Md. Code, Estates and Trusts, Title 15

in effect

Md. Code, Estates and Trusts § 15-1A-01

(a) In this subtitle the following words have the meanings indicated. (b) “Bank” has the meaning stated in 12 U.S.C. § 1841(c). (c) “Bank holding company” has the meaning stated in 12 U.S.C. § 1841(a). (d) (1) “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. (2) “Beneficiary” includes: (i) If the beneficiary is a minor, the beneficiary’s natural or legal guardian; or (ii) 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. (e) “Capital requirement” means a provision in any court order, statute, regulation, or writing, including a will, trust, or similar document or instrument, that requires a fiduciary to have a specified minimum amount of capital or capital and surplus. (f) “Corporate fiduciary” means: (1) A bank; (2) A trust company; or (3) Any other corporate entity that is authorized to act as a fiduciary under the laws of this State. (g) “Fiduciary” includes: (1) A trustee; (2) An executor or executrix; (3) A personal representative; (4) A receiver; (5) A special administrator; (6) A guardian; (7) A conservator; (8) A committee; (9) A custodian under the Maryland Uniform Transfers to Minors Act; and (10) Any other person who has a fiduciary relationship the responsibilities of which are customarily performed by a corporate fiduciary. (h) “Successor fiduciary” means a corporate fiduciary that is substituted for another corporate fiduciary under the provisions of § 15-1A-02 of this subtitle, by reason of: (1) A merger or consolidation of corporate fiduciaries; (2) The acquisition of the stock or assets of a corporate fiduciary by another corporate fiduciary; (3) The transfer by a corporate fiduciary of its trust and fiduciary business to another corporate fiduciary; or (4) 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. (i) “Trust company” has the meaning stated in § 1-101 of this article.

Md. Code, Estates and Trusts § 15-1A-02

(a) Subject to the provisions of § 15-1A-04(d)(2) of this subtitle, a successor fiduciary shall be substituted as a fiduciary for its predecessor corporate fiduciary, immediately upon the adoption of a corporate resolution by both the successor fiduciary and the predecessor corporate fiduciary providing for the substitution. (b) A successor fiduciary shall have all the rights, powers, duties, and obligations of the predecessor corporate fiduciary. (c) The successor fiduciary shall be deemed named as fiduciary in any writing, including a will, trust, court order, or similar document or instrument that names the predecessor corporate fiduciary as fiduciary, whether executed before or after the successor fiduciary is substituted, unless the writing expressly provides otherwise.

Md. Code, Estates and Trusts § 15-1A-03

(a) For purposes of qualifying as a fiduciary with respect to a capital requirement, a corporate fiduciary may attribute to its capital and surplus the capital and surplus of any: (1) Bank, trust company, or bank holding company of which it is a direct or indirect subsidiary or affiliate; or (2) Corporation with its principal office in this State if the corporate fiduciary is: (i) A trust company as defined under § 1-101 of this article; and (ii) A wholly owned subsidiary of the corporation. (b) When a successor fiduciary qualifies under this section, the following entities shall be jointly and severally liable with the successor fiduciary for claims against the successor fiduciary when acting in its fiduciary capacity: (1) Any bank, trust company, or bank holding company of which a successor fiduciary is a direct or indirect subsidiary or affiliate; or (2) Any corporation described in subsection (a) of this section with respect to a corporate fiduciary acting as a successor fiduciary.

Md. Code, Estates and Trusts § 15-1A-04

(a) When a successor fiduciary is substituted under this subtitle, the successor fiduciary shall send notice to the following persons at the person’s last known address: (1) Each cofiduciary of the successor fiduciary; (2) Each surviving settlor of a trust; (3) Each person who, alone or in conjunction with others, has the power to remove any corporate fiduciary; and (4) (i) Except as provided in subparagraph (ii) of this paragraph, each beneficiary of a trust, estate, or fund with respect to which a substitution of corporate fiduciary under this subtitle is made. (ii) In the case of a trust described in 26 U.S.C. § 401(a), notice shall be given to the employer or employee organization responsible for the maintenance of the trust. (b) The notice required under subsection (a) of this section shall be: (1) Personally delivered or mailed by registered mail, postage prepaid, return receipt requested, within 30 days before or after substitution of the successor fiduciary; and (2) 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. (c) The notice required under subsection (a) of this section shall contain: (1) The name of the predecessor corporate fiduciary; (2) The name of the successor fiduciary; (3) The effective date of substitution of the successor fiduciary; and (4) A summary of the provisions of this subtitle, including a statement of the rights and procedures available under subsection (d) of this section. (d) (1) In this subsection, “interested party” means a person who: (i) Is entitled to notice under subsection (a) of this section; and (ii) Has an interest in the trust, estate, or fund that is the subject of a complaint filed under this subsection. (2) 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. (3) After notice to all interested parties and a hearing, the court: (i) May appoint a new fiduciary to replace the successor fiduciary if it finds that substitution of the successor fiduciary under § 15-1A-02 of this subtitle will adversely affect administration of the trust, estate, or fund and that appointment of a new fiduciary will be in the best interests of the plaintiff and all other interested parties; and (ii) Shall appoint a new fiduciary to replace the successor fiduciary if the complaint for removal includes an objection to the qualifications of the successor fiduciary and the successor fiduciary’s qualification is dependent on the provisions of § 15-1A-03(a) of this subtitle.

Md. Code, Estates and Trusts § 15-1A-05

In addition to the provisions for removal under § 15-1A-04(d) of this subtitle, removal of a corporate fiduciary is subject to all other laws of this State affecting removal of fiduciaries and to any agreement that designates the predecessor corporate fiduciary as the corporate fiduciary of the trust, estate, or fund.

Md. Code, Estates and Trusts § 15-101

(a) In this subtitle the following words have the meanings indicated. (b) “Committee” includes any reorganization or protective committee formed for the purpose of formulating, proposing, or carrying out any plan of reorganization or to act in any other manner for the protection of the interests of the holders of any class or classes of securities, or persons performing a similar function, and any corporation formed or acting for any such purpose. (c) “Corporate fiduciary” has the meaning stated in § 15–1A–01 of this title. (d) “Depositary” includes any person receiving securities for deposit, exchange, or distribution under any reorganization agreement or plan of reorganization, or stamping securities presented to it to indicate the assent of any present or future holder or holders to any plan of reorganization affecting the securities or that the securities have been absolutely or conditionally made subject to any plan of reorganization. (e) “Deposited or exchanged”, as applied to securities, includes the presentation of securities to a depositary for stamping to indicate the assent of any present or future holder to any plan of reorganization affecting the securities or that the securities have been absolutely or conditionally made subject to any plan or organization. (f) (1) “Environmental law” means a federal, State, or local law, rule, regulation, or ordinance that relates to the protection of the environment. (2) “Environmental law” includes Title 16 of the Environment Article. (g) “Fiduciary” includes a trustee acting under a deed, will, declaration of trust or other instrument in the nature of a trust or appointed by a court, a receiver, custodian, committee or guardian of the property of a minor or disabled person, executor, administrator, or personal representative. (h) “Person” includes the State, any county, municipal corporation, or other political subdivision of the State, or any of their units, or an individual, fiduciary, or any partnership, firm, association, public or private corporation, or any other entity. (i) “Plan of reorganization” includes any plan for the reorganization of any corporation, public or private, or of any partnership, firm or association, and any plan of adjustment, readjustment, refunding, refinancing, or recapitalization affecting any securities, whether or not the plan is proposed or submitted in connection with any proceedings under the jurisdiction of any court. (j) “Reorganization agreement” includes any deposit agreement, protective agreement for the protection of holders of any class of securities, or similar agreement or instrument which embodies any plan of reorganization or provides for or permits the formulation or carrying out of a plan of reorganization. (k) “Securities” includes stocks, bonds, debentures, notes, voting trust certificates, equipment trust certificates, certificates of deposit, certificates of participation, certificates of beneficial interest, stock rights, stock warrants issued by or in connection with any corporation, partnership, firm, association or similar organization, and any other instruments evidencing rights of a similar character. (l) “Trust company” has the meaning stated in § 1–101 of this article.

Md. Code, Estates and Trusts § 15-102

(a) (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) (i) “Fiduciary” means a trustee: 1. Acting under a deed, will, or declaration of trust or other instrument in the nature of a trust, whether the trust or estate is created before or after the effective date of this subtitle; or 2. Appointed by a court or a committee or guardian of the property of a minor or a disabled person, whether the appointment is made before or after the effective date of this subtitle. (ii) “Fiduciary” does not include a receiver, trustee of a trust for the benefit of creditors, executor, administrator, or personal representative. (b) (1) A fiduciary may perform the functions and duties enumerated in this section without application to, approval of, or ratification by a court. (2) 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. (3) 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. (c) A fiduciary may invest in, sell, mortgage, exchange, or lease any property, real or personal. (d) A fiduciary may borrow money for the purpose of protecting property and pledge property as security for the loan. (e) A fiduciary may effect a fair and reasonable compromise with any debtor, obligor, creditor or obligee, or extend or renew any obligation by or to the fiduciary estate. (f) A fiduciary may retain assets owned by the minor or disabled person, in the case of a guardian, or owned by the decedent or the grantor, in the case of a trustee or otherwise coming into the hands of the fiduciary pending distribution or liquidation, including those in which the fiduciary is personally interested or which are otherwise improper for trust investment. (g) A fiduciary may receive assets from any sources, including other fiduciaries. (h) (1) A fiduciary may perform the contracts of the decedent or disabled person that continue as obligations of the fiduciary estate. (2) 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. (i) A fiduciary may satisfy written charitable pledges of the disabled person or decedent. (j) A fiduciary may deposit funds for the account of the fiduciary estate in checking accounts, in insured interest–bearing accounts, or in short–term loan arrangements. (k) A fiduciary may vote securities in person or by general or limited proxy, or enter into or participate in a voting trust or agreement of shareholder. (l) A fiduciary may insure the property of the fiduciary estate against damage, loss and liability, and himself or herself, as fiduciary against liability in respect to third persons. (m) A fiduciary may pay taxes, assessments and other expenses incident to the administration of the fiduciary estate. (n) A fiduciary may sell or exercise stock subscription, conversion or option rights, consent to or oppose, directly or through a committee or other agent, the reorganization, consolidation, merger, dissolution or liquidation of a corporation or other business enterprises. (o) A fiduciary may employ for reasonable compensation agents, attorneys, auditors, investment advisors or other persons with special skills, to advise or assist the fiduciary in the performance of the administrative duties of the fiduciary, but no attorney’s fee in an amount exceeding $50 shall be paid in a fiduciary estate administered under court jurisdiction unless the amount of the fee has been first approved by order of court. (p) (1) 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. (2) The fiduciary may request criminal injuries compensation, restitution, or any other financial property interest of a beneficiary who is a victim of a crime. (q) A fiduciary may continue as or become a limited partner in any partnership or a member in any limited liability company, including a single member limited liability company. (r) A fiduciary may incorporate any business or venture which forms a part of the fiduciary estate. (s) A fiduciary may convert a sole proprietorship the decedent was engaged in at the time of the decedent’s death to a limited liability company. (t) A fiduciary may exercise options, rights and privileges contained in a life insurance policy, annuity, or endowment contract constituting property of the fiduciary estate, including the right to obtain the cash surrender value, convert a policy to another type of policy, revoke any mode of settlement, and pay any part or all of the premiums on the policy or contract. (u) A fiduciary may pay any valid claim. (v) If any assets of the fiduciary estate are encumbered by mortgage, pledge, lien, or other security interest, a fiduciary may pay the encumbrance or any part of it, renew, or extend an obligation secured by the encumbrance, or convey or transfer the assets to the creditor in satisfaction of the security interest of the creditor, in whole or in part, if the act appears to be in the best interest of the fiduciary estate. (w) A fiduciary may release or terminate any mortgage or security interest, if the obligation secured by the mortgage or security interest has been fully satisfied. (x) A guardian may exercise any inter vivos power which the minor or disabled person could have exercised under an instrument, including the power to sell, mortgage, or lease. (y) A fiduciary may hold a security in the name of a nominee or in other form without disclosure of the interest of the fiduciary estate, but the fiduciary shall be liable for a wrongful act of the nominee in connection with the security so held. (z) (1) To comply with an environmental law, a fiduciary may: (i) Inspect property held by the fiduciary, including any type of interest in a sole proprietorship, partnership, limited liability company, or corporation, and any assets owned by a sole proprietorship, partnership, limited liability company, or corporation, to determine compliance with an environmental law and respond to an actual or potential environmental liability relating to the property; (ii) Before or after the initiation of a claim or a governmental enforcement action, take action necessary to prevent, abate, or otherwise remedy an actual or potential environmental liability that affects the fiduciary estate; (iii) Settle or compromise at any time a claim against the fiduciary estate based on an alleged environmental liability that may be asserted by any person; and (iv) Pay from the fiduciary estate the costs of an inspection, review, study, abatement, response, cleanup, or other remedial action that involves an environmental liability. (2) 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. (3) 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. (aa) A fiduciary may donate a conservation easement on any real property, or consent to the donation of a conservation easement on any real property by a personal representative of an estate of which the fiduciary is a legatee, in order to obtain the benefit of the estate tax exclusion allowed under § 2031(c) of the United States Internal Revenue Code of 1986, as amended, if: (1) The governing instrument authorizes or directs the donation of a conservation easement on the real property; or (2) Each beneficiary who has an interest in the real property that would be affected by the conservation easement consents in writing to the donation.

