Estates and Trusts - Spousal Lifetime Access Trusts

HB 185 modifies Maryland's Estates and Trusts law to clarify when a married person creating a trust for their spouse's benefit is not considered the "settlor" of that trust for tax purposes. Specifically, it applies when the trust meets federal tax requirements (treated as qualified terminable interest property under IRS rules), is created during the spouse's lifetime, and the creator becomes a beneficiary after the spouse's death. This change directly affects married individuals using certain trust structures to manage estate taxes and asset protection. The bill ensures that such trusts are treated consistently under Maryland law with federal tax rules, shielding the creator's interest from being considered their personal asset for tax calculation. It takes effect October 1, 2026.