Article 4

A trust may be created by:
(1) Transfer of property to another person as trustee during the lifetime of the settlor or by will or other disposition taking effect on the death of the settlor;
(2) Declaration by the owner of property that the owner holds identifiable property as trustee; or
(3) Exercise of a power of appointment in favor of a trustee.

(a) A trust is created only if:
(1) The settlor has capacity to create a trust;
(2) The settlor indicates an intention to create the trust;
(3) The trust has a definite beneficiary or is:
(i) A charitable trust;
(ii) A trust for the care of an animal, as provided in § 14.5–407 of this subtitle; or
(iii) A trust for a noncharitable purpose, as provided in § 14.5–408 of this subtitle; and
(4) The trustee has duties to perform.
[MISSING UTC(a)(5)]
(b) A beneficiary is definite if the beneficiary can be ascertained now or in the future, subject to any applicable rule against perpetuities.
(c) (1) A power in a trustee or in another person under the terms of the trust to select a beneficiary from an indefinite class is valid.
(2) If the power described in paragraph (1) of this subsection is not exercised within a reasonable time, the power fails and the property subject to the power passes to the persons that would have taken the property had the power not been conferred.

A trust not created by will is validly created if the creation of the trust complies with:
(1) The law of the jurisdiction in which the trust instrument was executed; or
(2) The law of the jurisdiction in which, at the time of creation:
(i) The settlor was domiciled [MISSING "HAD A PLACE OF ABODE"] or was a national;
(ii) A trustee of the trust was domiciled or had a place of business; or
(iii) Any trust property was located.

(a) A trust may be created only to the extent that the purposes of the trust are lawful, not contrary to public policy, and possible to achieve.
(b) A trust and the terms of the trust shall be for the benefit of the beneficiaries of the trust.

A trust is void to the extent that the creation of the trust was induced by fraud, duress, or undue influence.

Except as required by a provision other than this title, a trust need not be evidenced by a trust instrument, but the creation of an oral trust and the terms of the oral trust may be established only by clear and convincing evidence.

***Former MD E&T 14-112 re-enacted***
(a) A trust may be created to provide for the care of an animal alive during the lifetime of the settlor.
(b) A trust authorized by this section terminates:
(1) If created to provide for the care of one animal alive during the lifetime of the settlor, on the death of the animal;
Or
(2) If created to provide for the care of more than one animal alive during the lifetime of the settlor, on the death of the last surviving animal.
(c) (1) A trust authorized by this section may be enforced by a person appointed under the terms of the trust or, if no person is appointed, by a person appointed by the court.
(2) A person having an interest in the welfare of an animal, the care for which a trust has been established, may request the court to appoint a person to enforce the trust or to remove a person appointed.
(d) (1) Except to the extent that the court may determine that the value of a trust authorized by this section exceeds the amount required for the use intended by the trust, the property of the trust may be applied only to the intended use of the trust.
(2) Except as otherwise provided under the terms of the trust, property not required for the intended use of the trust shall be distributed:
(i) To the settlor, if living; or
(ii) If the settlor is deceased, to the successors in interest of the settlor.

Except as otherwise provided in § 14.5–407 of this subtitle or by another statute, the following rules apply:
(1) (i) A trust may be created for a noncharitable purpose without a definite or definitely ascertainable beneficiary or for a noncharitable but otherwise valid purpose to be selected by the trustee; and
(ii) A trust described in item (i) of this item may not be enforced for more than 21 years unless the settlor elects otherwise;
(2) A trust authorized by this section may be enforced by a person appointed in the terms of the trust or, if no person is so appointed, by a person appointed by the court; and
(3) (i) Property of a trust authorized by this section may be applied only to the intended use of the trust, except to the extent that the court determines that the value of the trust property exceeds the amount required for the intended use; and
(ii) Except as otherwise provided in the terms of a trust described in item (i) of this item, property not required for the intended use shall be distributed to the settlor, if then living, or to the successors in interest of the settlor, if the settlor is not then living.

(a) In addition to the methods of termination prescribed by §§ 14.5–410 through § 14.5–412 of this subtitle, a trust terminates to the extent:
(1) The trust is revoked or expires in accordance with the terms of the trust; or
[MISSING "NO PURPOSE OF THE TRUST REMAINS TO BE ACHIEVED"]
(2) The purposes of the trust have become unlawful, contrary to public policy, or impossible to achieve.
(b) A proceeding to approve or disapprove a proposed modification or termination under §§ 14.5–410 through § 14.5–414 of this subtitle, or combination or division of a trust under § 14.5–415 of this subtitle, may be commenced by a trustee or beneficiary [MISSING "[AND A PROCEEDING TO APPROVE . . . BY THE SETTLOR]. . . . THE SETTLOR OF A . . . MAINTAIN A PROCEEDING TO MODIFY THE TRUST UNDER (CODE)].