Md. Code, Estates and Trusts § 15-103

(a) Whenever securities are deposited or exchanged, or tendered for deposit or exchanged by a fiduciary under a reorganization agreement or plan of reorganization, a committee formulating, proposing, or carrying out a plan or soliciting deposits or exchanges under an agreement or plan, any depositary with or through which the deposit or exchange of securities may be made, solicited, requested or permitted, and a person to whom or to which securities are to be delivered pursuant to an agreement or a plan, may accept, receive, hold and ultimately dispose of the securities in accordance with the authorization or instructions of the fiduciary depositing or exchanging securities or tendering them for deposit or exchange under a reorganization agreement or plan of reorganization, without an obligation to inquire whether a fiduciary is authorized to make a deposit or exchange or is committing a breach of the obligation as fiduciary in so doing. (b) No committee, depositary, or ultimate recipient is liable in any way of any kind to a person for an action taken, suffered, or permitted with respect to securities in accordance with the authorization or instructions given by a fiduciary depositing or exchanging the securities or tendering the securities for deposit or exchange, unless the committee, depositary, or ultimate recipient has actual knowledge that a fiduciary is committing a breach of fiduciary trust in making the deposit or exchange, or has knowledge of facts that the action or conduct of the committee, depositary, or ultimate recipient amounts to bad faith.

Md. Code, Estates and Trusts § 15-104

(a) (1) 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. (2) 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. (3) 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. (4) 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. (b) (1) 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. (2) 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. (c) A fiduciary, on demand by any party to a judicial proceeding for the settlement of the account of the fiduciary or on demand by the attorney for the party, shall certify in writing to the party the securities deposited by the fiduciary in the clearing corporation for its account as fiduciary. (d) This section applies whether the trust be created or the appointment made prior or subsequent to July 1, 1973.

Md. Code, Estates and Trusts § 15-105

(a) A fiduciary, or party of whom a bond, undertaking or other obligation is required, may agree or arrange with a surety for a general or a special deposit for safekeeping of any money, assets and other property, for which the fiduciary is or may be responsible, with a bank, savings bank, safe deposit or trust company authorized by law to do business and situate in the county in which the fiduciary’s bond is filed. (b) A deposit shall be made in a manner as to prevent the withdrawal or alienation of money, assets, or other property, or any part of it, without the written consent of the surety, or an order of a court, made on notice to the surety as the court directs.

Md. Code, Estates and Trusts § 15-106

(a) The following investments shall be lawful investments for any person: (1) Debentures issued by federal intermediate credit banks or by banks for cooperatives; (2) Bonds issued by federal land banks or by the Federal Home Loan Bank Board; (3) Mortgages, bonds, or notes secured by a mortgage or deed of trust, or debentures issued by the Federal Housing Administration; (4) Obligations of national mortgage associations; (5) Shares, free-share accounts, certificates of deposit, or investment certificates of any insured financial institution, as defined in § 13-301(h) of this article; (6) 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; (7) Obligations issued or guaranteed by the International Bank for Reconstruction and Development; (8) Obligations issued or guaranteed by the African Development Bank; (9) Obligations issued or guaranteed by the International Finance Corporation; or (10) 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: (i) The portfolio of the open-end or closed-end management type investment company or investment trust is limited to direct obligations of the United States government and to repurchase agreements fully collateralized by United States government obligations; and (ii) The open-end or closed-end management type investment company or investment trust takes delivery of that collateral, either directly or through an authorized custodian. (b) (1) In this subsection, “affiliate” has the meaning stated in 12 U.S.C. § 1841. (2) 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. (3) 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. (c) (1) 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. (2) 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: (i) The investment is authorized by the agreement or instrument that gives the corporate fiduciary investment authority, or by court order; or (ii) The corporate fiduciary discloses to its principal or, if the assets are held in trust, to any current income beneficiaries of the trust: 1. The services provided by the corporate fiduciary or its affiliate to the investment company or investment trust; and 2. The rate, formula, or other method by which compensation paid to the corporate fiduciary or its affiliate is determined. (d) Any person holding a mortgage or other lien on property may exchange it, prior or subsequent to maturity, for any other lawful investment. (e) This section shall not be construed as relieving any person from any duty of exercising reasonable care in selecting securities. (f) No general, local, or special law which is inconsistent with this section shall have any effect. (g) This section shall not be construed to make unlawful any investment not listed in this section.

Md. Code, Estates and Trusts § 15-107

Whenever by will, deed, or other instrument, a power to sell, mortgage, lease or otherwise dispose of or deal with property shall be given to any one or more fiduciaries, the power, whether discretionary or otherwise, shall be construed to be appurtenant to the fiduciary office and shall pass to and be exercisable by any surviving or successor fiduciary, unless an intention to the contrary is expressly declared in the will, deed, or other instrument.

Md. Code, Estates and Trusts § 15-108

(a) A fiduciary making a distribution or delivery of any property, in conformity to a decree or order of court passed pursuant to the Maryland Rules, shall be protected from a claim in respect to the property by an absent or unknown beneficiary or life tenant proceeded against under the Maryland Rules, or the heirs, personal representatives, or assigns of an absent or unknown beneficiary or life tenant. (b) Nothing in this section limits a similar protection granted to fiduciaries by applicable laws in effect before the passage of the Maryland Rules.

Md. Code, Estates and Trusts § 15-109

The receipt and release of a foreign fiduciary to whom property is transferred, pursuant to a court order under the Maryland Rules, is a good and sufficient release to the fiduciary transferring the property.

Md. Code, Estates and Trusts § 15-110

(a) In addition to any other means of enforcing a court order, the court that has ordered a fiduciary to give countersecurity pursuant to the Maryland Rules may compel compliance with the court order by attachment and sequestration. (b) If the fiduciary fails to give countersecurity within the time fixed by the court, and is removed: (1) The register of wills may bring suit on the bond of the fiduciary to recover taxes and costs; and (2) 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.

Md. Code, Estates and Trusts § 15-111

The discharge of a fiduciary who has resigned the fiduciary’s office pursuant to the Maryland Rules does not release the fiduciary, or sureties of the fiduciary, from liability to any of the cestui que trustent, or other persons, for acts, defaults, or omissions of duty occurring while the fiduciary was in office.

Md. Code, Estates and Trusts § 15-112

(a) (1) A court shall remove a fiduciary who has: (i) Willfully misrepresented material facts leading to the appointment of the fiduciary or to other action by the court in reference to the fiduciary estate; (ii) Willfully disregarded an order of court; (iii) Shown to be incapable, with or without fault to properly perform the duties of the office of fiduciary; or (iv) Breached the fiduciary duty of good faith or loyalty in the management of property of the fiduciary estate. (2) A court may remove a fiduciary who has: (i) Negligently failed to file a bond within the time required by rule or order of court; (ii) Negligently failed to obey an order of court; or (iii) Failed to perform any fiduciary duty, or to competently administer the fiduciary estate. (b) Procedures for the removal of a fiduciary shall be conducted by the court in accordance with the provisions of the Maryland Rules applying to a fiduciary. (c) The provisions of this section may not apply to personal representatives.

Md. Code, Estates and Trusts § 15-113

An entity that controls, is controlled by, or is under common control with a trust company shall be jointly and severally liable for claims against the trust company when the trust company is acting as a trustee of bond indentures or similar debt issuances, if the trust company: (1) May exercise trust or fiduciary powers in the State; and (2) Meets the qualifications under 12 U.S.C. § 1841(c)(2)(D).

Md. Code, Estates and Trusts § 15-114

(a) (1) In this section the following words have the meanings indicated. (2) “Fiduciary” means: (i) A trust company; (ii) An investment advisor that is controlled by or is under common control with a trust company; or (iii) A person who makes an election under subsection (g) of this section. (3) “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. (4) “Investment advisor” means any company registered under the provisions of the federal Investment Advisers Act of 1940. (b) A fiduciary shall: (1) 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; (2) 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; (3) 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; (4) 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; (5) 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; (6) 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; (7) Act with prudence in deciding whether and how to delegate authority and in the selection and supervision of agents; and (8) Incur only costs that are reasonable in amount and appropriate to the investment responsibilities of the fiduciary appointment. (c) A fiduciary’s investment decisions shall be judged in accordance with the following guidelines and standards: (1) No specific investment or course of action is, taken alone, prudent or imprudent; (2) 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; (3) 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; (4) 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 (5) In making an investment decision, the fiduciary may consider, without limitation: (i) General economic conditions; (ii) The possible effect of inflation; (iii) The expected tax consequences of investment decisions or strategies; (iv) The role each investment or course of action plays within the investment of the portfolio of fiduciary assets as a whole; (v) The expected total return of the investment including both income yield and appreciation of capital; (vi) The reasonableness of any costs associated with the investment; and (vii) The status of related assets of beneficiaries. (d) To the extent that any provision of this section is inconsistent with the terms of a governing instrument, the terms of the governing instrument shall control. (e) If more than one person has investment authority over fiduciary assets, this section shall apply if any of those persons is a fiduciary. (f) Nothing in this section shall abrogate or restrict the power of a court to: (1) Direct or permit a fiduciary to deviate from the terms of a governing instrument; or (2) Direct or permit a fiduciary to take, or to restrain a fiduciary from taking, any action regarding the making or retention of investments. (g) This section shall apply to any person who: (1) Is a trustee, guardian, conservator, committee, custodian under the Maryland Uniform Transfers to Minors Act, investment manager, or investment advisor; and (2) 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.

