Question: What is the current state of the Maryland estate tax?
Answer: This past spring the Maryland General Assembly voted to decouple its state estate tax exemption from the very large new federal estate tax exemption created by the 2017 Tax Cuts and Jobs Act. The new law essentially reverses Maryland’s previous plan, which began years ago, to match the federal exemption. So while Maryland’s exemption is now $4,000,000 in 2018, it will be $5,000,000 beginning January 1, 2019 and thereafter. The exemption will not be indexed for inflation.
In addition, Maryland will allow spouses to ‘port’ or transfer to each other his or her exemption beginning next year as well. This means that if the first spouse to die does not use their entire Maryland state estate tax exemption, the administrator of their estate may permit the surviving spouse’s estate to later use the unused exemption.
Comment: Unlike the federal exemption, the Maryland exemption amount would not be applied to lifetime gifts because there is still no state gift tax. As such, there are still opportunities to make gifts to trusts for children, spousal limited access trusts, and other planning possibilities.
As always, if you have any questions or would like to learn more, please contact Steve Shane at firstname.lastname@example.org or .
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Steve Shane provides strategic counseling to clients in need of estate administration, charitable giving and business continuity planning while minimizing estate, gift, and generation-skipping transfer tax exposure. He offers legal guidance to clients on asset protection and the proper disposition of assets in accordance with the client’s objectives, while employing tax planning techniques such as the use of irrevocable trusts, life insurance planning, lifetime gifts and charitable trust. He is also experienced with drafting documents for business planning, the incorporation and application for exemption for Private Foundations and the administration of decedents’ estates.
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