Maryland has adopted the Uniform Trust Code, providing a modern framework for trust administration. But what truly sets Maryland apart is its tax environment: it is the only state in the country that imposes both a state estate tax and a state inheritance tax. This double layer of death taxes makes trust planning in Maryland more consequential than in most states. The Maryland Trust Act is found in the Maryland Trust Act provisions within the Estates and Trusts Article of the Maryland Code.
This guide applies to both revocable and irrevocable trusts in Maryland.
Where Maryland trust law lives
Maryland's trust statutes are found within the Estates and Trusts Article of the Maryland Code. The state adopted the UTC, providing the standard framework for trust creation, administration, modification, and termination. Related provisions cover the Uniform Principal and Income Act and estate and inheritance tax rules.
Accounting and notice requirements
Maryland follows the standard UTC notice framework. Trustees must notify qualified beneficiaries within 60 days of accepting trusteeship of an irrevocable trust. Annual accounting to qualified beneficiaries is required under the default rules. Beneficiaries may request annual financial reports.
While the trust is revocable and the trust creator is alive and competent, the trustee's duties run primarily to the trust creator.
Trustee duties
Maryland trustees must administer the trust in good faith, following the trust's terms and purposes, and in the interests of the beneficiaries. All standard UTC duties apply: loyalty, impartiality, prudent administration, and prudent investing.
Maryland recently updated its trustee compensation rules, effective October 2025. The updated legislation moved from fixed fees to a "reasonable compensation" standard, allowing more flexibility and fairness while maintaining proper oversight. Previously, guardians of property and trustees were required to charge fixed fees.
What makes Maryland different
Only state with both estate tax and inheritance tax. Maryland is the only state in the country that imposes both a state estate tax and a state inheritance tax. The estate tax applies to estates exceeding $5 million (not indexed for inflation) with rates up to 16%. The inheritance tax applies at a flat 10% rate on assets left to non-close relatives. Spouses, children, parents, grandparents, and siblings are exempt from the inheritance tax. This double layer of death taxes means trust planning in Maryland carries more weight than in states with one tax or neither.
$5 million estate tax exemption. Maryland's estate tax exemption is $5 million per individual, significantly lower than the federal exemption of $15 million for 2026. This means many Maryland families whose estates fall well below the federal threshold may still owe state estate tax. The Maryland estate tax is portable between spouses, so a married couple can potentially shelter up to $10 million.
Inheritance tax on non-close relatives. The 10% inheritance tax applies to assets left to nieces, nephews, friends, distant relatives, and most other non-immediate family members. There is no minimum threshold. Even a small bequest to a non-exempt beneficiary triggers the 10% tax. This makes beneficiary designations and trust distribution planning especially important in Maryland.
Neighboring state tax differences. Maryland sits between Virginia (no state estate tax, no inheritance tax) and the District of Columbia (estate tax with ~$5 million exemption, no inheritance tax). These differences create significant planning considerations for families in the DMV region who may have property, trusts, or beneficiaries in multiple jurisdictions.
Standard UTC modification tools. Maryland provides nonjudicial settlement agreements, court modification for changed circumstances, and modification by consent.
TrustHelm tip: Maryland's dual estate and inheritance tax system makes distribution planning especially important. TrustHelm's beneficiary tracking and financial records can help you understand who receives what, which beneficiaries are exempt from inheritance tax, and how the trust's total value relates to Maryland's $5 million estate tax threshold.
The most common Maryland trust mistakes
Not funding the trust. As in every state, the most common mistake is failing to transfer assets into the trust.
Overlooking the inheritance tax. Many Maryland families focus on the estate tax and forget about the inheritance tax. Any distribution to a non-exempt beneficiary (anyone other than a spouse, child, parent, grandparent, or sibling) faces a 10% tax.
Not planning around the $5 million threshold. Maryland's estate tax exemption is far lower than the federal threshold. Families whose estates are between $5 million and $15 million may owe Maryland estate tax while owing nothing at the federal level.
Not considering neighboring states. If you live in Maryland but have a trust created under Virginia or DC law, or vice versa, the different tax environments create planning opportunities and pitfalls. A family that moves from Virginia to Maryland suddenly faces state-level death taxes that did not exist before.
Not updating after the 2025 compensation change. Maryland's shift from fixed fees to reasonable compensation for trustees and guardians of property affects how trustee fees are set. Existing trust provisions addressing compensation should be reviewed in light of this change.
When to talk to an attorney
You should consult a Maryland trust attorney if you need help planning around the dual estate and inheritance taxes, if you have a trust with beneficiaries who are not close family members, if you are dealing with a trust that spans Maryland, Virginia, and DC, or if you need to update your trust after the 2025 compensation rule change.
If you need help finding a qualified estate planning attorney in your area, visit TrustHelm's Find an Attorney tool.
This guide is for educational purposes only and does not constitute legal advice. Consult a qualified attorney for decisions about your trust.