Md. Code, Estates and Trusts § 15-115

A corporation that under the laws of this State may act as a fiduciary without bond or security other than its own obligation may not incur the liability of a surety upon a bond.

Md. Code, Estates and Trusts § 15-116

Notwithstanding any other provision of law, and except as otherwise provided in the governing instrument, the duties of a trustee regarding the acquisition, retention, or ownership of a contract of insurance on the life of the grantor of the trust, or on the lives of the grantor and the grantor’s spouse, children, or grandchildren, include a duty of loyalty and fair dealing, but do not include a duty to: (1) Determine whether any contract of life insurance in the trust is or remains a proper investment; (2) Diversify the investment; or (3) Exercise any policy options, rights, or privileges available under any contract of life insurance in the trust, including any right to borrow the cash value or reserve of the policy, acquire a paid-up policy, or convert to a different policy.

Md. Code, Estates and Trusts § 15-201

(a) In this subtitle the following words have the meanings indicated. (b) “Bank” includes any person or association of persons, whether incorporated or not, carrying on the business of banking. (c) “Fiduciary” includes a trustee under any trust expressed, implied, resulting or constructive, executor, administrator, guardian, conservator, curator, receiver, trustee in bankruptcy, assignee for the benefit of creditors, partner, agent, officer of a corporation, public or private, public officer, or any other person acting in a fiduciary capacity for any person, trust, or estate. (d) “Person” includes an individual, a corporation, government or governmental subdivision or agency, business trust, statutory trust, estate, trust, partnership or association, two or more persons having a joint or common interest, or any other legal or commercial entity. (e) “Principal” includes any person to whom a fiduciary as such owes an obligation.

Md. Code, Estates and Trusts § 15-202

(a) A person who in good faith pays or transfers to a fiduciary any money or other property which the fiduciary is authorized to receive, is not responsible for the proper application of the money or property by the fiduciary. (b) A right or title to money or other property acquired from a fiduciary in consideration of payment or transfer is not invalid in consequence of a misapplication by the fiduciary.

Md. Code, Estates and Trusts § 15-203

(a) Except as provided in subsection (b) of this section, if any negotiable instrument payable or indorsed to a fiduciary is indorsed by the fiduciary, or if any negotiable instrument payable or indorsed to the fiduciary’s principal is indorsed by a fiduciary empowered to indorse the instrument on behalf of the principal, the indorsee is not bound to inquire whether the fiduciary is committing a breach of the obligation as fiduciary in indorsing or delivering the instrument, and is not chargeable with notice that the fiduciary is committing a breach of the obligation as fiduciary unless the indorsee takes the instrument with actual knowledge of the breach or with knowledge of the facts that the action of the indorsee in taking the instrument amounts to bad faith. (b) If an instrument is transferred by the fiduciary in payment of or as security for a personal debt of the fiduciary to the actual knowledge of the creditor, or is transferred in any transaction known by the transferee to be for the personal benefit of the fiduciary, the creditor or other transferee is liable to the principal if the fiduciary in fact commits a breach of the obligation as fiduciary in transferring the instrument.

Md. Code, Estates and Trusts § 15-204

(a) Except as provided in subsection (b) of this section, if a check or other bill of exchange is drawn by a fiduciary or in the name of the fiduciary’s principal by a fiduciary empowered to draw the instrument in the name of the principal, the payee is not bound to inquire whether the fiduciary is committing a breach of the obligation as fiduciary in drawing or delivering the instrument, and is not chargeable with notice that the fiduciary is committing a breach of the obligation as fiduciary unless the payee takes the instrument with actual knowledge of the breach or with knowledge of the facts that the action of the payee in taking the instrument amounts to bad faith. (b) If an instrument is payable to a personal creditor of the fiduciary and delivered to the creditor in payment of or as security for a personal debt of the fiduciary to the actual knowledge of the creditor, for the personal benefit of the fiduciary, the creditor or other payee is liable to the principal if the fiduciary in fact commits a breach of the obligation as fiduciary in drawing or delivering the instrument.

Md. Code, Estates and Trusts § 15-205

If a check or other bill of exchange is drawn by a fiduciary or in the name of the fiduciary’s principal by a fiduciary empowered to draw the instrument in the name of the principal, payable to the fiduciary personally, or payable to a third person and transferred by the third person to the fiduciary, and is thereafter transferred by the fiduciary, whether in payment of a personal debt of the fiduciary or otherwise, the transferee is not bound to inquire whether the fiduciary is committing a breach of the obligation as fiduciary in transferring the instrument, and is not chargeable with notice that the fiduciary is committing a breach of the obligation as fiduciary unless the transferee takes the instrument with actual knowledge of the breach or with knowledge of the facts that the action of the transferee in taking the instrument amounts to bad faith.

Md. Code, Estates and Trusts § 15-206

(a) Except as provided in subsection (b) of this section, if a deposit is made in a bank to the credit of a fiduciary, the bank is authorized to pay the amount of the deposit or any part of it on the check of the fiduciary, signed with the name in which the deposit is entered, without being liable to the principal, unless the bank pays the check with actual knowledge that the fiduciary is committing a breach of the obligation as fiduciary in drawing the check or with knowledge of the facts that the action of the bank in paying the check amounts to bad faith. (b) If a check is payable to the drawee bank and is delivered to the bank in payment of or as security for a personal debt of the fiduciary to it, the bank is liable to the principal if the fiduciary in fact commits a breach of the obligation as fiduciary in drawing or delivering the check.

Md. Code, Estates and Trusts § 15-207

(a) Except as provided in subsection (b) of this section, if a check is drawn on the bank account of the principal of a fiduciary by a fiduciary who is empowered to draw checks on the account of the principal, the bank is authorized to pay the check without being liable to the principal, unless the bank pays the check with actual knowledge that the fiduciary is committing a breach of the obligation as fiduciary in drawing the check, or with knowledge of the facts that the action of the bank in paying the check amounts to bad faith. (b) If a check is payable to the drawee bank and is delivered to the bank in payment of or as security for a personal debt of the fiduciary to it, the bank is liable to the principal if the fiduciary in fact commits a breach of the obligation as fiduciary in drawing or delivering the check.

Md. Code, Estates and Trusts § 15-208

(a) This section applies if a fiduciary makes a deposit in a bank to the fiduciary’s personal credit of: (1) Checks drawn by the fiduciary on an account in the name of the fiduciary as fiduciary; (2) Checks payable to the fiduciary as fiduciary; (3) 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; (4) Checks payable to the principal of a fiduciary and indorsed by the fiduciary, if the fiduciary is empowered to indorse the checks; or (5) Other funds held by the fiduciary as fiduciary. (b) A bank receiving a deposit in accordance with subsection (a) of this section may not be bound to inquire whether the fiduciary is committing a breach of the obligation as fiduciary and is authorized to pay the amount of the deposit or any part of the deposit on the personal check of the fiduciary without being liable to the principal, unless the bank receives the deposit or pays the check with actual knowledge that the fiduciary is committing a breach of the obligation as fiduciary in making the deposit or in drawing the check, or with knowledge of the facts that the action of the bank in receiving the deposit or paying the check amounts to bad faith.

Md. Code, Estates and Trusts § 15-209

In any case not provided for in this subtitle the rules of law and equity, including the law merchant and those rules of law and equity relating to trusts, agency, negotiable instruments, and banking, shall continue to apply.

Md. Code, Estates and Trusts § 15-210

The Maryland Uniform Fiduciaries Act shall be so interpreted and construed as to effectuate its general purpose to make uniform the law of those states which adopt it.

Md. Code, Estates and Trusts § 15-211

This subtitle may be cited as the Maryland Uniform Fiduciaries Act.

Md. Code, Estates and Trusts § 15-301

(a) In this subtitle the following words have the meanings indicated. (b) “Assignment” includes any written stock power, bond power, bill of sale, deed, declaration of trust, or other instrument of transfer. (c) “Claims” includes a claim of any interest by a legatee of a decedent, distributee, heir, or creditor, a beneficiary under a trust, a ward, a beneficial owner of a security registered in the name of a nominee, or a minor owner of a security registered in the name of a custodian, or a claim of any similar interest, whether the claim is asserted by the claimant or by a fiduciary or by any other authorized person on behalf of the claimant, and includes a claim that the transfer would be in breach of fiduciary duties. (d) “Corporation” means a private or public corporation, association or trust issuing a security. (e) “Fiduciary” means an executor, administrator, trustee, guardian, committee, conservator, curator, tutor, custodian, or nominee. (f) “Person” includes an individual, a corporation, government or governmental subdivision or agency, business trust, statutory trust, estate, trust, partnership or association, two or more persons having a joint or common interest, or any other legal or commercial entity. (g) “Security” includes any share of stock, bond, debenture, note, or other security issued by a corporation which is registered as to ownership on the books of the corporation. (h) “Transfer” means a change on the books of a corporation in the registered ownership of a security. (i) “Transfer agent” means a person employed or authorized by a corporation to transfer securities issued by the corporation.

Md. Code, Estates and Trusts § 15-302

A corporation or transfer agent registering a security in the name of a person who is a fiduciary or who is described as a fiduciary: (1) Is not bound to inquire into the existence, extent, or correct description of the fiduciary relationship; and (2) May assume without inquiry that the newly registered owner continues to be the fiduciary until the corporation or transfer agent receives written notice that the fiduciary is no longer acting as the fiduciary with respect to the particular security.

Md. Code, Estates and Trusts § 15-303

Except as otherwise provided in this subtitle, a corporation or transfer agent making a transfer of a security pursuant to an assignment by a fiduciary: (1) May assume without inquiry that the assignment, even though to the fiduciary or to a nominee of the fiduciary, is within the authority and capacity of the fiduciary and is not in breach of the duties of the fiduciary; (2) May assume without inquiry that the fiduciary has complied with any controlling instrument and with the law of the jurisdiction governing the fiduciary relationship, including any law requiring the fiduciary to obtain court approval of the transfer; and (3) Is not charged with notice of and is not bound to obtain or examine any court record or any recorded or unrecorded document relating to the fiduciary relationship or the assignment, even though the record or document is in its possession.

Md. Code, Estates and Trusts § 15-304

(a) A corporation or transfer agent making a transfer pursuant to an assignment by a fiduciary who is not the registered owner shall obtain the following evidence of appointment or incumbency: (1) 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 (2) 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. (b) A corporation or transfer agent may adopt standards with respect to evidence of appointment or incumbency under subsection (a) of this section if the standards are not manifestly unreasonable. (c) Neither the corporation nor transfer agent is charged with notice of the contents of a document obtained pursuant to this section except to the extent that the contents relate directly to the appointment or incumbency.

Md. Code, Estates and Trusts § 15-305

(a) (1) 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. (2) 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. (3) 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. (b) (1) 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. (2) 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.

Md. Code, Estates and Trusts § 15-306

A corporation or transfer agent incurs no liability to any person by making a transfer or otherwise acting in a manner authorized by this subtitle.

