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HB 50

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2025 Regular Session

The bill would shield certain irrevocable spousal lifetime access trusts from the grantor’s creditors, limiting claims on trust assets after the spouse’s death.

H COW:Failed 21-36-5-0-0
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Bill Summary · HB 50

Summary — HB 50: Estates and Trusts — Spousal Lifetime Access Trusts

Status: Withdrawn by sponsor (withdrawn 2025-02-17)
Introduced: First read Jan 8, 2025 (pre‑filed Oct 31, 2024)
Primary sponsor: Delegate Cardin (companion: SB 12)
Source statute amended: Estates & Trusts, §14.5‑1003 (Maryland Trust Act)
Proposed effective date (if enacted): October 1, 2025

Main purpose

To expand creditor‑protection rules under the Maryland Trust Act by treating certain irrevocable “spousal lifetime access trusts” (SLATs) as not being trusts of which the trust creator is the settlor for purposes of creditors’ claims. In short, the bill would make it harder for a creator’s creditors to reach assets preserved in a particular class of irrevocable trusts that provide benefits to the creator (indirectly) after the spouse’s death.

Key provisions

  • Adds a new category under §14.5‑1003 whereby an individual who creates a trust is not considered the settlor — and therefore the individual’s creditors cannot reach the trust or the individual’s interest in it — if all of the following are true:
    • The creator established (or caused to be established) an irrevocable trust for the benefit of the creator’s spouse during the spouse’s lifetime (or for the spouse and any other beneficiary during the spouse’s lifetime);
    • The trust is irrevocable and does NOT meet the existing qualified terminable interest property (QTIP) requirements in current law; and
    • After the spouse’s death, the original creator becomes a beneficiary of the trust by virtue of a power of appointment exercised by the spouse (or by another person who did not create the trust).
  • For trusts meeting these conditions, the bill would prevent a creditor of the trust creator from attaching, reaching, compelling distribution of, or exercising claims against:
    • any principal or income of the trust;
    • any principal or income of other trusts to the extent those assets are attributable to such a trust;
    • the creator’s interest in the trust; and
    • the creator’s interest in other trusts to the extent attributable to such a trust.
  • Defines “spouse” for the statute as the person to whom the trust creator was married when the trust was created.
  • Explicitly states the section does not alter State law regarding fraudulent transfers.

Who would be affected

  • Trust creators (grantors) and their spouses — especially those using SLAT‑type planning to preserve assets for family while seeking creditor protection.
  • Creditors of grantors, including private creditors, small businesses seeking to collect debts, and government entities (tax authorities, litigants) that otherwise might seek to attach trust assets.
  • Estate planners, trustees, beneficiaries, and the courts (litigation over reachability of trust assets).
  • Fiscal note warns limited potential impact on State and local revenue recovery where government claims cannot be collected from trust assets.

Fiscal and policy implications

  • Department of Legislative Services fiscal note: possible but likely limited decreases in State and local revenues if the bill prevents government recovery of claims (e.g., tax debts). Small businesses could be meaningfully affected to the extent their ability to collect from individuals is reduced.
  • No estimated change in State or local expenditures.

Procedural history / current status

  • Introduced (first read) Jan 8, 2025 and assigned to Judiciary; companion SB 12 filed.
  • Fiscal and policy note prepared (January 2025).
  • Withdrawn by the sponsor on 2025‑02‑17; not enacted.

Practical effect (if it had become law)

Grantors could place assets into certain irrevocable SLATs with greater confidence those trust assets — and the grantor’s post‑spouse‑death interest obtained by power of appointment — would be insulated from the grantor’s creditors, subject to fraudulent transfer and other applicable law. This change narrows creditor remedies and could alter estate planning and creditor‑collection practices in Maryland.

Compiled from official sources — confirm details with the bill’s official record.

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