When planning an estate, it is important to be up-to-date with the latest changes in applicable laws. One aspect of estate administration law, which does periodically change, is that of estate tax exemptions. This can be even trickier when a person’s state has its own estate tax laws on top of the federal taxes already in place. Maryland, which does have its own estate tax, has recently made changes to its rules regarding exemptions.
Maryland has raised the state’s exemption level for the first time since 2002. Before the recent change, the law had allowed estates worth $1 million or less to be exempt from taxation, while any assets over the $1 million threshold would be taxed. The new law increases the exemption over the next several years.
In 2015, the exemption level will be $1.5 million, while in 2016, the level will be $2 million. The exemption level will then continue to be increased to $3 million in 2017 and $4 million in 2018. With the increase in the tax exemption levels, fewer people will need the estate tax strategy portions in their estate plans, which means it will be a good opportunity to simplify their estate plans.
However, it is important when updating one’s estate plan to understand how the new estate administration laws apply to one’s specific case in Maryland. Also, actual changes to one’s estate plan will depend upon a person’s individual estate planning goals. This may differ significantly from person to person. There may be other aspects besides tax strategies that may also be important to a person.
Source: wealthmanagement.com, "Maryland Raises Estate Tax Exemption", Jane Sims and David Forrer, June 3, 2014