Recently, we wrote on this blog about how the Maryland legislature is considering changes to the estate tax system that could benefit family farms. However, other bills currently pending legislative action could also help ease estate administration for everyone by reducing the tax burden in certain areas. The measures are aimed toward making Maryland more competitive with other states and keeping residents from locating outside the state.
The first measure, introduced by Sen. E. J. Pipkin, would completely repeal the inheritance tax. Maryland's inheritance tax is currently the seventh highest nationwide, making it somewhat more difficult for beneficiaries to inherit as the deceased intended. Adding to the problem is that the neighboring states of Virginia and West Virginia have neither an inheritance nor even a state estate tax.
A second measure, introduced by Sen. Ronald Young, benefits residents who are aged 70 and up. Under the proposed legislation, taxpayers in that age group would not have to pay taxes on their retirement income. That may well improve their standard of living, but it would also have a significant impact on estate planning. Namely, it would help to maximize the size of the estate, which would in turn aid one's heirs.
At the moment, these bills are simply proposals, and they may well face a substantial hill to climb. However, if they are passed, they would certainly make estate administration easier to handle by making it simpler to create an effective estate plan. Yet regardless of whether the laws are passed or not, it is certainly worthwhile to revisit one's estate plan every few years to make sure it is up to date with all the latest laws.
Source: Washington Examiner, "Measures try to prevent retirees from leaving Maryland," Ben Giles, March 14, 2012