Maryland Estate Tax Planning
Maryland Estate Tax Planning
Smart Strategies to Preserve More of What You’ve Built
If your estate exceeds $5 million, your heirs could face significant estate tax liability—even if your assets are primarily in real estate, retirement accounts, or a family business. Maryland is one of the few states that imposes its own estate tax, separate from the federal system.
At Eleff Law, we help individuals and families across Montgomery and Frederick Counties understand how estate tax works in Maryland—and implement proactive strategies to reduce or eliminate the burden.
Maryland’s Estate Tax Basics
Maryland Estate Tax Exemption (2025):
- Approx. $5 million per person
- No portability between spouses (unlike federal law)
- Tax rates range from 0.8% to 16% on the taxable estate
- Applies to all Maryland residents and those who own real estate in the state
Even if you don’t consider yourself “ultra-wealthy,” you may reach the threshold quickly when factoring in:
- Real estate value (especially in Bethesda or Potomac)
- Retirement accounts and life insurance
- Business interests
- Investment portfolios
Without planning, the estate tax could cost your heirs hundreds of thousands of dollars—or more.
Federal vs. Maryland Estate Tax
| Feature | Maryland | Federal |
|---|---|---|
| 2025 Exemption | $5M | $13.61M (set to drop after 2025) |
| Portability | No | Yes |
| Gift Tax Tie-In | No | Yes (unified with estate tax) |
| Tax Rate | Up to 16% | Up to 40% |
In Maryland, lifetime gifts do not reduce your estate tax exemption, making strategic gifting a powerful planning tool.
Who Needs Estate Tax Planning?
We recommend a formal estate tax plan if:
Your total estate is valued at $3.5 million or more (you’re approaching the threshold)
You own real estate in Montgomery, Frederick, or Howard County
You are widowed or divorced, and lack portability protections
You hold significant IRAs, 401(k)s, or business equity
You want to preserve assets for children or grandchildren without a tax drain
Proactive planning now can prevent rushed decisions, forced sales, or unnecessary court involvement later.
Common Estate Tax Planning Strategies
Credit Shelter Trusts (Bypass Trusts)
Allow married couples to shelter the first spouse’s $5M exemption from being wasted—essential in Maryland since portability doesn’t apply.
Gifting Strategies
Make use of the federal annual gift tax exclusion ($18,000 per person in 2024) and lifetime gift tax exemption while it’s still high.
Irrevocable Life Insurance Trusts (ILITs)
Keep large life insurance payouts out of your taxable estate, protecting liquidity for your heirs.
Charitable Remainder Trusts (CRTs)
Allow you to reduce estate tax exposure while supporting causes you care about and receiving income during your lifetime.
Family Limited Partnerships (FLPs)
Transfer business or real estate interests to the next generation at a discount while maintaining control and reducing estate size.
Generation-Skipping Trusts
Help transfer wealth to grandchildren or future generations while avoiding repeated taxation at each generational level.
Every client’s situation is different. We’ll help you implement the strategies that make the most sense for your family, asset mix, and long-term goals.
Coordinate Across State Lines
If you:
- Own property outside Maryland
- Are moving into or out of the state
- Have out-of-state heirs or executors
…your plan must account for multi-jurisdictional rules. We guide clients in structuring plans that hold up across state lines and avoid unnecessary probate or taxation in multiple places.
Preserve Wealth. Minimize Tax. Maximize Control.
You’ve worked hard to build your legacy. We’ll help ensure more of it goes where you want—not to the state.
Bethesda • Silver Spring • Frederick
Contact Attorney Susan Eleff to build a customized estate tax plan tailored to Maryland law.