What is the Maryland Estate Tax?
Maryland has an estate tax separate and apart from the federal estate tax. For many years, it was triggered if a Maryland decedent had more than $1 million of assets that it was leaving to anyone other than a spouse or a charity. Recently, Maryland came into a great deal of criticism about its tax because that tax, combined with the Maryland inheritance tax, made Maryland an expensive place at someone’s death. In fact, there was a fairly widely quoted editorial written in a national newspaper listing Maryland as one of the five worst places in the country to be “caught dead.” In response to that criticism, the General Assembly passed a Bill to phase out the standalone Maryland estate tax. In 2014 the threshold for exposure to the tax was $1 million, in 2015 that threshold now is $1,500,000.00 and in 2016 it will be $2 million and it keeps ratcheting up until it is equal to the federal estate tax threshold in the year 2019. The federal threshold is $5 million indexed for inflation so that number applying the index is, for example, $5,430,000.00 for decedents dying in 2015. Because of the spread (albeit a transitory spread) between the Maryland estate tax and the federal tax it may be a good idea to do some planning to minimize the exposure to the Maryland tax especially during the transitory years. That can be minimized by having a trust come into being at the first death for a married couple so as to preserve both of the thresholds.
Click here to see articles on the substantive law of estates & trusts in Maryland.