Creating a Trust in Maryland, D.C., and Virginia

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For families who live in one DMV jurisdiction (D.C., Maryland, Virginia) and own property in another, the hardest part of setting up a trust is not choosing between revocable and irrevocable. It is that Maryland, the District of Columbia, and Virginia have each adopted their own version of the Uniform Trust Code, and each made its own edits. The four or five things that must be true before a trust legally exists are not identical across the three.

This guide covers what each jurisdiction requires before a trust is created at all, the ways a trust can be brought into existence, how revocability is presumed and how that presumption is limited by date, what your own creditors can reach, and what funding actually takes. An estate planning attorney licensed in all three DMV jurisdictions can read your situation against each set of rules rather than against one, and can set up your trust to work wherever your property sits.

What Does It Take to Create a Valid Trust?

Each jurisdiction gives a short list of conditions, and a trust is created only if every condition is met. All three require capacity, an indicated intention to create the trust, a definite beneficiary or a recognized exception, and a trustee with duties to perform. Virginia states the first condition as capacity of the settlor, or creation by the settlor’s agent under a power of attorney that expressly authorizes the agent to create a trust. For a revocable trust, all three jurisdictions use the same capacity test as for a will.

The recognized exceptions are the same in outline across the three: a charitable trust, a trust for the care of an animal, and a trust for a noncharitable purpose. A beneficiary counts as definite if that person can be ascertained now or in the future, subject to any applicable rule against perpetuities.

Then the lists diverge.

The District of Columbia adds a fifth condition, that the same person is not the sole trustee and sole beneficiary. Virginia’s statute carries the identical fifth condition. Maryland’s list of conditions for creating a trust stops at four and contains no such requirement.

That difference is narrower than it looks. Maryland’s trust code says the common law of trusts still applies unless the code changes it. The traditional common law rule, called merger, holds that a trust does not exist when one person is both the only trustee and the only beneficiary. So a one-person arrangement should not be treated as safe in Maryland either. In all three jurisdictions, the usual fix is to name a real remainder beneficiary or a co-trustee, and to do it deliberately rather than discover the problem later.

How Can a Trust Be Brought Into Existence?

Maryland recognizes three routes. A settlor can transfer property to another person as trustee during life or at death, declare that the settlor holds identifiable property as trustee, or exercise a power of appointment in favor of a trustee. Maryland’s trust code lists no court route, but once a guardian of the property has been appointed, a Maryland circuit court has all the powers over that person’s property that the person would have, which can include placing the property in a trust.

The District recognizes those same three and adds a fourth. A court can create a trust for the benefit of an individual in lieu of transferring property to a conservatorship or guardianship.

Virginia opens the door widest. Beyond the familiar routes, Virginia allows creation by the settlor’s agent under a power of attorney that expressly authorizes the agent to create a trust, by a conservator acting under the relevant statute, and by a circuit court on petition from an interested party.

The planning point is about powers of attorney, not trusts. In Maryland, D.C., and Virginia alike, an agent can create a trust for you only if your power of attorney expressly gives the agent that authority. Maryland’s statutory limited power of attorney form, for example, lists it as an optional power you must initial. If incapacity is a realistic concern, that authority needs to be written into the power of attorney in advance. A power of attorney drafted without it closes off that route, which can leave a court proceeding as the only alternative.

Is a Trust Revocable Unless It Says Otherwise?

In all three jurisdictions the modern rule is the same: unless the terms of the trust expressly provide that it is irrevocable, the settlor may revoke or amend it. That reverses the older common law default, and it is the single most misunderstood point in this area.

The reversal is not retroactive, and the cutoff dates are different.

Maryland’s presumption does not apply to a trust created under an instrument executed before January 1, 2015. The District’s does not apply to an instrument executed before March 10, 2004. Virginia’s does not apply to an instrument executed before July 1, 2006.

So an older trust document that is silent on revocability is governed by whatever rule applied when it was signed, and that rule may be the opposite of the one people assume.If you are holding a trust instrument signed before 2015 in Maryland, before March 10, 2004, in D.C., or before July 1, 2006, in Virginia, and nobody has looked at it since, its revocability is a question worth answering before you rely on either answer.

How Do You Revoke or Amend a Trust Once It Exists?

Start with the document. All three jurisdictions let the settlor revoke or amend by substantially complying with a method the trust itself provides.

The fallback rules differ in a way that matters. Maryland and the District both use the fallback where the trust states no method or where the stated method is not expressly made exclusive. In those cases, both allow a later will or codicil that expressly refers to the trust or specifically leaves property that would otherwise pass under the trust. Both also accept any other method that shows the settlor’s intent by clear and convincing evidence.

Virginia’s fallback applies only where the trust provides no method at all. It then accepts any method that shows the settlor’s intent by clear and convincing evidence. So in Virginia, if the trust spells out a method, even one that is not exclusive, follow it.

Agents and guardians face limits everywhere, but the limits differ.

