Estates and Trusts - Spousal Lifetime Access Trusts
HB 185 would amend Maryland’s Estates and Trusts law governing spousal lifetime access trusts (SLATs). The bill expands the circumstances in which a person who creates a trust for a spouse is not treated as the settlor with respect to that person’s retained interest in the trust. In addition to the current rule for certain trusts treated as qualified terminable interest property (QTIP) under federal tax law, the bill adds a new category for irrevocable trusts created for a spouse, or for a spouse and other beneficiaries, during the spouse’s lifetime, where the spouse’s interest ends and the creator becomes a beneficiary only through a power of appointment exercised by the spouse or another non-creator individual.
The bill also preserves and clarifies creditor protections tied to these trusts. Under the amended statute, a creditor of the trust creator generally may not reach the trust principal or income, the creator’s interest in the trust, or interests in related trusts to the extent attributable to a qualifying SLAT. The bill expressly states that it does not alter Maryland law on fraudulent transfers, leaving existing remedies intact where a transfer is made to hinder, delay, or defraud creditors.
If enacted, the bill would revise Section 14.5-1003 of the Estates and Trusts Article and broaden the state-law treatment of SLATs for estate-planning and asset-protection purposes. It would likely affect trust creators, spouses, beneficiaries, estate planners, and creditors by making more irrevocable spousal trusts eligible for the statute’s settlor-exclusion and creditor-shielding rules. The bill is set to take effect October 1, 2026.
The overall sentiment in the available record appears neutral to supportive in concept, but the bill did not advance to a final vote and was withdrawn by the sponsor in the House. Because there are no committee transcripts or recorded votes, there is no documented floor or committee debate to indicate broader support or opposition. The sponsor’s withdrawal suggests either a strategic pause, a need for further revision, or insufficient momentum for enactment in this session.
The main point of potential contention is the expansion of creditor protection for trusts benefiting a spouse, especially the new irrevocable trust category that can still shield assets while allowing the creator to benefit later through a power of appointment structure. Supporters would likely view this as a modernization of estate-planning rules, while critics could see it as increasing opportunities for asset shielding. The bill’s explicit preservation of fraudulent transfer law appears intended to address that concern.
The bill would amend Maryland Code, Estates and Trusts § 14.5-1003, expanding when a trust creator is not treated as the settlor for purposes of the creator’s retained interest in a spousal lifetime access trust. It would also extend the statute’s creditor-protection provisions to the newly added trust category and to related trusts funded with attributable property, while leaving fraudulent transfer law unchanged. The practical effect would be to broaden estate-planning and asset-protection options for spouses and trust creators, and to limit creditors’ ability to reach certain trust assets.
The available record shows no committee testimony or recorded votes, so there is no detailed public debate to measure. The bill was ultimately withdrawn by the sponsor in the House, which suggests the measure did not have enough momentum to proceed in this session. Overall, the sentiment appears neutral to cautiously favorable in policy terms, but procedurally unresolved.
The likely area of contention is the bill’s expansion of spousal trust protections, particularly the new provision allowing an irrevocable trust for a spouse, or a spouse and others, to qualify even when the creator may later benefit through a power of appointment structure. Critics may view this as strengthening asset protection and creditor avoidance, while supporters may see it as a technical clarification for modern estate planning. The bill’s express statement preserving fraudulent transfer law appears designed to limit that criticism and reassure opponents concerned about abuse.