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January 10, 2019The Importance of Reviewing Assets & Estate Planning Documents Post-Divorce
January 17, 2019Like its Federal Counterpart, the Maryland Estate Tax (MET) is not collected from every estate passing assets through probate.
This article will explore who pays the MET, when the MET is assessed, and how much can be due.
Only amounts over $5 million (up from $4 million in 2018) passing through probate in Maryland are subject to the state’s estate tax. This means any estate value at less than $5 million is not subject to the tax and the amounts above that threshold are assessed at a graduating rate. While the first $40,000 is essentially untaxed due to tax credits from the state, the below chart shows the remaining brackets and their rates.
NOTE: These tables are best viewed on tablet or larger screen.
| Taxable Estate | $40,000-90,000 | $90,000-140,000 | $140,000-240,00 | $240,000-440,00 | $440,000-640,000 | >$640,000-840,00 | $840,000-1.04 million |
|---|---|---|---|---|---|---|---|
| Marginal Rate | 0.8% | 1.6% | 2.4% | 3.2% | 4.0% | 4.8% | 5.6% |
| Taxable Estate | $1.04-1.54 million | $1.54-2.04 million | $2.04-2.54 million | $2.54-3.04 million | $3.04-3.54 million | $3.54-4.04 million | $4.04-5.04 million |
|---|---|---|---|---|---|---|---|
| Marginal Rate | 6.4% | 7.2% | 8.0% | 8.8% | 9.6% | 10.4% | 11.2% |
| Taxable Estate | $5.04-6.04 million | $6.04-7.04 million | $7.04-8.04 million | $8.04-9.04 million | $9.04-10.04 million | $10.04 million and up |
|---|---|---|---|---|---|---|
| Marginal Rate | 12.0% | 12.8% | 13.6% | 14.4% | 15.2% | 16.0% |
The majority of people exempt from Maryland’s inheritance tax are close family members, but the list includes other parties as well.
Besides spouses, children (includes biological, adopted, and stepchildren), grandchildren, grandparents, and siblings – spouses of children or grandchildren, the surviving spouse of a deceased child (so long as they have not remarried), a business if all owners (stockholders, partners, or members) are exempt, a Maryland 501(c)(3) nonprofit organization, and many out-of-state nonprofits are exempt from the MET.
There is also no tax imposed:
- on the transfer of the decedent’s primary residence if owned as a joint tenancy with their domestic partner,
- inheritance of assets valued at less than $1,000,
- or the proceeds of a life insurance policy so long as the beneficiary is a named person.
While the list of exemptions is quite extensive there are cases where gifts to these or any other person are subject to Maryland inheritance tax even if made while someone is alive.
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Mr. Abraham is an experienced attorney and founding member of the Law Office of Richard K. Abraham. The Sparks, MD office of the firm concentrates its practice in Estate Planning, Elder Law, Probate, Medical Assistance (Medicaid), Guardianship, Asset Preservation and Fiduciary Representation.
He is an active member in a number of professional organizations that focus on law, the senior community, and estate planning. He works with clients in Central Maryland, especially in Towson, Hunt Valley, Lutherville/Timonium, Parkville, White Marsh, Bel Air & Northern Baltimore City.
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