An agent under a power of attorney can revoke or amend the trust only with express permission. In Maryland, both the trust and the power of attorney must expressly allow it. In the District, the power of attorney must expressly grant that authority, and the trust or another document can prohibit it. In Virginia, the power of attorney must expressly allow it, and the trust can override that by expressly prohibiting it.

A court-appointed guardian or conservator faces a different test. In Maryland, a guardian needs approval from the court supervising the guardianship, and only if the trust does not say otherwise. In the District, a conservator or guardian needs approval from the supervising court. In Virginia, a conservator or guardian may act if the trust expressly allows it, or otherwise with court approval for good cause.

What Can Your Own Creditors Reach?

This is where the three diverge most sharply, and where the marketing copy people read online is least reliable.

Maryland and the District follow the standard rule.

While the settlor is alive, property in a revocable trust is subject to the settlor’s creditors. For an irrevocable trust, the settlor’s creditor can reach the maximum amount that can be distributed to or for the settlor’s benefit. Neither jurisdiction has a general law, like Virginia’s, that protects a trust a settlor sets up for the settlor’s own benefit.

Maryland does recognize narrower protections, including one for certain special needs trusts. And in all three jurisdictions, a married couple’s home or other property held as tenants by the entirety can keep its protection from one spouse’s creditors after it moves into the couple’s trust, if they stay married and both remain beneficiaries. Maryland also requires the trust or deed to say that its statute applies.

Virginia’s does. Virginia turns its general settlor-creditor rule off for a settlor’s qualified interest in a qualified self-settled spendthrift trust. To qualify, the trust must:

• Be irrevocable,
• Be created during the settlor’s lifetime,
• Have at least one beneficiary other than the settlor whenever distributions could be made to the settlor,
• Have at least one qualified trustee, meaning a Virginia resident or a company authorized to do trust business in Virginia that takes part in running the trust there,
• Expressly adopt Virginia law to govern the trust, and
• Contain a spendthrift provision that blocks both voluntary and involuntary transfers of the settlor’s interest.

The protection covers only distributions to the settlor that are left to the sole discretion of an independent qualified trustee. That trustee cannot be, or take direction from, the settlor, the settlor’s close family members, or the settlor’s employees.

Even then the protection is not immediate or absolute. A creditor may bring an action to avoid a transfer to such a trust, or to enforce a claim that existed on the transfer date, within five years after that transfer. Each later transfer to the same trust starts its own five-year clock. A transfer can also still be undone on other grounds, for example if it leaves the settlor unable to pay existing debts.

Why Does Funding Decide Whether Any of This Works?

A trust governs only the property transferred to it or made payable to it. Signing the trust document does not move anything into it. An unfunded trust can still receive property later, for example through a beneficiary designation or your will, but until then it controls nothing.

Funding Means Retitling

Real property moves by deed into the name of the trustee. Bank and brokerage accounts are retitled with the institution. Retirement accounts such as IRAs and 401(k)s are different. They generally cannot be moved into a trust during your lifetime without being treated as a withdrawal, so they pass by beneficiary designation instead, which can name the trust when that fits the plan. Business interests move according to the operating agreement or partnership agreement, which often requires consent that has to be obtained before the transfer, not after.

Funding is also not a one-time task. Property you acquire later in your own name stays outside the trust until it is retitled, and that is a common reason a family ends up in probate anyway. You still need a will behind the trust. A will that leaves your remaining property to the trust, often called a pour-over will, catches probate assets left outside it. It does not control accounts or property that pass by beneficiary designation, joint ownership with survivorship, or transfer on death.

What Else Do DMV Families Ask About Creating a Trust?

Can I be my own trustee?

Yes. Serving as the sole trustee of your own revocable trust is common in Maryland, D.C., and Virginia. What D.C. and Virginia bar by statute, and what the traditional common law rule bars in Maryland, is one person being both the only trustee and the only beneficiary. A typical revocable trust names children or other people to receive the property after your death. Those remainder beneficiaries satisfy the rule, so you can still serve as your own trustee.

Does a trust have to be recorded anywhere to be valid?

The creation statutes in all three jurisdictions condition validity on capacity, intent, a definite beneficiary or recognized exception, and trustee duties. None of them conditions creation on recording the instrument. A written, signed trust is standard practice in all three. For a trust involving real estate, Maryland and D.C. go further and treat an unwritten trust as void. Recording becomes relevant when you fund the trust with real property, because the deed transferring that property is recorded in the land records where the property sits.

If I move to another DMV jurisdiction, does my trust still work?

Generally, yes. For a living trust, all three jurisdictions treat the trust as valid if it was validly created under the law of the place where it was signed. They also accept the law of a few other places connected to the trust when it was created, such as where you lived, where a trustee lived or did business, or where trust property was located. If the trust names the law that governs it, that choice generally stays in place after a move. If it names no governing law, the law of the place most closely connected to the issue applies, and a move can change that answer. Either way, a move is a reason to have the document reviewed rather than a reason to assume it is fine or to assume it is broken.