If you have read our recent overview of estate and inheritance taxes, you know that every state has different laws and imposes different taxes. Maryland is unique: it’s the only state that imposes both an estate tax and an inheritance tax. This makes planning especially important for those who live or own property in Maryland.

Maryland’s Dual Taxes
Maryland’s estate tax applies to estates worth more than $5 million. Estates over that amount may be taxed up to 16%. This tax is paid by the estate before heirs receive assets.

Maryland’s inheritance tax is a 10% tax on assets that are left to certain types of beneficiaries. Close family members, including spouses, children, parents, siblings, and stepchildren, are exempt. The tax applies to more distant relatives and those who are not family members. It’s important to know that this applies to assets that go through probate and some assets that don’t go through probate. This tax is paid by the executor of the estate to the Register of Wills before assets are distributed.

How To Reduce Maryland Estate Taxes
To protect your legacy, reduce taxes, and eliminate unplanned expenses for your beneficiaries, consider:

• Leaving assets to exempt family members
• Making lifetime gifts—a gift made during your lifetime instead of after death—to beneficiaries who would not be exempt under Maryland law
• Setting up trusts to increase your options and for potential tax benefits

Maryland lawmakers have debated eliminating the inheritance tax and lowering the estate tax exemption, but no changes have been made.

What Should You Do?
If you have assets in Maryland, now is a good time to review your estate plan. Understanding Maryland’s estate and inheritance taxes and planning ahead can help protect your legacy and reduce surprises for your beneficiaries.

Questions or concerns? Contact us to review your estate plan and make sure that your legacy and your heirs are protected.

This post was created by Avatus Stone, COO & estate planning strategist at JM LAW, PLLC.