Generally, transfers at death may be divided into probate and non-probate transfers. Probate refers to the process under which property would pass under a will, if any, and in the absence of a will, property that would pass under the intestacy laws of the state. Non-probate covers all the rest of the property that passes – generally under contractual arrangements. Typical non-probate dispositions include property passing under revocable trusts, IRAs, 401(k)s, jointly held bank accounts and jointly held real property. Most of Maryland’s Estates and Trusts Article governs probate transfers only. Maryland law defines “property” to include all property “which does not pass, at the time of the decedent’s death, to other person by the terms of the instrument under which it is held…” Md. Code Ann., Est. & Trusts § 1-101(r).
The probate/non-probate distinction must be remembered when reading the various sections of Maryland’s Estates and Trusts Article. Section 1-301, for example, seems to cover all property:
“All property of a decedent shall be subject to the estates of decedents law, and upon the person’s death shall pass directly to the personal representative, who shall hold the legal title for administration and distribution, without any distinction, preference, or priority as between real and personal property.”
This provision is more and less than it seems. On the one hand, § 1-301 articulates a change of law from that which existed in Maryland prior to January 1, 1970. Before 1970, title to a decedent’s real property passed directly to heirs or devisees upon death. The personal representative of the estate, without an express provision in the will to the contrary, had no interest in the real property. Goldman v. Walker, 260 Md. 222, 271 A.2d 639 (1970). Section 1-301 is a very important provision as it relates to the title of real property. Prior to 1970, if a formal estate was not opened, title was vested in the heirs. After 1970, if a formal proceeding was not opened, the real estate remained dormant in the hands of the yet-to-be appointed personal representative. After 1970, one needs to open an estate to perfect title in the beneficiaries of the estate. Any ambiguity in the title of property that was not subject to estate proceedings prior to 1970 flows from problems in identifying heirs, and not from the fact that an affirmative act was missing in the devolution of the property.
However, § 1-301 is less than it appears in that it boldly states that “all property of a decedent shall be subject to the estates of decedents law.” Non-probate property, however, is generally not governed by this Article. The general limitation of the statute to probate transfers results in a different substantive law for bequests or devises under a will and similar arrangements under revocable trusts. See, e.g., Clymer v. Mayo, 473 N.E.2d 1084 (Mass. 1985). In response to a concern that the protections that have developed over the years and are embodied in the Maryland Code should be extended to revocable trusts, the Maryland State Bar Association supported legislation in the 2001 and 2002 Sessions of the General Assembly that would incorporate various provisions of the Maryland Code to cover the testamentary aspects of “revocable trusts.” The General Assembly was not receptive to these suggestions and the law has not been changed.