In addition to the federal estate tax, Maryland has its own estate tax. In Maryland, through the remainder of 2014, an estate with a gross value of more than $1 million may owe the Maryland estate tax. Compare this to the federal estate tax, which requires returns only for estates greater than $5.34 million for deaths in 2014.
On May 15, 2014, Maryland Governor Martin O'Malley signed H.B. 739, Maryland Estate Tax - Unified Credit, into law. This new law makes several significant changes that will go into effect beginning on January 1, 2015.
Under the new law, the exempt amount will increase each year until 2019, when it will match the exemption from the federal estate tax, which is indexed for inflation annually. Here are the scheduled exemption amounts:
2015: $1.5 million
2016: $2 million
2017: $3 million
2018: $4 million
2019: amount equal to federal estate tax exemption amount
The gross estate, for purposes of Maryland estate tax, will include an interest in:
For estate tax purposes, it doesn’t matter if these assets go through probate or not. Even if you name “payable-on-death” beneficiaries for your bank accounts, name beneficiaries to account, or hold your real estate in a revocable trust; those assets will be included in your gross estate.
Maryland also imposes an inheritance tax. The inheritance tax rate doesn’t depend on the size of the estate; rather, it is a function of how closely related you are to your heirs or legatees.
To find out more about the potential for your estate to be burdened with estate tax, and to discuss options to minimize or eliminate that burden, please contact us.