Effective October 1, 2018, Maryland enacted a one-year statute of limitations period for breach of trust actions where (1) the beneficiary (or beneficiary’s representative) has been sent a report which adequately discloses a potential breach of trust claim or the underlying facts giving rise to a claim and (2) informs the beneficiary of the time allowed for bringing a judicial action. Md. Code Ann., Est. & Trusts § 14.5-904 (2018). A report “adequately discloses” a potential claim if it provides sufficient information that the beneficiary either knows of or should have inquired into the existence of the potential claim. Id. While “report” is not specifically defined in Section 14.5-904, other sections in Title 14.5 do provide guidance as to what this report should contain. Relevantly, Section 14.5-813 provides that, “On request by a qualified beneficiary, a trustee shall send to the qualified beneficiary . . . a report of the trust property, liabilities, receipts, and disbursements, including the source and amount of the compensation of the trustee, a listing of the trust assets, and, if feasible, the respective market values of the trust assets.” This is somewhat common practice for institutional trustees that regularly send account statements to beneficiaries in the normal course of business.
If a report does not meet these disclosure requirements, however, then the three-year statute of limitations for breach of fiduciary duty still applies. Furthermore, the one-year limitations period is not available if the trustee acted in bad faith or with reckless indifference to the purposes of the trust or the beneficiaries’ interests. Md. Code Ann., Est. & Trusts § 14.5-904 (2018).