Md. Code, Estates and Trusts § 15-307

(a) A person who participates in the acquisition, disposition, assignment or transfer of a security by or to a fiduciary, including a person who guarantees the signature of the fiduciary, shall have the immunity from liability described under § 5-421(b) of the Courts and Judicial Proceedings Article. (b) If a corporation or transfer agent makes a transfer pursuant to an assignment by a fiduciary, a person who guaranteed the signature of the fiduciary shall have the immunity from liability described under § 5-421(c) of the Courts and Judicial Proceedings Article. (c) This section and § 5-421 of the Courts and Judicial Proceedings Article do not impose any liability upon the corporation or its transfer agent.

Md. Code, Estates and Trusts § 15-308

(a) The rights and duties of a corporation and its transfer agents in registering a security in the name of a fiduciary or in making a transfer of a security pursuant to an assignment by a fiduciary are governed by the law of the jurisdiction under whose laws the corporation is organized. (b) This subtitle applies to the rights and duties of a person other than the corporation and its transfer agents with regard to acts and omissions in this State in connection with the acquisition, disposition, assignment, or transfer of a security by or to a fiduciary and of a person who guarantees in this State the signature of a fiduciary in connection with such a transaction.

Md. Code, Estates and Trusts § 15-309

This subtitle does not affect any obligation of a corporation or transfer agent with respect to estate, inheritance, succession, generation-skipping transfer, or other taxes imposed by the laws of this State.

Md. Code, Estates and Trusts § 15-310

This subtitle shall be so construed as to effectuate its general purpose to make uniform the law of those states which enact it.

Md. Code, Estates and Trusts § 15-311

This subtitle may be cited as the Maryland Uniform Act for the Simplification of Fiduciary Security Transfers.

Md. Code, Estates and Trusts § 15-401

(a) In this subtitle the following words have the meanings indicated. (b) “Charitable purpose” means the relief of poverty, the advancement of education or religion, the promotion of health, the promotion of a governmental purpose, or any other purpose the achievement of which is beneficial to the community. (c) (1) “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. (2) “Endowment fund” does not include assets that an institution designates as an endowment fund for the use of the institution. (d) “Gift instrument” means a record, including an institutional solicitation, under which property is granted to, transferred to, or held by an institution as an institutional fund. (e) “Institution” means: (1) A person, other than an individual, organized and operated exclusively for charitable purposes; (2) 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 (3) A trust that had both charitable and noncharitable interests, after all noncharitable interests have terminated. (f) (1) “Institutional fund” means a fund held by an institution exclusively for charitable purposes. (2) “Institutional fund” does not include: (i) Program–related assets; (ii) A fund held for an institution by a trustee that is not an institution; or (iii) A fund in which a beneficiary that is not an institution has an interest, other than an interest that could arise on violation or failure of the purposes of the fund. (g) “Person” means an individual, corporation, business trust, statutory trust, estate, trust, partnership, limited liability company, association, joint venture, public corporation, government or governmental subdivision, agency, or instrumentality, or any other legal or commercial entity. (h) “Program–related asset” means an asset held by an institution primarily to accomplish a charitable purpose of the institution and not primarily for investment. (i) “Record” means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form.

Md. Code, Estates and Trusts § 15-402

(a) Subject to the intent of a donor expressed in a gift instrument, an institution, in managing and investing an institutional fund, shall consider the charitable purposes of the institution and the purposes of the institutional fund. (b) In addition to complying with the duty of loyalty imposed by law other than this subtitle, each person responsible for managing and investing an institutional fund shall manage and invest the fund exercising ordinary business care and prudence under the facts and circumstances prevailing at the time of the action or decision. (c) In managing and investing an institutional fund, an institution: (1) 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 (2) Shall make a reasonable effort to verify facts relevant to the management and investment of the fund. (d) An institution may pool two or more institutional funds for purposes of management and investment. (e) (1) The provisions of this subsection apply except as otherwise provided by a gift instrument. (2) In managing and investing an institutional fund, the following factors, if relevant, shall be considered: (i) General economic conditions; (ii) The possible effect of inflation or deflation; (iii) The expected tax consequences, if any, of investment decisions or strategies; (iv) The role that each investment or course of action plays within the overall investment portfolio of the fund; (v) The expected total return from income and the appreciation of investments; (vi) Other resources of the institution; (vii) The needs of the institution and the fund to make distributions and to preserve capital; and (viii) The special relationship or special value of the asset, if any, to the charitable purposes of the institution. (3) 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. (4) 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. (5) 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. (6) 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. (7) 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.

Md. Code, Estates and Trusts § 15-403

(a) (1) 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. (2) Unless stated otherwise in the gift instrument, the assets in an endowment fund are donor–restricted assets until appropriated for expenditure by the institution. (3) 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: (i) The duration and preservation of the endowment fund; (ii) The purposes of the institution and the endowment fund; (iii) General economic conditions; (iv) The possible effect of inflation or deflation; (v) The expected total return from income and the appreciation of investments; (vi) Other resources of the institution; and (vii) The investment policy of the institution. (b) To limit the authority to appropriate for expenditure or accumulate under subsection (a) of this section, a gift instrument must specifically state the limitation. (c) Terms in a gift instrument designating a gift as an endowment, or a direction or authorization in the gift instrument to use only “income”, “interest”, “dividends”, or “rents, issues, or profits”, or “to preserve the principal intact”, or words of similar import: (1) Create an endowment fund of permanent duration unless other language in the gift instrument limits the duration or purpose of the fund; and (2) Do not otherwise limit the authority to appropriate for expenditure or accumulate under subsection (a) of this section. (d) (1) In this subsection, fair market value shall be calculated: (i) If an endowment fund has existed at least 3 years, on the basis of the market value determined at least quarterly and averaged over a period of not less than 3 years immediately preceding the year in which the appropriation for expenditure is made; or (ii) If an endowment fund has existed for fewer than 3 years, for the period the endowment fund has existed. (2) 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. (3) 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. (4) This subsection does not: (i) Apply to an appropriation for expenditure permitted under law other than this subtitle or by the gift instrument; or (ii) Create a presumption of prudence for an appropriation for expenditure of an amount less than or equal to 7 percent of the fair market value of the endowment fund.

Md. Code, Estates and Trusts § 15-404

(a) (1) 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. (2) An institution shall exercise ordinary business care and prudence under the facts and circumstances prevailing at the time of the action or decision, in: (i) Selecting an agent; (ii) Establishing the scope and terms of the delegation, consistent with the purposes of the institution and the institutional fund; and (iii) Periodically reviewing the actions of the agent in order to monitor the performance and compliance of the agent with the scope and terms of the delegation. (b) In performing a delegated function, an agent owes a duty to the institution to exercise reasonable care to comply with the scope and terms of the delegation. (c) The standard established by § 15–402(b) of this subtitle is not limited or extinguished by the appointment of an external agent. (d) By accepting delegation of a management or investment function from an institution that is subject to the laws of the State, an agent submits to the jurisdiction of the courts of the State in all proceedings arising from or related to the delegation or the performance of the delegated function. (e) An institution may delegate management and investment functions to the committees, officers, or employees of the institution as authorized by law other than this subtitle.

Md. Code, Estates and Trusts § 15-405

(a) (1) 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. (2) A release or modification may not allow a fund to be used for a purpose other than a charitable purpose of the institution. (b) (1) 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. (2) (i) 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. (ii) To the extent practicable, any modification made under paragraph (1) of this subsection must be made in accordance with the donor’s probable intention. (c) (1) 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. (2) 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. (d) If an institution determines that a restriction contained in a gift instrument on the management, investment, or purpose of an institutional fund is unlawful, impracticable, or impossible to achieve, the institution, 60 days after notification to the Attorney General, may release or modify the restriction, in whole or in part, if: (1) The institutional fund subject to the restriction has a total value of less than $50,000; (2) More than 20 years have elapsed since the fund was established; and (3) The institution uses the property in a manner clearly consistent with the charitable purposes expressed in the gift instrument.

Md. Code, Estates and Trusts § 15-406

Compliance with this subtitle shall be determined in light of the facts and circumstances existing at the time a decision is made or action is taken.

Md. Code, Estates and Trusts § 15-407

(a) Except as provided in subsection (b) of this section, this subtitle applies to institutional funds existing on or established after the effective date of Chapter 134 of the Acts of the General Assembly of 2009. (b) As applied to institutional funds existing on the effective date of Chapter 134 of the Acts of the General Assembly of 2009, this subtitle governs only decisions made or actions taken on or after that date.

Md. Code, Estates and Trusts § 15-408

This subtitle modifies, limits, and supersedes the Electronic Signatures in Global and National Commerce Act, 15 U.S.C. § 7001 et seq., but does not modify, limit, or supersede § 101(c) of that act, 15 U.S.C. § 7001(c), or authorize electronic delivery of the notices described in § 103(b) of that act, 15 U.S.C. § 7003(b).

Md. Code, Estates and Trusts § 15-409

In applying and construing this subtitle, which is a uniform act, consideration shall be given to the need to promote uniformity of the law with respect to the subject matter of the law among the states that enact the law.

Md. Code, Estates and Trusts § 15-410

This subtitle may be cited as the “Maryland Uniform Prudent Management of Institutional Funds Act”.

Md. Code, Estates and Trusts § 15-501

(a) In this subtitle the following words have the meanings indicated. (b) (1) “Accounting period” means a calendar year unless another 12-month period is selected by a fiduciary. (2) “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. (c) “Beneficiary” includes, in the case of a decedent’s estate, an heir and legatee and, in the case of a trust, an income beneficiary and a remainder beneficiary. (d) (1) “Fiduciary” means a personal representative or a trustee. (2) “Fiduciary” includes an executor, administrator, successor personal representative, special administrator, and a person performing substantially the same function. (e) (1) “Income” means money or property that a fiduciary receives as current return from a principal asset. (2) “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. (f) “Income beneficiary” means a person to whom net income of a trust is or may be payable. (g) “Income interest” means the right of an income beneficiary to receive all or part of net income, whether the terms of the trust require it to be distributed or authorize it to be distributed in the trustee’s discretion. (h) “Mandatory income interest” means the right of an income beneficiary to receive net income that the terms of the trust require the fiduciary to distribute. (i) “Net income” means the total receipts allocated to income during an accounting period minus the disbursements made from income during the period, plus or minus transfers under this subtitle to or from income during the period. (j) “Person” means an individual, corporation, business trust, statutory trust, estate, trust, partnership, limited liability company, association, joint venture, government; governmental subdivision, agency, or instrumentality; public corporation, or any other legal or commercial entity. (k) “Principal” means property held in trust for distribution to a remainder beneficiary when the trust terminates. (l) “Remainder beneficiary” means a person entitled to receive principal when an income interest ends. (m) “Terms of a trust” means the manifestation of the intent of a settlor or decedent with respect to the trust, expressed in a manner that admits of its proof in a judicial proceeding, whether by written or spoken words or by conduct. (n) “Trustee” includes an original, additional, or successor trustee, whether or not appointed or confirmed by a court. (o) “Unitrust” means a trust from which the income beneficiary is entitled to receive annually a fixed percentage of the fair market value of the trust’s assets.

