Maryland’s New Estate Tax Exemption
In 2014, Maryland’s estate tax exemption had been $1 million, and increased to $1.5 million in 2015. Over the next four years, this exemption amount will increase as follows:
- $2 million for individuals who pass away in 2016
- $3 million for individuals who pass away in 2017
- $4 million for individuals who pass away in 2018
- $5.9 million or so, to match the federal estate tax exemption then in effect for individuals who pass away in 2019
What Is An Estate Tax Exemption?
An estate tax exemption is the amount of money or assets that are exempt from estate taxes. When you pass away, your estate is subject to estate taxes. However, this tax applies only to estates that exceed the tax exemption. For example, in 2015, the Maryland estate tax exemption is $1.5 million. If someone dies in 2015 with a net estate of $1.6 million, that estate will only be taxed on the $100,000 that exceeds this exemption.
Do I Need To Update My Estate Plan?
If you are a Maryland resident with a large estate – in excess of $1.5 million – this new law affects you. Your current estate plan may employ various tax-savings techniques that are no longer necessary, or may employ techniques that don’t fully maximize the new exemption levels.
Another upcoming change to Maryland law has to do with portability. Under federal law, married couples have the ability to use each other’s unused exemption. For example, if your spouse passes away in 2015 and only uses $1 million of his or her federal estate tax exemption, you can use the remaining $500,000 exemption if you, as the surviving spouse, file a specific federal election within 9 months of your spouse’s death. While the portability portion of the law won’t come into effect for Maryland estate taxes until 2019, it is important to think ahead when developing your estate plan and use estate planning tools that take advantage of portability, and in the interim, take advantage to estate planning tools that allow married couples to take advantage of the Maryland estate tax exemption available to each of them.
The bottom line is this: increases in the estate tax exemption are good for Maryland residents. Speak to an estate planning attorney to make sure your estate plan takes advantage of advances in the law.
Maryland’s New Estate Tax Exemption
In 2014, Maryland’s estate tax exemption had been $1 million, and increased to $1.5 million in 2015. Over the next four years, this exemption amount will increase as follows:
- $2 million for individuals who pass away in 2016
- $3 million for individuals who pass away in 2017
- $4 million for individuals who pass away in 2018
- $5.9 million or so, to match the federal estate tax exemption then in effect for individuals who pass away in 2019
What Is An Estate Tax Exemption?
An estate tax exemption is the amount of money or assets that are exempt from estate taxes. When you pass away, your estate is subject to estate taxes. However, this tax applies only to estates that exceed the tax exemption. For example, in 2015, the Maryland estate tax exemption is $1.5 million. If someone dies in 2015 with a net estate of $1.6 million, that estate will only be taxed on the $100,000 that exceeds this exemption.
Do I Need To Update My Estate Plan?
If you are a Maryland resident with a large estate – in excess of $1.5 million – this new law affects you. Your current estate plan may employ various tax-savings techniques that are no longer necessary, or may employ techniques that don’t fully maximize the new exemption levels.
Another upcoming change to Maryland law has to do with portability. Under federal law, married couples have the ability to use each other’s unused exemption. For example, if your spouse passes away in 2015 and only uses $1 million of his or her federal estate tax exemption, you can use the remaining $500,000 exemption if you, as the surviving spouse, file a specific federal election within 9 months of your spouse’s death. While the portability portion of the law won’t come into effect for Maryland estate taxes until 2019, it is important to think ahead when developing your estate plan and use estate planning tools that take advantage of portability, and in the interim, take advantage to estate planning tools that allow married couples to take advantage of the Maryland estate tax exemption available to each of them.
The bottom line is this: increases in the estate tax exemption are good for Maryland residents. Speak to an estate planning attorney to make sure your estate plan takes advantage of advances in the law.
