Estates and Trusts - Compensation of Guardians of Property and Trustees
Summary
SB19 revises Maryland’s Estates and Trusts law governing how guardians of property and trustees are paid. For guardians, the bill clarifies the existing commission structure for income, corpus, sales of real or leasehold property, and final distribution, while preserving the rule that compensation may be adjusted by a court in unusual circumstances. It also retains the special cap for guardians of certain disabled recipients of long-term care services under the Maryland Medical Assistance Program, unless a court finds unusual circumstances.
For trustees, the bill replaces the prior commission-based framework with a general rule that a trustee is entitled to compensation that is reasonable under the circumstances when the trust instrument does not specify compensation. If the trust does specify compensation, the court may increase or reduce it if the trustee’s duties differ substantially from what was contemplated or if the stated compensation is unreasonably low or high. The bill also allows trustees to receive reasonable compensation for additional services connected to trust administration, and it sets out factors a court must consider in evaluating reasonableness.
The bill further preserves a special filing-and-notice process for certain institutional trustees and attorneys who want to charge compensation based on a filed schedule of rates. Those trustees must file the schedule with the appropriate regulator, notify qualified beneficiaries, and may be subject to court review if the rates are challenged. If the trustee fails to file or notify properly, the trustee is limited to the default reasonable-compensation rule. Individual trustees not authorized to use the schedule process may seek court approval to file a schedule after notice to beneficiaries.
SB19 also makes conforming changes to Maryland’s principal and income allocation rules so that trustee compensation and related expenses are allocated between income and principal in a simplified way. It revises provisions on income and principal disbursements, including environmental remediation costs, and updates cross-references to the new compensation rules. The act takes effect October 1, 2025.
The bill appears to have broad support and little visible opposition in the available record. It passed the Senate 44-0 and the House 128-0, and the committee report was favorable. The overall sentiment suggests the legislation was viewed as a technical modernization and clarification measure rather than a controversial policy change, though the shift from fixed statutory commission rates to a reasonableness standard for trustees could be a point of interest for fiduciaries, beneficiaries, and financial institutions.
Impact
SB19 amends multiple sections of the Maryland Estates and Trusts Article, including provisions on guardians of property, trustee compensation, and principal-and-income allocation. It changes the legal standard for trustee compensation from fixed statutory commissions in many cases to compensation that is reasonable under the circumstances, while preserving a separate schedule-of-rates mechanism for certain regulated trustees and attorneys. It also updates related allocation rules so trustee compensation and certain expenses are charged between income and principal in a manner consistent with the new compensation framework. Guardianship commission rules are clarified rather than fundamentally rewritten, and the bill retains existing court oversight and special limits for certain guardianships.
Sentiment
The available legislative history shows strong bipartisan or unanimous support, with no recorded dissent in either chamber’s third-reading votes. The favorable committee report and absence of committee transcript controversy suggest the bill was treated as a routine estates-and-trusts cleanup or modernization measure. Overall sentiment appears positive, with lawmakers likely viewing the bill as clarifying compensation rules and aligning trustee payment practices with current fiduciary administration needs.
Contention
No explicit controversy is documented in the provided materials, but the main substantive issue is the bill’s move away from rigid statutory trustee commission schedules toward a court-tested reasonableness standard. That change could matter to trustees, beneficiaries, and institutional fiduciaries because it gives courts more discretion to review compensation and may affect fee predictability. A secondary point of interest is the continued special treatment for certain institutional trustees and attorneys who may file schedules of rates, as well as the retained cap on compensation for guardians of certain Medicaid long-term care recipients, which could be relevant to advocates for vulnerable adults and estate administration practitioners.