Md. Code, Estates and Trusts § 15-502

(a) In allocating receipts and disbursements to or between principal and income, and with respect to any matter within the scope of Parts II and III of this subtitle, a fiduciary: (1) 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; (2) 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; (3) 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 (4) 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. (b) (1) 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. (2) A determination in accordance with this subtitle is presumed to be fair and reasonable to all of the beneficiaries.

Md. Code, Estates and Trusts § 15-502.1

§15–502.1. (a) A trustee may convert a trust into a unitrust as described in this section if: (1) The trustee receives a written request from a beneficiary to exercise the power conferred by this subsection to convert to a unitrust; (2) The trustee invests and manages the trust assets in the manner set forth in § 15–114(b) and (c) of this title; (3) 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 (4) (i) The trustee complies with the notice requirements of § 15–502.3 of this subtitle and all qualified beneficiaries consent; or (ii) A court reviews a petition filed under § 15–502.3 of this subtitle and approves the proposed decision to convert to a unitrust. (b) In deciding whether to exercise the power conferred by subsection (a) of this section, a trustee shall consider all factors relevant to the trust and its beneficiaries, including the following factors to the extent they are relevant: (1) The nature, purpose, and expected duration of the trust; (2) The intent of the creator of the trust; (3) The identity and circumstances of the beneficiaries; (4) The needs for liquidity, regularity of income, and preservation and appreciation of capital; (5) The assets held in the trust and: (i) The extent to which they consist of financial assets, interests in closely held enterprises, tangible and intangible personal property, or real property; (ii) The extent to which an asset is used by a beneficiary; and (iii) Whether an asset was acquired by the trustee or received from the creator of the trust; (6) 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; (7) The actual and anticipated effect of economic conditions on principal and income and the effects of inflation and deflation; and (8) The anticipated tax consequences of a unitrust conversion. (c) After a trust is converted to a unitrust, all of the following apply: (1) 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: (i) The 3 preceding years; or (ii) The period during which the trust has been in existence; (2) Expenses that would be deducted from income if the trust were not a unitrust may not be deducted from the unitrust distribution; (3) 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; (4) 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 (5) The trustee may determine to account for the unitrust distribution in accordance with the following rules: (i) To the extent net income is insufficient, the unitrust distribution shall be paid from net realized short–term capital gains; (ii) To the extent income and net realized short–term capital gains are insufficient, the unitrust distribution shall be paid from net realized long–term capital gains; and (iii) To the extent income and net realized short–term and long–term capital gains are insufficient, the unitrust distribution shall be paid from the principal of the trust. (d) The trustee shall determine: (1) The effect of other payments from or contributions to the trust on the trust’s valuation; (2) How frequently to value nonliquid assets and whether to estimate their value; and (3) Whether to omit from the calculations trust property occupied or possessed by a beneficiary. (e) If authorized by a court order, in accordance with a petition filed under § 15–502.3 of this subtitle, the converted unitrust may provide that: (1) The payout percentage is different than 4%; (2) 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 (3) Valuation of the trust’s net assets shall be averaged over a period other than 3 years. (f) A trustee may not convert a trust into a unitrust under subsection (a) of this section if: (1) 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; (2) 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; (3) 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; (4) 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; (5) 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 (6) The trustee is a beneficiary of the trust. (g) (1) 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. (2) 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. (h) (1) A trustee may release the power conferred by subsection (a) of this section to convert to a unitrust if: (i) The trustee is uncertain about whether possessing or exercising the power will cause a result described in subsection (f)(4), (5), or (6) of this section; or (ii) 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 (f) of this section. (2) 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. (i) If the trustee receives a written request from a beneficiary to reconvert a trust from a unitrust, the trustee may reconvert a trust from a unitrust if: (1) 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 (2) A court reviews a petition filed under § 15–502.3 of this subtitle and approves the proposed decision to reconvert from a unitrust. (j) Unless it is clear from the terms of the trust that the terms are intended to deny the trustee the power conferred by subsection (a) of this section, the terms of a trust that limit the power of a trustee to convert to a unitrust do not affect the application of this section.

Md. Code, Estates and Trusts § 15-502.2

§15–502.2. (a) A trustee may adjust between principal and income to the extent the trustee considers necessary if: (1) The trustee receives a written request from a beneficiary to exercise the power conferred by this subsection to make an adjustment; (2) The trustee invests and manages the trust assets in the manner set forth in § 15-114(b) and (c) of this title; (3) The terms of the trust describe the amount that may or must be distributed to a beneficiary by referring to the trust’s income; (4) 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; (5) 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 (6) (i) The trustee complies with the notice requirements of § 15-502.3 of this subtitle and all qualified beneficiaries consent; or (ii) A court reviews a petition filed under § 15-502.3 of this subtitle and approves the adjustment. (b) In deciding whether and to what extent to exercise the power conferred by subsection (a) of this section, a trustee shall consider all the factors relevant to the trust and its beneficiaries, including the following factors to the extent they are relevant: (1) The nature, purpose, and expected duration of the trust; (2) The intent of the creator of the trust; (3) The identity and circumstances of the beneficiaries; (4) The needs for liquidity, regularity of income, and preservation and appreciation of capital; (5) The assets held in the trust and: (i) The extent to which they consist of financial assets, interests in closely held enterprises, tangible and intangible personal property, or real property; (ii) The extent to which an asset is used by a beneficiary; and (iii) Whether an asset was acquired by the trustee or received from the creator of the trust; (6) 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; (7) 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; (8) The actual and anticipated effect of economic conditions on principal and income and the effects of inflation and deflation; and (9) The anticipated tax consequences of an adjustment. (c) Unless authorized by a court order in accordance with a petition filed under § 15-502.3 of this subtitle, a trustee may not make an adjustment under subsection (a) of this section in any accounting period if the adjustment results in a distribution of net income to the income beneficiary: (1) 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 (2) 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. (d) A trustee may not make an adjustment under subsection (a) of this section: (1) 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; (2) 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; (3) That changes the amount payable to a beneficiary as a fixed annuity or a fixed fraction of the value of the trust assets; (4) 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; (5) 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; (6) 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; (7) If the trustee is a beneficiary of the trust; or (8) If the trust has been converted to a unitrust in accordance with § 15-502.1 of this subtitle. (e) If subsection (d)(5), (6), or (7) of this section applies to a trustee and there is more than one trustee, a cotrustee to whom the provision does not apply may make the adjustment under subsection (a) of this section unless the exercise of the power by the remaining trustee or trustees is not permitted by the terms of the trust. (f) (1) 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. (2) 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. (g) The terms of a trust that limit the power of a trustee to make an adjustment between principal and income do not affect the application of this section unless it is clear from the terms of the trust that the terms are intended to deny the trustee the power of adjustment conferred by subsection (a) of this section.

Md. Code, Estates and Trusts § 15-502.3

§15–502.3. (a) In this section, “qualified beneficiary” means: (1) A person who, on the date that notice is given by the trustee in accordance with subsection (b) of this section: (i) Is a distributee or permissible distributee of the income or principal of the trust estate; (ii) Would be a distributee or permissible distributee of the income or principal of the trust estate if the interests of the distributees described in item (i) of this paragraph terminated on the date that notice is given by the trustee; or (iii) Would be a distributee or permissible distributee of the income or principal of the trust estate if the trust were to terminate on the date that notice is given by the trustee and no powers of appointment were exercised; (2) If an individual described in paragraph (1) of this subsection is a minor, the individual’s natural or legal guardian; or (3) 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. (b) A trustee shall give notice of a proposed decision regarding the exercise or nonexercise of the discretionary power conferred under: (1) Section 15-502.1(a) of this subtitle to convert a trust to a unitrust; (2) Section 15-502.1(i) of this subtitle to reconvert from a unitrust; or (3) Section 15-502.2(a) of this subtitle to adjust between principal and income. (c) The trustee shall mail the notice required under subsection (b) of this section to: (1) 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 (2) The creator of the trust, if living. (d) The notice of proposed decision shall state that it is given in accordance with this section and shall state the following: (1) 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; (2) 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; (3) 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 (4) 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. (e) If the trustee receives the written consent of all qualified beneficiaries, then the trustee shall undertake the proposed decision unless 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. (f) If any qualified beneficiary does not consent to the proposed decision, or if the proposed decision includes an action that requires an order of a court under § 15-502.1 or § 15-502.2 of this subtitle, then the trustee or any qualified beneficiary may file a petition to review the proposed decision in the circuit court for the county in which the trustee resides in this State, if the trustee is an individual, or in which the principal place of business of the trustee is located in this State. (g) (1) In a proceeding under subsection (f) of this section: (i) With respect to the power to convert to a unitrust under § 15-502.1(a) of this subtitle or to reconvert from a unitrust under § 15-502.1(i) of this subtitle, the sole remedy in the proceeding is to direct, deny, or revise the conversion to a unitrust or reconversion from a unitrust; and (ii) With respect to the power to adjust between principal and income under § 15-502.2(a) of this subtitle, the sole remedy in the proceeding is to direct, deny, or revise the adjustment between principal and income. (2) Notice of the proceeding shall be given by the petitioner to the trustee and to all qualified beneficiaries. (h) Any action taken or not taken in accordance with the provisions of this section shall be binding on the trustee, all qualified beneficiaries, and any other person who has a present or future interest in the trust, vested or contingent, including any unborn or unascertained beneficiary, and the trustee is not liable to any person for that action taken or not taken.

Md. Code, Estates and Trusts § 15-503

(a) The rules in subsections (b) through (e) of this section apply: (1) In the case of an estate, after a decedent dies; or (2) After an income interest in a trust ends. (b) (1) A fiduciary of an estate or of a terminating income interest shall: (i) Determine the amount of net income and net principal receipts received from property specifically given to a beneficiary under the rules in Parts III through V of this subtitle which apply to trustees and the rules in subsection (e) of this section; and (ii) Distribute the net income and net principal receipts to the beneficiary who is to receive the specific property. (2) 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. (3) (i) If the beneficiary who is to receive the specific property fails to make payment to the personal representative within 15 days from the date of written demand, the personal representative may sell at either public or private sale the specific property to satisfy the excess charges, taxes, and expenses accrued. (ii) Proceeds of the sale in excess of the charges, taxes, and expenses, including the expenses of the sale, shall subsequently be distributed to the beneficiary in full satisfaction of the right to receive the specific property. (iii) If the proceeds of the sale are insufficient to satisfy charges, taxes, and expenses incident to the specific property, then the personal representative may pay the excess expenses, taxes, and other charges out of the residuary estate. (c) A fiduciary shall determine the remaining net income of a decedent’s estate or a terminating income interest under the rules in Parts III through V of this subtitle which apply to trustees and by: (1) Including in net income all income from property used to discharge liabilities; (2) 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 (3) 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. (d) A fiduciary shall distribute the remaining net income in the manner described in § 15–504 of this subtitle to all other beneficiaries, including a beneficiary who receives a pecuniary amount in trust, even if the beneficiary holds an unqualified power to withdraw assets from the trust or other presently exercisable general power of appointment over the trust, but excluding a beneficiary other than a surviving spouse who receives a pecuniary amount that is not in trust. (e) (1) 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. (2) 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.

Md. Code, Estates and Trusts § 15-504

(a) (1) 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. (2) 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. (b) In determining a beneficiary’s share of net income: (1) 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; (2) 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; (3) 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 (4) 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. (c) If a fiduciary does not distribute all of the collected but undistributed net income to each person as of a distribution date, the fiduciary shall maintain appropriate records showing the interest of each beneficiary in that net income. (d) A fiduciary may apply the rules in this section, to the extent that the fiduciary considers it appropriate, to net gain or loss realized after the date of death or terminating event or earlier distribution date from the disposition of a principal asset if this section applies to the income from the asset.

