One of the goals of estate planning is to minimize the impact of taxes while maximizing the size of the estate. This way, heirs and beneficiaries of the estate are not stuck with a tax bill that they cannot pay without liquidating much of what they are supposed to inherit. However, estate administration may become somewhat easier for some Maryland residents if legislators pass a bill that is currently before the House Ways and Means Committee.
The bill, proposed by Governor O’Malley, would affect family farms by increasing the estate tax exemptions for agricultural land. Currently, Maryland’s estate tax is set at 16 percent, which is in addition to any federal estate taxes. For many farmers who are “land rich and cash poor,” it imposes an undue level of stress on both them and their families when they pass away. Heirs are sometimes forced to sell the family farm merely to pay the estate taxes on it.
That strikes many as less than ideal. Under Martin O’Malley’s proposed legislation, the state estate tax exemption would increase to $5 million. However, the legislation also includes a provision stating that for the exemption to apply, the land in question must remain agricultural for at least 10 years after the owner’s death.
Although not all legislators agree on the specifics of the bill, they do seem to agree that such a bill is needed. That should come as good news to many Maryland farmers who wish to ensure that a farm that has been in the family for generations is able to continue staying within the family. Regardless of the outcome of the legislation, estate planning may well be beneficial in securing a relatively pain-free estate administration process.
Source: Southern Maryland Online, “Easing Estate Taxes on Farms Favored; Snack Tax Opposed,” Justin Snow, Feb. 15, 2012