GO TO PASTERNAKFIDIS.COM
DC Metro Trust Code
  • About this website
  • FAQ
  • Trust code legislative history
  • About Pasternak & Fidis

Comparison of Uniform Trust Code, DC Trust Code, Maryland Trust Act, and Virginia Trust Code, with Annotations

  • Preamble
  • Article 1
  • Article 2
  • Article 3
  • Article 4
  • Article 5
  • Article 6
  • Article 7
  • Article 8
  • UPIA-UTC Article 9
  • Article 10
  • Article 11
Limit the display as desired by selecting the HIDE/SHOW buttons above each column. Access annotations by clicking
A

Subtitle 5 of the MTA differs substantially from UTC Article 5. Much of the common law of Maryland regarding creditors’ rights is well established and follows closely the statement of the law as found in the Restatement (Second) of Trusts.

Article 5 of the UTC is primarily modeled on the precepts of the Restatement (Third) of the Law of Trusts and does not recognize the distinctions recognized by Maryland common law limiting the rights of creditors to reach discretionary trusts, support trusts, and spendthrift trusts. In particular, First National Bank v. Department of Health and Mental Hygiene, 284 Md. 720, 399 A.2d 891 (1979), provides guidance on the creation and administration of discretionary and support trusts.

Under Maryland common law, it is well-settled that limited powers of appointment are not property and therefore are not subject to remedies for the benefit of the limited powerholder’s creditors. See, United State v. Baldwin, 283 Md. 586, 391 A.2d 844 (1978) and Mercantile Trust Co. v. Bergdorf & Goodman Co., 167 Md. 158, 173 A.2d 21 (1934). In order to explain and support the provisions of Subtitle 5 of the MTA, a number of definitions are included in MD §14.5-103 which are omitted from the UTC. Those definitions are “discretionary distribution provision,” “support provision,” “mandatory distribution provision,” “power of appointment,” “general power of appointment,” “power of withdrawal,” and “spendthrift provision.”

MD §14.5-501 clarifies that traditional creditor remedies are unavailable with respect to beneficiary interests and trust property that are subject to discretionary distribution, support, or spendthrift provisions. Such remedies are also unavailable with respect to trust property that is the subject of a third party power of appointment, where the power holder acts as a surrogate for the settlor. Absent a valid discretionary distribution, support, or spendthrift provision, a creditor can ordinarily reach the interest of a beneficiary in a trust in the same manner as any other property of the beneficiary.

Hide/Show UTC · Hide/Show DC · Hide/Show MD · Hide/Show VA

UTC

§ 501. Rights of beneficiary’s creditor or assignee.

To the extent a beneficiary’s interest is not subject to a spendthrift provision, the court may authorize a creditor or assignee of the beneficiary to reach the beneficiary’s interest by attachment of present or future distributions to or for the benefit of the beneficiary or other means. The court may limit the award to such relief as is appropriate under the circumstances.

DC

§ 19-1305.01. Rights of beneficiary's creditor or assignee.

To the extent a beneficiary's interest is not protected by a spendthrift provision, the court may authorize a creditor or assignee of the beneficiary to reach the beneficiary's interest by attachment of present or future distributions to or for the benefit of the beneficiary or other means. The court may limit the award to such relief as is appropriate under the circumstances. Whether or not a trust contains a spendthrift provision, the creditor of a beneficiary cannot exercise or compel the exercise of the beneficiary's right to commerce, approve, or disapprove a proposed trust termination or modification under sections 19-1304.11 through 19-1304.16, or trust combination or division under section 19-1304.17.

MD

§ 14.5-501. Creditor's claims.

A

(a) A court may authorize a creditor or an assignee of a beneficiary to reach the interest of the beneficiary by attachment of present or future distributions to or for the benefit of the beneficiary or by other means if that interest is not subject to a discretionary distribution provision, a support provision, or a spendthrift provision.
(b) The court may limit the amount, timing, or other terms and conditions of an award under this section to relief as is appropriate under the circumstances considering, among other factors:
(1) The support needs of the beneficiary, the spouse of the beneficiary, the former spouse of the beneficiary, and the dependent children of the beneficiary;
(2) With respect to a beneficiary that is the recipient of public benefits, the supplemental needs of the beneficiary if the trust was not intended to provide for the basic support of the beneficiary; and
(3) The amount of the claim of the creditor or assignee and the likely proceeds that a sale would produce as compared to the potential value of the interest to the beneficiary.

VA

§ 64.2-742. Rights of beneficiary's creditor or assignee

To the extent a beneficiary's interest is not subject to a spendthrift provision, the court may authorize a creditor or assignee of the beneficiary to reach the beneficiary's interest by attachment of present or future distributions to or for the benefit of the beneficiary or other means. The court may limit the award to such relief as is appropriate under the circumstances.

← Previous Article Next Article →

The materials available on this site are for informational purposes only and not for the purpose of providing legal advice. While we make every effort to present accurate and reliable information on this site, we cannot guarantee its accuracy or completeness.

Current Through: 7/25/2019

Copyright © 2022 Pasternak & Fidis, P.C. All rights reserved. DCMetroTrustCode.com

7101 Wisconsin Avenue, Suite 1025

Bethesda, MD 20814

phone 301.656.8850 · fax 301.656.3053