[MISSING UTC[(a)]]
(a) (1) a noncharitable irrevocable trust may be terminated on consent of the trustee and all beneficiaries if the court concludes that continuance of the trust is not necessary to achieve any material purpose of the trust.
(2) a noncharitable irrevocable trust may be modified on consent of the trustee and all beneficiaries if the court concludes that modification is not inconsistent with a material purpose of the trust.
(b) the existence of a spendthrift provision or similar protective language in the terms of the trust does not prevent a termination of a trust under subsection (a)(1) of this section. [CHANGED/EXPANDED UTC(c)]
(c) on termination of a trust under subsection (a)(1) of this section, the trustee shall distribute the trust property as agreed by the beneficiaries.
(d) if not all beneficiaries consent to a proposed modification or termination of the trust under subsection (a) of this section, the modification or termination may be approved by the court if the court is satisfied that:
(1) if all beneficiaries had consented, the trust could have been modified or terminated under this section; and
(2) the interests of a beneficiary that does not consent will be adequately protected.

(a) (1) The court may modify the administrative or dispositive terms of a trust or terminate the trust if, because of circumstances not anticipated by the settlor, modification or termination will further the purposes of the trust.
(2) To the extent practicable, the modification described in paragraph (1) of this subsection shall be made in accordance with the probable intention of the settlor.
(b) The court may modify the administrative terms of a trust if continuation of the trust on its existing terms would be impracticable or wasteful or impair the administration of the trust.
(c) On termination of a trust under subsection (a) of this section, the trustee shall distribute the trust property in a manner consistent with the purposes of the trust as ordered by the court.

***Former MD E&T 14-107 re-enacted***
(a) (1) In this section the following words have the meanings indicated.
(2) “Life expectancy” means the life expectancy published from time to time in the life tables issued by the U.S. Department of Health and Human Services.
(3) “Net annual income” means the gross income of a trust estate during a fiscal year minus trust commissions and expenses attributable to income for that fiscal year.
(b) Subject to the provisions of this section, a trustee may terminate a trust without an order of court if the fair market value of the trust as of the last anniversary date of the trust is $100,000 [SUBSTITUTED FOR $50,000] or less [MISSING "IF THE TRUSTEE CONCLUDES . . . JUSTIFY COST OF ADMINISTATION"].
[MISSING UTC(b)]
(c) (1) (i) A trustee proposing to terminate a trust under this section shall send notice of the proposed termination to each cotrustee and each qualified beneficiary of the trust at the last known address of the cotrustee or qualified beneficiary.
(ii) The notice described in subparagraph (i) of this paragraph shall be:
1. Personally delivered; or
2. Mailed by certified mail, postage prepaid, return receipt requested.
(2) The notice required under paragraph (1) of this subsection shall contain:
(i) The name of the trust;
(ii) The name of the person who created the trust;
(iii) The date on which the trust was established;
(iv) The name and address of the trustee seeking to terminate the trust;
(v) The name of any cotrustee;
(vi) A statement that the effective date of the termination shall be at least 90 days after the date on which notice under paragraph (1) of this subsection has been received by each cotrustee and each qualified beneficiary;
(vii) A statement of the reasons for termination of the trust;
(viii) The approximate amount and the manner of calculation of each distribution of the trust estate; and
(ix) A statement of the right to object and the procedures to follow under subsection (d) of this section.
(d) (1) A person entitled to notice under subsection (c) of this section that objects to the termination of a trust shall send written objection to the termination.
(2) The written objection described in paragraph (1) of this subsection shall be personally delivered or mailed by certified mail, postage prepaid, return receipt requested, within 60 days after the date on which notice that is sent under subsection (c)(1) of this section is received by the objecting party, to the trustee proposing to terminate the trust at the address in the notice.
(e) (1) If no qualified beneficiary or cotrustee delivers a timely objection in accordance with the provisions of subsection (d) of this section, the trust shall be terminated and the trust estate shall be distributed in accordance with the provisions of subsection (f) of this section.
(2) If a qualified beneficiary or cotrustee delivers a timely written objection in accordance with the provisions of subsection (d) of this section, the trust may not be terminated unless the objection is withdrawn in writing by the objecting party within 90 days after receipt of the notice by the objecting party.
(f) (1) A trust estate that is terminated under this section shall be distributed in any manner [MISSING: "CONSISTENT WITH THE PURPOSES OF THE TRUST"] unanimously agreed on by all qualified beneficiaries.
(2) (i) If the qualified beneficiaries do not unanimously agree to a manner of distribution, the distribution shall be made in accordance with the provisions of this paragraph.
(ii) A qualified beneficiary that has a present interest in the trust estate shall receive an amount equal to the present value of an annuity equal to the proportionate share of the qualified beneficiary of the average net annual income of the trust as of the last three anniversary dates of the trust for a term equal to the life expectancy of the qualified beneficiary, at the interest rate for valuing vested benefits provided by the pension benefit guaranty corporation for the month immediately preceding the date on which the notice under subsection (c)(1) of this section is sent.
(iii) The amount of the trust estate remaining after distribution to qualified beneficiaries having a present interest in the trust estate shall be distributed to qualified beneficiaries having a future interest in the trust estate in whatever proportions are provided for under the terms of the governing instrument under which the trust was created.
(g) The existence of spendthrift or similar protective language in the governing instrument under which the trust was created may not prevent termination under this section.
(h) All expenses incurred by the trustee incident to the termination of a trust under this section shall be paid by the trust estate.
(i) A distribution to a minor qualified beneficiary shall be made to the custodian of the minor under the Maryland uniform Transfers to Minors Act.
(j) This section may not be construed to limit the right of a trustee to terminate a trust in accordance with applicable provisions of the governing instrument under which the trust was created.
(k) A trust may be terminated under this section if:
(1) The trustee has determined that termination of the trust is in the best interests of the qualified beneficiaries; and
(2) The governing instrument does not expressly prohibit termination of the trust regardless of the size of the trust.
(l) A trust may not be terminated under this section if:
(1) The provisions of the governing instrument make the trust eligible to qualify for the marital deduction for United States estate tax or for United States gift tax purposes under the Internal Revenue Code of 1986, as amended, unless all qualified beneficiaries agree that all of the trust estate shall be distributed to the spouse of the creator of the trust; or
(2) The provisions of the governing instrument make the trust qualify, in whole or in part, for a charitable deduction for United States estate tax, United States gift tax, or United States income tax purposes under the Internal Revenue Code of 1986, as amended, unless all qualified beneficiaries agree that all of the trust estate shall be distributed to one or more qualified beneficiaries that qualify for the charitable deduction under the Internal Revenue Code of 1986, as amended.
[MISSING UTC(d)]

