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An update on an important change to Maryland's estate tax law.






estate tax update

...In this issue, an update on a big change in Maryland's estate tax.

...And scroll to the bottom of the page for a bit of estate planning humor (funniness not guaranteed).

 
Maryland Reduces Its Estate Tax

The State of Maryland imposes a tax on property that passes at or after the death of an individual through an estate tax and an inheritance tax.

The estate tax does not apply to estates that are valued at less than $1 million and it does not apply to portions of estates that are given to a spouse.  Maryland law also has special provisions limiting the impact of these taxes on agricultural land.  The estate tax rate is 16% and the inheritance tax rate is 10%.

Estate tax revenues for Maryland are expected to exceed $150 million this year, with another $50 million generated by the inheritance tax.  Those revenues, though, will be lost because of a bill signed yesterday by the Governor.

Beginning in 2015, HB 739 will increase the amount of wealth that can transfer at death free of estate taxation.
Marylanders who die in 2015 will only be taxed on any assets in excess of $1.5 million.  In 2016, $2.0 million will be exempted.  In 2017, the exemption amount increases to $3.0 million, and in 2018 it increases to $4.0 million.  In 2019, the Maryland State exemption amount will be equal to the amount excluded under the federal estate tax law.

At the federal level, the estate tax is levied only on assets in excess of $5 million.  This number is indexed for inflation, and is now $5.34 million.

According to the Maryland Legislature's nonpartisan Department of Legislative Services, this increase in the estate tax exemption amount will cause the loss of about $200 million in tax revenues through 2019 and is expected to result in the loss of tax revenues of more than $150 million per year every year thereafter.

Why did the Legislature do this, and is it good policy?  Keep reading to hear my thoughts on that.


click here to continue reading →

a little humor is never amiss


A couple meets with their estate planning attorney.  That night, the husband is lying wide awake next to his sleeping wife.  He nudges his wife awake and says, "Honey, if I die and you remarry, would you let your new husband wear my Rolex?"  Wife replies, "No, dear, of course not. Please go to sleep."  But her husband still can't sleep.
He elbows his wife awake again, asking, "Honey, if I die and you remarry, would you let your new husband drive my Mercedes?"  Wife replies, "Oh for Pete's sake, of course not. Just go to sleep and stop worrying so much."  Finally, husband, still not sleeping, shakes his wife awake a third time and asks, "Honey, if I die and you remarry, would you let your new husband use my golf clubs?"  To which wife replies, "Oh please. Don't be silly.  He's left-handed."
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