Md. Code, Estates and Trusts § 15-505

(a) (1) An income beneficiary is entitled to net income from the date on which the income interest begins. (2) 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. (b) An asset becomes subject to a trust: (1) 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; (2) 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 (3) 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. (c) An asset becomes subject to a successive income interest on the day after the preceding income interest ends, as determined under subsection (d) of this section, even if there is an intervening period of administration to wind up the preceding income interest. (d) An income interest ends on the day before an income beneficiary dies or another terminating event occurs, or on the last day of a period during which there is no beneficiary to whom a trustee may distribute income.

Md. Code, Estates and Trusts § 15-506

(a) A trustee shall allocate an income receipt or disbursement other than one to which § 15–503(b) of this subtitle applies to principal if its due date occurs before a decedent dies in the case of an estate or before an income interest begins in the case of a trust or successive income interest. (b) (1) 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. (2) 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. (3) 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. (c) (1) An item of income or an obligation is due on the date the payer is required to make a payment. (2) If a payment date is not stated, there is no due date for the purposes of this subtitle. (3) 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. (4) 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.

Md. Code, Estates and Trusts § 15-507

(a) (1) In this section, “undistributed income” means net income received before the date on which an income interest ends. (2) “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. (b) (1) 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. (2) 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. (c) When a trustee’s obligation to pay a fixed annuity or a fixed fraction of the value of the trust’s assets ends, the trustee shall prorate the final payment if and to the extent required by applicable law to accomplish a purpose of the trust or its settlor relating to income, gift, estate, or other tax requirements.

Md. Code, Estates and Trusts § 15-508

(a) In this section, “entity” means a corporation, partnership, limited liability company, regulated investment company, real estate investment trust, common trust fund, or any other organization in which a trustee has an interest other than a trust or estate to which § 15–509 of this subtitle applies, a business or activity to which § 15–510 of this subtitle applies, or an asset–backed security to which § 15–522 of this subtitle applies. (b) Except as otherwise provided in this section, a trustee shall allocate to income money received from an entity. (c) Except as provided in subsection (f) of this section, a trustee shall allocate the following receipts from an entity to principal: (1) Property other than money; (2) 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; (3) Money received in total or partial liquidation of the entity; and (4) 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. (d) Money is received in partial liquidation: (1) To the extent that the entity, at or near the time of a distribution, indicates that it is a distribution in partial liquidation; or (2) 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. (e) Money is not received in partial liquidation, nor may it be taken into account under subsection (d)(2) of this section, to the extent that it does not exceed the amount of income tax that a trustee or beneficiary must pay on taxable income of the entity that distributes the money. (f) (1) (i) In this subsection the following words have the meanings indicated. (ii) “Investment fund” means an entity that is exempt from registration under the Investment Company Act of 1940 based on the authority in 15 U.S.C. § 80a–3(c)(1), is treated as a partnership for federal income tax purposes, has 50 or more investors, and more than half the assets of which consist of cash and marketable securities, including its proportionate share of these assets owned by any entity in which it owns an interest. (iii) “Unit” means an equity interest in an investment fund. (2) 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. (g) A trustee may rely upon a statement made by an entity about the source or character of a distribution if the statement is made at or near the time of distribution by the entity’s board of directors or other person or group of persons authorized to exercise powers to pay money or transfer property comparable to those of a corporation’s board of directors.

Md. Code, Estates and Trusts § 15-509

(a) A trustee shall allocate to income an amount received as a distribution of income from a trust or an estate in which the trust has an interest other than a purchased interest, and shall allocate to principal an amount received as a distribution of principal from such a trust or estate. (b) If a trustee purchases an interest in a trust that is an investment entity, or a decedent or donor transfers an interest in such a trust to a trustee, § 15–508 or § 15–522 of this subtitle applies to a receipt from the trust.

Md. Code, Estates and Trusts § 15-510

(a) If a trustee who conducts a business or other activity determines that it is in the best interest of all the beneficiaries to account separately for the business or activity instead of accounting for it as part of the trust’s general accounting records, the trustee may maintain separate accounting records for its transactions, whether or not its assets are segregated from other trust assets. (b) (1) 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. (2) 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. (c) Activities for which a trustee may maintain separate accounting records include: (1) Retail, manufacturing, service, and other traditional business activities; (2) Farming; (3) Raising and selling livestock and other animals; (4) Management of rental properties; (5) Extraction of minerals and other natural resources; (6) Timber operations; and (7) Activities to which § 15-521 of this subtitle applies.

Md. Code, Estates and Trusts § 15-511

A trustee shall allocate to principal: (1) To the extent not allocated to income under this subtitle, assets received from a transferor during the transferor’s lifetime, a decedent’s estate, a trust with a terminating income interest, or a payer under a contract naming the trust or its trustee as beneficiary; (2) Money or other property received from the sale, exchange, liquidation, or change in form of a principal asset, including realized profit, subject to this subtitle; (3) Amounts recovered from third parties to reimburse the trust because of disbursements described in § 15–524(a)(7) of this subtitle or for other reasons to the extent not based on the loss of income; (4) Proceeds of property taken by eminent domain, but a separate award made for the loss of income with respect to an accounting period during which a current income beneficiary had a mandatory income interest is income; (5) Net income received in an accounting period during which there is no beneficiary to whom a trustee may or must distribute income; and (6) Other receipts as provided in Part III of this subtitle.

Md. Code, Estates and Trusts § 15-512

(a) To the extent that a trustee accounts for receipts from rental property pursuant to this section, the trustee shall allocate to income an amount received as rent of real or personal property, including an amount received for cancellation or renewal of a lease. (b) An amount received as a refundable deposit, including a security deposit or a deposit that is to be applied as rent for future periods, shall be added to principal and held subject to the terms of the lease and is not available for distribution to a beneficiary until the trustee’s contractual obligations have been satisfied with respect to that amount.

Md. Code, Estates and Trusts § 15-513

(a) An amount received as interest, whether determined at a fixed, variable, or floating rate, on an obligation to pay money to the trustee, including an amount received as consideration for prepaying principal, must be allocated to income without any provision for amortization of premium. (b) (1) 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. (2) 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. (c) This section does not apply to an obligation to which § 15-516, § 15-517, § 15-518, § 15-519, § 15-521, or § 15-522 of this subtitle applies.

Md. Code, Estates and Trusts § 15-514

(a) Except as provided in subsection (b) of this section, a trustee shall: (1) 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 (2) Allocate dividends on an insurance policy: (i) If the premiums on the insurance policy are paid from income, to income; and (ii) If the premiums on the insurance policy are paid from principal, to principal. (b) A trustee shall allocate to income proceeds of a contract that insures the trustee against loss of occupancy or other use by an income beneficiary, loss of income, or, subject to § 15-510 of this subtitle, loss of profits from a business. (c) This section does not apply to a contract to which § 15-516 of this subtitle applies. (d) (1) 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: (i) A bond; (ii) A zero coupon bond; (iii) An annuity contract before unitization; (iv) A life insurance contract before the death of the insured; and (v) An interest in a common trust fund as defined under § 584 of the Internal Revenue Code with respect to charitable remainder trusts as defined under § 664 of the Internal Revenue Code and pooled income funds as defined under § 642(c)(5) of the Internal Revenue Code. (2) 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. (3) (i) The increment in value is distributable to the beneficiary who was the income beneficiary at the time of the increment from the first principal cash available or, if none is available, when realized by sale, redemption, or other disposition. (ii) Whenever unrealized increment is distributed as income, but out of principal, the principal shall be reimbursed for the increment when realized. (4) 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.

Md. Code, Estates and Trusts § 15-515

(a) (1) 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. (2) 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. (b) An allocation is presumed to be insubstantial if: (1) 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 (2) 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.

Md. Code, Estates and Trusts § 15-516

(a) (1) In this section the following words have the meanings indicated. (2) (i) “Payment” means a payment that a trustee may receive over a fixed number of years or during the life of one or more individuals because of services rendered or property transferred to the payer in exchange for future payments. (ii) “Payment” includes: 1. A payment made in money or property from the payer’s general assets or from a separate fund created by the payer; or 2. For the purposes of subsection (d), (e), (f), or (g) of this section, any payment from a separate fund, regardless of the reason for the payment. (3) “Separate fund” includes a private or commercial annuity, an individual retirement account, and a pension, profit–sharing, stock–bonus, or stock–ownership plan. (b) (1) 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. (2) 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. (c) (1) 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. (2) 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. (3) 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. (d) Except as otherwise provided in subsection (e) of this section, subsections (f) and (g) of this section apply, and subsections (b) and (c) of this section do not apply, in determining the allocation of a payment made from a separate fund to: (1) 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 (2) A trust that qualifies for the marital deduction under § 2056(b)(5) of the Internal Revenue Code of 1986. (e) Subsections (d), (f), and (g) of this section do not apply if, and to the extent that, the series of payments would, without the application of subsection (d) of this section, qualify for the marital deduction under § 2056(b)(7)(C) of the Internal Revenue Code of 1986. (f) (1) 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. (2) On request of the surviving spouse, the trustee shall demand that the person administering the separate fund distribute the internal income to the trust. (3) The trustee shall allocate: (i) A payment from the separate fund to income to the extent of the amount of the internal income of the separate fund and distribute that amount to the surviving spouse; and (ii) The balance of the payment to principal. (4) 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. (g) (1) 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. (2) 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. (h) This section does not apply to payments to which § 15–517 of this subtitle applies.

Md. Code, Estates and Trusts § 15-517

(a) (1) 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. (2) “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. (3) “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. (b) A trustee shall allocate to income 10 percent of the receipts from a liquidating asset and the balance to principal.

Md. Code, Estates and Trusts § 15-518

(a) To the extent that a trustee accounts for receipts from an interest in minerals or other natural resources pursuant to this section, the trustee shall allocate them as follows: (1) If received as nominal delay rental or nominal annual rent on a lease, a receipt shall be allocated to income; (2) If received from a production payment, a receipt shall be allocated: (i) If and to the extent that the agreement creating the production payment provides a factor for interest or its equivalent, to income; and (ii) The balance shall be allocated to principal; (3) 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 (4) 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. (b) (1) An amount received on account of an interest in water that is renewable shall be allocated to income. (2) If the water is not renewable, 90% of the amount shall be allocated to principal and the balance to income. (c) This subtitle applies whether or not a decedent or donor was extracting minerals, water, or other natural resources before the interest became subject to the trust. (d) (1) 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. (2) 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.

Md. Code, Estates and Trusts § 15-519

(a) To the extent that a trustee accounts for receipts from the sale of timber and related products pursuant to this section, the trustee shall allocate the net receipts: (1) 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; (2) 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; (3) 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 (4) 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. (b) In determining net receipts to be allocated pursuant to subsection (a) of this section, a trustee shall deduct and transfer to principal a reasonable amount for depletion. (c) This subtitle applies whether or not a decedent or transferor was harvesting timber from the property before it became subject to the trust. (d) (1) 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. (2) 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.

