While we know the act of giving is a very personal thing, gifting part of your estate to lower your estate taxes may be a good idea. In Maryland gifting is a very powerful estate planning tool and the results can be rewarding.
Unlike the Federal Estate tax, when you transfer assets out of your Maryland estate, the asset is not brought back into your estate for Maryland estate tax purposes. For example, if you have an estate of $1,500,000 and you gift $500,000 your Maryland estate is now $1,000,000. Because the exclusion in Maryland is $1,000,000 your family will not owe any Maryland estate tax on your death. If the sum had not been gifted and the estate at death was $1,500,000 your family will have to pay Maryland estate taxes on the $500,000 at the rate of 16% which results in much less going to your loved ones.
Knowing which assets to gift is the key to saving taxes. That is why it is important to meet with an attorney or tax advisor that is knowledgeable about the tax implications and benefits of gifting.
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