On March 20th the Maryland Senate passed the measure, already passed by the House, to gradually raise the amount exempt from Maryland’s estate tax to match the federal estate tax exemption. Governor Martin O’Malley’s signature is expected soon.
The Maryland measure gradually increases the amount exempt from the state estate tax from $1 million this year, to $1.5 million in 2015, $2 million in 2016, $3 million in 2017, and $4 million in 2018. In 2019 it will match the federal exemption which is projected to be $5.9 million, up from $5.34 million today (it’s indexed for inflation).
The Maryland estate tax change provides a measure of relief. However, even if no estate tax is due, consideration must be given to whom you leave your assets at death because a separate inheritance tax may be assessed. Spouses, children (and their spouses and children), parents, and siblings are all exempt from the state inheritance tax, but a niece, an aunt or a friend, for example, would owe the inheritance tax at a rate of 10%.
While taxes are only a small portion of the many layers that a comprehensive estate plan manages, we know the ever changing law may affect the estate planning choices you now have in place. It is important to review you estate plan frequently with your estate planning attorney to ensure your ultimate estate planning goals are in place.
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