Md. Code, Estates and Trusts § 15-520

(a) (1) 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. (2) The trustee may decide which action or combination of actions to take. (b) In cases not governed by subsection (a) of this section, proceeds from the sale or other disposition of an asset are principal without regard to the amount of income the asset produces during any accounting period.

Md. Code, Estates and Trusts § 15-521

(a) In this section, “derivative” means a contract or financial instrument or a combination of contracts and financial instruments which gives a trust the right or obligation to participate in some or all changes in the price of a tangible or intangible asset or group of assets, or changes in a rate, an index of prices or rates, or other market indicator for an asset or a group of assets. (b) To the extent that a trustee does not account under § 15-510 of this subtitle for transactions in derivatives, the trustee shall allocate to principal receipts from and disbursements made in connection with those transactions. (c) (1) 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. (2) An amount paid to acquire the option shall be paid from principal. (3) 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.

Md. Code, Estates and Trusts § 15-522

(a) (1) 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. (2) “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. (3) “Asset-backed security” does not include an asset to which § 15-508 or § 15-516 of this subtitle applies. (b) If a trust receives a payment from interest or other current return and from other proceeds of the collateral financial assets, the trustee shall allocate to income the portion of the payment which the payer identifies as being from interest or other current return and shall allocate the balance of the payment to principal. (c) (1) 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. (2) 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.

Md. Code, Estates and Trusts § 15-523

A trustee shall make the following disbursements from income to the extent that they are not disbursements to which § 15–503(c)(2) or (3) of this subtitle apply: (1) One–half of the regular compensation of the trustee and any person providing investment advisory or custodial services to the trustee; (2) One–half of all expenses for accountings, judicial proceedings, or other matters that involve both the income and remainder interests; (3) All of the other ordinary expenses incurred in connection with the administration, management, or preservation of trust property and the distribution of income, including interest, ordinary repairs, regularly recurring taxes assessed against principal, and expenses of a proceeding or other matter that concerns primarily the income interest; and (4) Recurring premiums on insurance covering the loss of a principal asset or the loss of income from or use of the asset.

Md. Code, Estates and Trusts § 15-524

(a) A trustee shall make the following disbursements from principal: (1) The remaining one–half of the disbursements described under § 15–523(1) and (2) of this subtitle; (2) 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; (3) Payments on the principal of a trust debt; (4) Expenses of a proceeding that concerns primarily principal, including a proceeding to construe the trust or to protect the trust or its property; (5) 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; (6) Estate, inheritance, and other transfer taxes, including penalties, apportioned to the trust; and (7) 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. (b) If a principal asset is encumbered with an obligation that requires income from that asset to be paid directly to the creditor, the trustee shall transfer from principal to income an amount equal to the income paid to the creditor in reduction of the principal balance of the obligation.

Md. Code, Estates and Trusts § 15-525

(a) In this section, “depreciation” means a reduction in value due to wear, tear, decay, corrosion, or gradual obsolescence of a fixed asset having a useful life of more than 1 year. (b) A trustee may transfer to principal a reasonable amount of the net cash receipts from a principal asset that is subject to depreciation, but may not transfer any amount for depreciation: (1) 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; (2) During the administration of a decedent’s estate; or (3) 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. (c) An amount transferred to principal need not be held as a separate fund.

Md. Code, Estates and Trusts § 15-526

(a) If a trustee makes or expects to make a principal disbursement described in this section, the trustee may transfer an appropriate amount from income to principal in one or more accounting periods to reimburse principal or to provide a reserve for future principal disbursements. (b) Principal disbursements to which subsection (a) applies include the following, but only to the extent that the trustee has not been and does not expect to be reimbursed by a third party: (1) An amount chargeable to income but paid from principal because it is unusually large, including extraordinary repairs; (2) 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; (3) Disbursements made to prepare property for rental, including tenant allowances, leasehold improvements, and broker’s commissions; (4) 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 (5) Disbursements described in § 15–524(a)(7) of this subtitle. (c) If the asset whose ownership gives rise to the disbursements becomes subject to a successive income interest after an income interest ends, a trustee may continue to transfer amounts from income to principal as provided in subsection (a) of this section.

Md. Code, Estates and Trusts § 15-527

(a) A tax required to be paid by a trustee based on receipts allocated to income shall be paid from income. (b) A tax required to be paid by a trustee based on receipts allocated to principal shall be paid from principal, even if the tax is called an income tax by the taxing authority. (c) A tax required to be paid by a trustee on the trust’s share of an entity’s taxable income shall be paid: (1) From income to the extent that receipts from the entity are allocated only to income; (2) From principal to the extent that receipts from the entity are allocated only to principal; (3) Proportionately from principal and income to the extent that receipts from the entity are allocated to both income and principal; and (4) From principal to the extent that the tax exceeds the total receipts from the entity. (d) After applying subsections (a) through (c) of this section, the trustee shall adjust income or principal receipts to the extent that the trust’s taxes are reduced because the trust receives a deduction for payments made to a beneficiary.

Md. Code, Estates and Trusts § 15-528

(a) A fiduciary may make adjustments between principal and income to offset the shifting of economic interests or tax benefits between income beneficiaries and remainder beneficiaries which arise from: (1) Elections and decisions, other than those described in subsection (b) of this section, that the fiduciary makes from time to time regarding tax matters; (2) 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 (3) 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. (b) A trustee shall make an adjustment from principal to income to compensate an income beneficiary for taxes paid or payable by the income beneficiary in respect of the taxable income of an entity that is taxable to the income beneficiary but that is distributed to the trustee and allocated to principal. (c) (1) 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. (2) 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. (3) 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.

Md. Code, Estates and Trusts § 15-529

This subtitle shall be so applied and construed to effectuate its general purpose to make uniform the law with respect to the subject matter of this subtitle among those states which enact it.

Md. Code, Estates and Trusts § 15-530

This subtitle may be cited as the “Maryland Uniform Principal and Income Act”.

Md. Code, Estates and Trusts § 15-601

(a) In this subtitle the following words have the meanings indicated. (b) “Account” means an arrangement under a terms–of–service agreement in which a custodian carries, maintains, processes, receives, or stores a digital asset of a user or provides goods or services to the user. (c) “Agent” has the meaning stated in § 17–101 of this article. (d) “Carries” means engages in the transmission of electronic communications. (e) “Catalogue of electronic communications” means information that identifies: (1) Each person with whom a user has had an electronic communication; (2) The time and date of the communication; and (3) The electronic address of the person. (f) “Content of an electronic communication” means information concerning the substance or meaning of a communication that: (1) Has been sent or received by a user; (2) (i) Is in electronic storage by a custodian providing an electronic communication service to the public; or (ii) Is carried or maintained by a custodian providing a remote computing service to the public; and (3) Is not readily accessible to the public. (g) “Custodian” means a person who carries, maintains, processes, receives, or stores a digital asset of an account holder. (h) “Designated recipient” means a person chosen by a user using an online tool to administer the digital assets of the user. (i) (1) “Digital asset” means an electronic record in which an individual has a right or interest. (2) “Digital asset” does not include an underlying asset or liability unless the asset or liability is itself an electronic record. (j) “Electronic” means relating to technology having electrical, digital, magnetic, wireless, optical, electromagnetic, or similar capabilities. (k) “Electronic communication” has the meaning stated in 18 U.S.C. § 2510(12). (l) “Electronic communication service” means a custodian that provides to a user the ability to send or receive an electronic communication. (m) “Fiduciary” means an original, additional, or successor personal representative, guardian, agent, or trustee. (n) (1) “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. (2) “Guardian” includes a limited guardian. (o) “Information” means data, text, images, videos, sounds, codes, computer programs, software, or databases. (p) “Online tool” means an electronic service provided by a custodian that allows a user, in an agreement distinct from the terms–of–service agreement between the custodian and the user, to provide directions for disclosure or nondisclosure of digital assets to a third party. (q) “Person” means an individual, estate, business or nonprofit entity, public corporation, government or governmental subdivision, agency, instrumentality, or other legal entity. (r) “Personal representative” means an executor, administrator, special administrator, or person that performs substantially the same function under a law of this State other than this subtitle. (s) “Power of attorney” has the meaning stated in § 17–101 of this article. (t) “Principal” has the meaning stated in § 17–101 of this article. (u) (1) “Protected person” means an individual for whom a guardian has been appointed. (2) “Protected person” includes an individual for whom an application for the appointment of a guardian is pending. (v) “Record” means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form. (w) “Remote computing service” means a custodian who provides to a user computer processing services or the storage of digital assets by means of an electronic communications system, as defined in 18 U.S.C. § 2510(14). (x) “Terms–of–service agreement” means an agreement that controls the relationship between a user and a custodian. (y) (1) “Trustee” means a fiduciary with legal title to property under an agreement or a declaration that creates a beneficial interest in another. (2) “Trustee” includes an original, additional, or successor trustee or cotrustee, whether or not appointed or confirmed by a court. (z) “User” means a person who has an account with a custodian. (aa) “Will” includes a codicil, a testamentary instrument that only appoints a personal representative, or an instrument that revokes or revises a testamentary instrument if the codicil or instrument satisfies the requirements of § 4–102, § 4–103, or § 4–104 of this article.

Md. Code, Estates and Trusts § 15-602

This subtitle does not apply to a digital asset of an employer used by an employee in the ordinary course of the employer’s business.

Md. Code, Estates and Trusts § 15-603

(a) (1) 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. (2) 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. (b) If the user does not use an online tool to give direction under subsection (a) of this section or if the custodian fails to provide an online tool, the user may, in a will, trust, power of attorney, or other record, allow or prohibit disclosure to a fiduciary of some or all of the user’s digital assets, including the content of electronic communications sent or received by the user. (c) A direction by a user under subsection (a) or (b) of this section shall override a contrary provision in a terms–of–service agreement, if the terms–of–service agreement does not require the user to act affirmatively and distinctly from the user’s assent to the terms of service.

Md. Code, Estates and Trusts § 15-604

(a) This subtitle does not change or impair the right of a custodian or a user under a terms–of–service agreement to access or use the digital assets of the user. (b) This subtitle does not grant a fiduciary or designated recipient new or expanded rights other than those held by the user for whom or for whose estate or trust the fiduciary or designated recipient acts or represents. (c) A fiduciary’s or designated recipient’s access to digital assets may be modified or eliminated by: (1) A user; (2) Federal law; or (3) A terms–of–service agreement if the user has not provided direction under § 15–603 of this subtitle.

Md. Code, Estates and Trusts § 15-605

(a) When disclosing the digital assets of a user under this subtitle, a custodian may in its sole discretion: (1) Grant a fiduciary or designated recipient full access to the user’s account; (2) 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 (3) 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. (b) A custodian may assess a reasonable administrative charge for the cost of disclosing digital assets under this subtitle. (c) A custodian need not disclose under this subtitle a digital asset deleted by a user. (d) (1) 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. (2) 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: (i) A subset, limited by date, of the user’s digital assets; (ii) All of the user’s digital assets to the fiduciary or designated recipient; (iii) None of the user’s digital assets; or (iv) All of the user’s digital assets to the court for review in camera.

