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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
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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. <BR
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 §14.5-506 makes clear a creditor’s right to reach the present or future mandatory distribution interest of a trust beneficiary if that interest is not subject to a support provision or a spendthrift provision.

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UTC

§ 506. Overdue distribution.

(a) In this section, “mandatory distribution” means a distribution of income or principal which the trustee is required to make to a beneficiary under the terms of the trust, including a distribution upon termination of the trust. The term does not include a distribution subject to the exercise of the trustee’s discretion even if (1) the discretion is expressed in the form of a standard of distribution, or (2) the terms of the trust authorizing a distribution couple language of discretion with language of direction.
(b) Whether or not a trust contains a spendthrift provision, a creditor or assignee of a beneficiary may reach a mandatory distribution of income or principal, including a distribution upon termination of the trust, if the trustee has not made the distribution to the beneficiary within a reasonable time after the designated distribution date.

DC

§ 19-1305.06. Overdue distribution.

[MISSING UTC(a)]
Whether or not a trust contains a spendthrift provision, a creditor or assignee of a beneficiary may reach a mandatory distribution of income or principal, including a distribution upon termination of the trust, if the trustee has not made the distribution to the beneficiary within a reasonable time after the designated distribution date.

MD

§ 14.5-506. Mandatory distribution provisions other than support provision -- Attachment.

A

[UTC(a) INCLUDED AS MTA 103(o)]
(a) To the extent that the interest of a beneficiary subject to a mandatory distribution provision, other than a support provision, does not contain a spendthrift provision, the court may authorize a creditor or an assignee of the beneficiary to attach present or future mandatory distributions to or for the benefit of the beneficiary, or to reach the beneficiary’s interest by other means, as provided in § 14.5–501 of this subtitle.

(b) A creditor or an assignee of a beneficiary may reach a mandatory distribution of a trust if the trustee has not made the distribution to the beneficiary within a reasonable time after the designated distribution date, whether or not the trust contains a spendthrift provision or a support provision.

VA

§ 64.2-748. Overdue distribution

A. In this section "mandatory distribution" means a distribution of income or principal that the trustee is required to make to a beneficiary under the terms of the trust, including a distribution upon termination of the trust. The term does not include a distribution subject to the exercise of the trustee's discretion even if (i) the discretion is expressed in the form of a standard of distribution or (ii) the terms of the trust authorizing a distribution use language of discretion with language of direction.
B. Whether or not a trust contains a spendthrift provision, a creditor or assignee of a beneficiary may reach a mandatory distribution of income or principal, including a distribution upon termination of the trust, if the trustee has not made the distribution to the beneficiary within a reasonable time after the designated distribution date.

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