Delegate Carden seeks transfer/recordation tax exemption for common-law trusts in House Bill 82
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Summary
Sponsor Delegate John Carden told the Ways and Means Committee HB82 would extend existing transfer and recordation tax exemptions to common-law trusts transferring real property to wholly owned LLC subsidiaries; technical witnesses were absent and Carden promised to provide follow-up details.
Delegate John Carden, sponsor of House Bill 82, told the Ways and Means Committee on Feb. 3 that the bill would exempt transfers and recordation of Maryland real estate when trustees of common-law trusts move property into wholly owned limited liability company subsidiaries. "This is a recordation and transfer tax exemption for common law trusts," Carden said during the sponsor-only hearing.
The bill aims to align treatment of common-law trusts with existing exemptions that apply when individuals transfer property to an LLC they wholly own or when business entities move property into wholly owned subsidiary LLCs. Carden said current law produces disparate results for trustees of common-law trusts, who "are unable to transfer real property via deed from the trust to an LLC that is wholly owned by the trust without incurring a transfer recordation tax." He told members he would provide technical witnesses from the Maryland State Bar Association if the committee requests them.
Carden acknowledged the fiscal note projects a revenue reduction from the proposed exemption but argued the change may have little near-term budget impact. "According to the fiscal note, yes, there will be a deduction, a reduction in revenue," Carden said, and added his belief that because the exemption is not widely used today there is limited current revenue loss and that clarifying the rule could attract more trust activity to Maryland.
During questioning, Delegate Polakovich Kaur asked for a basic definition and scope: "What is a common law trust?" Carden replied that common-law trusts are formed by agreement between owners and trustees, with trustees holding legal title, and he indicated he would provide a more technical description and confirm whether the bill applies only to real property.
The hearing closed without votes; Carden said he will submit additional technical information and witness testimony to the committee as requested. The committee took no formal action during the session.