Md. Code, Estates and Trusts § 15-606

If a deceased user consented to or a court directs the disclosure of the contents of electronic communications of the user, a custodian shall disclose to the personal representative of the user’s estate the content of an electronic communication sent or received by the user if the personal representative provides the custodian: (1) A written request for disclosure in physical or electronic form; (2) A copy of the certificate of the user’s death; (3) A copy of the letters of administration of the personal representative or court order appointing a special administrator; (4) Unless the user provided direction using an online tool, a copy of the user’s will, trust, power of attorney, or other record evidencing the user’s consent to disclosure of the content of electronic communications; and (5) If requested by the custodian: (i) A number, username, address, or other unique subscriber or account identifier assigned by the custodian to identify the user’s account; (ii) Evidence linking the account to the user; or (iii) A finding by the court that: 1. The user had a specific account with the custodian, identifiable by the information specified in item (i) of this item; 2. Disclosure of the content of electronic communications of the user would not violate 18 U.S.C. § 2701, et seq., 47 U.S.C. § 222, or other applicable law; 3. Unless the user provided direction using an online tool, the user consented to disclosure of the content of electronic communications; or 4. Disclosure of the content of electronic communications of the user is reasonably necessary for administration of the estate.

Md. Code, Estates and Trusts § 15-607

Unless a user prohibited disclosure of digital assets or a court directs otherwise, a custodian shall disclose to the personal representative of the estate of the user a catalogue of electronic communications sent or received by the user and the digital assets of the user, other than the content of the electronic communications, if the personal representative provides the custodian: (1) A written request for disclosure in physical or electronic form; (2) A copy of the certificate of the user’s death; (3) A copy of the letters of administration of the personal representative or court order appointing a special administrator; and (4) If requested by the custodian: (i) A number, username, address, or other unique subscriber or account identifier assigned by the custodian to identify the user’s account; (ii) Evidence linking the account to the user; (iii) An affidavit stating that disclosure of the user’s digital assets is reasonably necessary for administration of the estate; or (iv) A finding by the court that: 1. The user had a specific account with the custodian, identifiable by the information specified in item (i) of this item; or 2. Disclosure of the catalogue of electronic communications of the user is reasonably necessary for administration of the estate.

Md. Code, Estates and Trusts § 15-608

To the extent that a power of attorney expressly grants an agent authority over the content of electronic communications sent or received by the principal and unless directed otherwise by the principal or a court, a custodian shall disclose to the agent the content if the agent provides the custodian: (1) A written request for disclosure in a physical or electronic form; (2) An original or copy of the power of attorney expressly granting the agent authority over the content of electronic communications of the principal; (3) A certification by the agent, under penalty of perjury, that the power of attorney is in effect; and (4) If requested by the custodian: (i) A number, username, address, or other unique subscriber or account identifier assigned by the custodian to identify the principal’s account; or (ii) Evidence linking the account to the principal.

Md. Code, Estates and Trusts § 15-609

Unless otherwise ordered by a court, directed by a principal, or provided by a power of attorney, a custodian shall disclose to an agent with specific authority over digital assets or general authority to act on behalf of a principal a catalogue of electronic communications sent or received by the principal and digital assets, other than the content of electronic communications, of the principal if the agent provides the custodian: (1) A written request for disclosure in physical or electronic form; (2) An original or copy of the power of attorney that grants the agent specific authority over digital assets or general authority to act on behalf of the principal; (3) A certification by the agent, under penalty of perjury, that the power of attorney is in effect; and (4) If requested by the custodian: (i) A number, username, address, or other unique subscriber or account identifier assigned by the custodian to identify the principal’s account; or (ii) Evidence linking the account to the principal.

Md. Code, Estates and Trusts § 15-610

Unless otherwise ordered by a court or provided in a trust, a custodian shall disclose to a trustee that is an original user of an account the digital assets of the account held in trust, including a catalogue of electronic communications of the trustee and the content of electronic communications.

Md. Code, Estates and Trusts § 15-611

Unless otherwise ordered by a court, directed by a user, or provided in a trust, a custodian shall disclose to a trustee that is not an original user of an account the content of an electronic communication sent or received by an original or successor user and carried, maintained, processed, received, or stored by the custodian in the account of the trust if the trustee provides the custodian: (1) A written request for disclosure in physical or electronic form; (2) A copy of the trust instrument or certification of the trust under § 14.5–910 of this article that includes consent to disclosure of the content of electronic communications to the trustee; (3) A certification by the trustee, under penalty of perjury, that the trust exists and the trustee is a currently acting trustee of the trust; and (4) If requested by the custodian: (i) A number, username, address, or other unique subscriber or account identifier assigned by the custodian to identify the trust’s account; or (ii) Evidence linking the account to the trust.

Md. Code, Estates and Trusts § 15-612

Unless otherwise ordered by a court, directed by a user, or provided in a trust, a custodian shall disclose to a trustee that is not an original user of an account a catalogue of electronic communications sent or received by an original or successor user or stored, carried, or maintained by the custodian in an account of the trust and the digital assets, other than electronic communications, in which the trust has a right or interest if the trustee provides the custodian: (1) A written request for disclosure in physical or electronic form; (2) A copy of the trust instrument or certification of the trust under § 14.5–910 of this article; (3) A certification by the trustee, under penalty of perjury, that the trust exists and the trustee is a currently acting trustee of the trust; and (4) If requested by the custodian: (i) A number, username, address, or other unique subscriber or account identifier assigned by the custodian to identify the trust’s account; or (ii) Evidence linking the account to the trust.

Md. Code, Estates and Trusts § 15-613

(a) After an opportunity for hearing under Title 13, Subtitle 2 or Title 13, Subtitle 7 of this article, a court may grant a guardian access to the digital assets of the protected person for whom the guardian has been appointed. (b) Unless otherwise ordered by a court or directed by a user, a custodian shall disclose to a guardian the catalogue of electronic communications sent or received by the protected person and the digital assets, other than the content of electronic communications, in which the protected person has a right or interest if the guardian provides the custodian: (1) A written request for disclosure in physical or electronic form; (2) A copy of the court order that gives the guardian authority over the digital assets of the protected person; and (3) If requested by the custodian: (i) A number, username, address, or other unique subscriber or account identifier assigned by the custodian to identify the protected person’s account; or (ii) Evidence linking the account to the protected person. (c) (1) A guardian with general authority to manage the assets of a protected person may request a custodian of the digital assets of the protected person to suspend or terminate an account of the protected person for good cause. (2) A request made under this subsection shall be accompanied by a copy of the court order granting the guardian authority over the protected person’s property.

Md. Code, Estates and Trusts § 15-614

(a) The legal duties imposed on a fiduciary charged with managing tangible property apply to the management of digital assets, including: (1) The duty of care; (2) The duty of loyalty; and (3) The duty of confidentiality. (b) A fiduciary’s or designated recipient’s authority with respect to a digital asset of a user: (1) Except as otherwise provided in § 15–603 of this subtitle, is subject to the applicable terms of service; (2) Is subject to other applicable law, including copyright law; (3) In the case of a fiduciary, is limited by the scope of the fiduciary’s duties; and (4) May not be used to impersonate the user. (c) A fiduciary with authority over the property of a decedent, protected person, principal, or settlor has the right to access a digital asset in which the decedent, protected person, principal, or settlor had a right or interest and that is not held by a custodian or subject to a terms–of–service agreement. (d) A fiduciary acting within the scope of the fiduciary’s duties is an authorized user of the property of the decedent, protected person, principal, or settlor for the purpose of applicable computer–fraud and unauthorized–computer–access laws, including § 7–302 of the Criminal Law Article. (e) A fiduciary with authority over the tangible, personal property of a decedent, protected person, principal, or settlor: (1) Has the right to access the property and the digital assets stored in it; and (2) Is an authorized user for the purpose of computer–fraud and unauthorized–computer–access laws, including § 7–302 of the Criminal Law Article. (f) A custodian may disclose information in an account to a fiduciary of the user when the information is required to terminate an account used to access digital assets licensed to the user. (g) (1) A fiduciary of a user may request a custodian to terminate the user’s account. (2) The fiduciary shall submit the request for termination to the custodian in writing, in either physical or electronic form, accompanied by: (i) If the user is deceased, a copy of the death certificate of the user; (ii) A copy of the letters of administration of the personal representative or court order appointing a special administrator, power of attorney, or trust granting the fiduciary authority over the account; and (iii) If requested by the custodian: 1. A number, username, address, or other unique subscriber or account identifier assigned by the custodian to identify the user’s account; 2. Evidence linking the account to the user; or 3. A finding by the court that the user had a specific account with the custodian, identifiable by the information specified in item 1 of this item.

Md. Code, Estates and Trusts § 15-615

(a) (1) No later than 60 days after receipt of the information required under §§ 15–606 through 15–613 of this subtitle, a custodian shall comply with a request under this subtitle from a fiduciary or designated recipient to disclose digital assets or terminate an account. (2) If the custodian fails to comply with the request, the fiduciary or designated recipient may apply to a court for an order directing compliance. (b) An order under subsection (a) of this section directing compliance shall contain a finding that compliance is not in violation of 18 U.S.C. § 2702. (c) A custodian may notify the user that a request for disclosure or termination of an account was made under this subtitle. (d) A custodian may deny a request under this subtitle from a fiduciary or designated recipient for disclosure of digital assets or termination of an account if the custodian is aware of any lawful access to the account following receipt of the fiduciary’s request. (e) This subtitle does not limit a custodian’s ability to obtain or to require a fiduciary or designated recipient requesting disclosure or termination under this subtitle to obtain a court order that: (1) Specifies that an account belongs to the protected person or principal; (2) Specifies that there is sufficient consent from the protected person or principal to support the requested disclosure or termination; and (3) Contains a finding required by law other than this subtitle. (f) A custodian and its officers, employees, and agents are immune from liability for an act or omission done in good faith in compliance with this subtitle.

Md. Code, Estates and Trusts § 15-616

In applying and construing this subtitle, consideration shall be given to the need to promote uniformity of the law with respect to its subject matter among states that enact the Revised Uniform Fiduciary Access to Digital Assets Act.

Md. Code, Estates and Trusts § 15-617

This subtitle modifies, limits, or supersedes the Electronic Signatures in Global and National Commerce Act, 15 U.S.C. § 7001 et seq., but does not modify, limit, or supersede Section 101(c) of that Act, 15 U.S.C. § 7001(c), or authorize electronic delivery of the notices described in Section 103(b) of that Act, 15 U.S.C. § 7003(b).

Md. Code, Estates and Trusts § 15-618

This subtitle applies to: (1) A fiduciary acting under a will or power of attorney executed before, on, or after October 1, 2016; (2) A personal representative acting for a decedent who died before, on, or after October 1, 2016; (3) A guardianship proceeding, whether pending in a court or commenced before, on, or after October 1, 2016; (4) A trustee acting under a trust created before, on, or after October 1, 2016; and (5) A custodian if the user resides in this State or resided in this State at the time of the user’s death.

Md. Code, Estates and Trusts § 15-619

If a provision of this subtitle or its application to a person or circumstances is held invalid, the invalidity does not affect other provisions or applications of this subtitle that can be given effect without the invalid provision or application, and to this end the provisions of this subtitle are severable.

Md. Code, Estates and Trusts § 15-620

This subtitle may be cited as the Maryland Fiduciary Access to Digital Assets Act.

Source: Open US Law by Vaquill AI (CC BY 4.0)URL: https://mgaleg.maryland.gov/mgawebsite/Laws/StatutesFetched: 10/16/2026