The court may reform the terms of a trust, even if unambiguous, to conform the terms to the intention of the settlor if it is proved by clear and convincing evidence that both the intent of the settlor and the terms of the trust were affected by a mistake of fact or law, whether in expression or inducement.

(a) To achieve the tax objectives of the settlor, the court may modify the terms of a trust in a manner that is not contrary to the probable intention of the settlor.
(b) The court may provide that the modification described in subsection (a) of this section has retroactive effect.

***Former MD E&T 14-106 re-enacted***
(a) (1) Subject to the provisions of paragraph (2) of this subsection, on petition by a trustee, personal representative, beneficiary, or party in interest, after notice as the court may direct to the trustees, personal representatives, beneficiaries, and parties in interest, and for good cause shown, a court may:
(i) Divide a trust into two or more separate trusts; or
(ii) Consolidate two or more trusts into a single trust.
(2) A court may divide a trust or consolidate trusts:
(i) On terms and conditions as the court considers appropriate; and
(ii) If the court is satisfied that a division of a trust or consolidation of trusts will not defeat or materially impair:
1. The accomplishment of trust purposes; or
2. The interests of the beneficiaries.
(3) a court may pass orders that the court considers proper or necessary to protect the interests of:
(i) A trustee;
(ii) A personal representative;
(iii) A beneficiary; or
(iv) A party in interest.
(b) [MISSING "AFTER NOTICE TO THE QUALIFIED BENEFICIARIES"] Subsection (a) of this section may not be construed to limit the right of a trustee or personal representative to divide a trust or consolidate trusts, without an order of a court, in accordance with the applicable provisions of the governing instrument [MISSING "IF THE RESULT DOES NOT . . . THE PURPOSES OF THE TRUST].
(c)(1) Subject to the provisions of paragraphs (2) and (3) of this subsection, if a trust instrument does not provide for the consolidation or division of a trust, a trustee may, without an order of a court:
(i) Divide a trust into two or more separate trusts; or
(ii) Consolidate two or more trusts into a single trust.
(2) A trustee may not divide a trust into two or more separate trusts or consolidate two or more trusts into a single trust if a beneficiary objects in writing within 30 days after the trustee provided notice under § 14.5-109 of this title.
(3) A trustee may divide a trust or consolidate trusts:
(i) On terms and conditions as the trustee considers appropriate;
(ii) If the division of a trust or consolidation of a trust grants beneficial interests to the beneficiaries that, in the aggregate, are substantially similar to the interests the beneficiaries had before the division of the trust or consolidation of the trust; and
(iii) If the trustee is satisfied that a division of a trust or consolidation of trusts will not defeat or materially impair:
1. The accomplishment of trust purposes; or
2. The interests of the beneficiaries.