Recently, I joined my colleague, Cheryl Chapman Henderson, Esq. to present “Trust Administration: Tough Income and Distributions Issues” in a National Business Institute webinar to attorneys and CPAs. The lesson taught is that Trust Administration is not the simple alternative to Probate where family members gather around the kitchen table and decide how the deceased assets should be divided according to the instructions left in the trust. The Maryland Trust Act creates rules for the Trustee to follow in the administration of a trust. The Trustee has duties to give notice, provide a copy of the trust, provide reports and give accountings.  

Here are the major differences between Trust Administration and Probate Administration: 

• Should the present beneficiary pass away, a person who could receive property under a trust have a right to receive reports on the trust. Most likely these “Qualified Beneficiaries” are the children when the spouse is beneficiary of the trust. In Probate Administration, the persons who would inherit without a will are given notice of the proceeding.  

• Disputes that cannot be resolved between the parties in Trust Administration end up in Circuit Court. The Orphans’ Court can resolve most disputes in Probate Administration at a lower cost than a proceeding in Circuit Court. 

• In Trust Administration, the Trustee needs to rely on an attorney experienced in trust administration to fulfill the duties and requirements of the office. A Personal Representative can rely on the Register of Wills to provide a guide through the process. 

• In Trust Administration, the attorney can provide tax advice throughout the process. In Probate Administration, the tax filings are often handled at the end of the proceeding. This can limit proactive planning that can reduce present and future taxes. 

The lesson to the average person is that Revocable Trusts should be used by persons who have more complicated estates. Trusts should be used when there could be conflicts or tax issues and an attorney should be involved in the estate. Trust administration fees for the attorney should be less than probate fees as there are fewer required filings. A properly funded trust avoids the court-imposed fees for probate administration. If you want more information, please take our quiz on “Do you need a trust?” to find out more about your situation.