How do Maryland’s Estate Tax Laws Impact Inheritance?

 Posted on November 25, 2024 in Estate Planning

Estate planning is an important part of preparing for the future, and for how your assets will be passed on to loved ones in particular. Maryland’s estate tax laws could affect how much money heirs receive and how trusts are structured. Speak with a qualified Chevy Chase, MD estate planning lawyer to learn more about how these laws might impact inheritance and trust planning.

What is Estate Tax?

An estate tax is a tax on the value of a person’s property after they pass away. This can include real estate, savings accounts, investments, and personal belongings. In Maryland, if a person’s estate is worth more than a certain amount, it is subject to an estate tax. The estate tax is paid before the heirs are given the inheritance.

Maryland’s New Estate Tax Laws

Maryland’s estate tax laws determine how much money people must pay when they inherit property, money, or other assets. More specifically, the laws set an estate tax exemption, meaning the value of the inheritance you can receive without needing to pay estate tax. The exemption amount is $5 million, so estates valued above that amount must pay estate tax on the portion that exceeds $5 million.

If your estate is worth more than the exemption amount, your heirs might need to pay estate tax before they can inherit it. For those inheriting larger estates, estate tax can be a significant burden.

Trust Planning in Maryland

Trusts are an important tool for estate planning, especially for people who have larger estates. A trust enables a trustee to manage property on behalf of the beneficiary. Trusts can help reduce estate tax by removing assets from the taxable portion of the estate, thus potentially lowering the value that will be taxed.

When assets are placed in certain types of trusts, such as an irrevocable trust, the owner of the state is no longer the legal owner of the assets, which can reduce the estate’s total value and tax liability. Setting up a trust can be even more important for people whose estate is close to or above the estate tax exemption limit.

Schedule a Free Consultation with a Silver Spring, MD Estate Planning Lawyer

If you are ready to think about what will happen to your estate after you pass away, you should consult with a knowledgeable Rockville, MD estate planning attorney. At The Eleff Law Group, we understand all the implications that can arise when leaving your assets behind for your loved ones. We are passionate about providing our clients with peace of mind by helping them make informed decisions. Call us at 301-857-1990 to schedule a free consultation.