate plan.

Registration of Trust or Fiduciary Powers in Maryland

When a bank, trust company, or savings bank that does not fall within the definition outlined in Md. Code, Ests. & Trs. Art, § 1-101(z) wishes to exercise trust or fiduciary powers in Maryland, it must adhere to Md. Code, Ests. & Trs. Art, § 14.5-710(b). This entails filing a registration with the Department of Labor before undertaking such powers within our state.

Simply put, trust companies that have not been set up in Maryland and do not have principal offices here typically must register before exercising trust or fiduciary powers in our state. The registration should encompass pertinent details including the corporate name of the financial institution at issue, a contact person’s address and telephone number, a resident agent residing in Maryland, and any other information deemed necessary for safeguarding the public interest.

Exemptions and Applicability

Maryland law, as articulated in Md. Code, Ests. & Trs. Art, § 14.5-710(a), specifies that the registration requirement does not extend to individuals, trust companies as defined in Md. Code, Ests. & Trs. Art, § 1-101, 501(c)(3) corporations, or national banks or federal savings banks with the authority to exercise trust or fiduciary powers under federal law. Federal or out-of-state depository institutions that maintain a branch or office in Maryland generally do not require registration. However, foreign bank offices may need to acquire a “foreign bank office permit.”

Reciprocity Considerations

For an out-of-state bank or trust company to exercise trust or fiduciary powers in Maryland, it must ensure that the laws of its chartering state would permit a Maryland state-chartered bank or trust company to do the same under comparable circumstances. Prior to undertaking such activities, an applicant out-of-state bank or trust company must obtain written confirmation of reciprocity from the relevant state chartering authority.

Best Practices for Drafting a Trust Document in Maryland

We previously mentioned that while you are not required to register a trust in Maryland, you should still take care when drafting your trust document. This document will govern the establishment, administration, and distribution of assets within your trust. The following is an overview of the best practices to employ when drafting a trust document in Maryland:

Clear and Precise Trust Terms

Drafters should prioritize clarity and precision when articulating the terms of a trust. Ambiguities in language can lead to misunderstandings and disputes. Clearly defining the roles and responsibilities of trustees and beneficiaries, specifying distribution conditions, and outlining the purpose of the trust are critical components.

Incorporating Maryland-Specific Language

Furthermore, diligent approach to drafting a trust document typically involves incorporating Maryland-specific language and adhering to the state’s legal terminology. This ensures that the trust document aligns seamlessly with Maryland trust laws and minimizes the potential for misinterpretation.

Selection of Competent Trustees

Careful consideration should also be given to the selection of trustees. Choosing individuals who possess the requisite financial acumen, integrity, and commitment to fulfilling their fiduciary duties is paramount. Trust drafters should outline the powers and limitations of trustees within the document to guide their actions effectively.

Contingency Planning and Flexibility

Anticipating future changes and uncertainties is essential. Including provisions for contingencies, such as changes in family dynamics or financial circumstances, enhances the document’s adaptability. This flexibility is crucial for the trust to remain effective and relevant over time.

Regular Review and Updating

Another best practice involves incorporating a mechanism for regular review and potential updates to the trust document. This ensures that the terms align with any changes in personal circumstances, tax laws, or other factors that may impact the trust’s administration.

Collaborate with Our Lawyers

Finally, engaging in ongoing collaboration with our experienced legal team can be highly valuable. Our attorneys can provide valuable insights, ensure legal compliance, and contribute to the creation of a well-crafted trust document that serves the interests of the grantor, trustees, and beneficiaries.

Contact Our Attorneys for Help Creating a Trust in Maryland

Get help from our Towson, MD estate and trusts attorneys by calling Rice, Murtha & Psoras at (410) 694-7291.