A revocable trust is often used as a way to avoid probate, and is prepared during the estate planning process. In Maryland, you must be 18 years of age or older to create a revocable trust. MD Est & Trusts Code §§ 4-101 and 14.5-601.
Mental Capacity To Create A Revocable Trust
The creator of the trust, known as the settlor, must also have the capacity to make the revocable trust.
To be legally competent to make a revocable trust under Maryland law, a settlor must:
- Understand the nature of the business in which the settlor is engaging.
- Be able to recite the property of which the settlor intends to dispose of and who will receive it.
- Knows who would receive the property if the settlor did not make the trust.
A settlor that lacks capacity is not capable of creating, revoking, or amending a revocable trust under Maryland law. MD Est & Trusts Code § 14.5-601.
Can an Agent Using a Power Of Attorney Create A Revocable Trust?
Yes, under Maryland law an agent can create a revocable trust on behalf of the principal. The principal may grant the power to create, amend, or revoke an inter vivos trust to an agent under a power of attorney. The power must be explicitly set forth in the power of attorney, and in the revocable trust. See MD Est & Trusts Code §§ 17-108 and 17-203.
Can a Guardian Or Conservator Create a Revocable Trust In Maryland?
No, a guardian or conservator is not authorized to create a trust for a settlor under Maryland law. However, a guardian may exercise the same powers that a settlor has to amend or revoke a trust if:
- The court supervising the guardianship approves of the amendment or revocation; and,
- The trust does not provide otherwise.
See MD Est & Trusts Code § 14.5-602(f).
How Do You Create a Valid Trust Under Maryland Law?
In order to create a valid trust under Maryland law, there must be a trustee with duties to perform, and a definite beneficiary (unless the trust is a charitable trust, a trust for the benefit of an animal, or a non-charitable trust with a specific intended use).
The trust does not have to funded when it is created to be valid in Maryland. Instead, the trust can be funded after creation or at death under the decedent’s will.
It is standard practice in Maryland to create trusts using the same execution requirements for wills, although it is not required. This means that trusts should be in writing, signed by the settlor (or some other person in the settlor’s presence and at the settlor’s direction), and attested and signed by two or more credible witnesses in the settlor’s presence. Complying with these formalities bolsters the validity of the trust, the intent of the settlor, and makes a trust contest more challenging.
Does a Revocable Trust Have To Be In Writing?
No. A revocable trust created by an individual does not have to be in writing under Maryland law, if the creation and terms of the trust are established by clear and convincing evidence. MD Est & Trusts Code § 14.5-406. However, it is incredibly difficult to establish an oral trust, which further supports the standard practice of creating a trust agreement in writing with the formalities required for creation of a will under Maryland law.
If a revocable trust holds real property, the trust must be in writing and signed by the settlor or the trust is void under Maryland law. See MD Real Prop. Code § 5-105. An oral trust cannot hold real property.
A Maryland probate attorney can help you establish a revocable trust as part of your estate planning.
