Maryland Estate Tax Guide 2023-2024

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Navigating the world of estate taxes can be a complex endeavor, especially with the nuanced laws specific to Maryland. As we move into the 2023-2024 tax seasons, it’s crucial for residents and estate planners to stay informed about the latest estate tax regulations.

This guide aims to clarify what estate taxes are, explore how trusts can positively affect estate taxes, and help you ensure your estate plan is up to date for tax purposes and beyond.

If you live in Maryland and are preparing an estate plan or have a loved one who has recently passed and you have questions about what to do next when it comes to their estate, call our office at (301) 456-0982 or contact us here for a FREE consultation with our expert Maryland estate planning attorney. We will go over your unique situation and make sure you have the proper support for whatever stage in the estate planning process you’re currently in.

What Are Estate Taxes?

Estate taxes, sometimes referred to as "death taxes," are taxes levied on an individual's estate after they pass away.

In Maryland, estate taxes are calculated based on the total value of the deceased person’s estate. It's important to note that not all estates are subject to estate tax, only those exceeding a certain threshold, which is periodically adjusted for inflation and legislative changes.

Estate Taxes in Maryland for 2023-2024

For the tax years 2023-2024, Maryland has its specific exemption amounts and rates for estate taxes, which differ from federal estate tax laws. It’s essential for estate holders and heirs to understand these specifics to assess their potential tax liabilities accurately.

Maryland Estate Tax Limit

As of 2024, Maryland’s estate tax exemption is $5 million for an individual and $10 million for a couple. This is not scheduled to be changed unless by the General Assembly.

For estates above $5 million that are subject to estate tax, there is a maximum tax rate of 16 percent.

For a more detailed breakdown of Maryland estate tax, visit the Maryland Register of Wills office or contact a Maryland estate planning attorney or tax professional who can guide you through these regulations in detail and help you optimize your estate plan based on these limits.

Federal Estate Tax Limit

The Federal Estate Tax limit that is applied to the estate is based on the year of death of the original estate holder.

The Federal Estate Tax limit for 2023 was increased to $12.92 million for an individual and $25.84 million for a couple.

The Federal Estate Tax limit for 2024 is $13.61 million.

Note that according to the IRS:

“Beginning January 1, 2011, estates of decedents survived by a spouse may elect to pass any of the decedent's unused exemption to the surviving spouse. This election is made on a timely filed estate tax return for the decedent with a surviving spouse. Note that simplified valuation provisions apply for those estates without a filing requirement absent the portability election.”

How Trusts Affect Estate Taxes

Trusts can be a powerful tool in estate planning, particularly when it comes to managing estate taxes.

Different types of trusts, such as revocable and irrevocable trusts, offer varying levels of tax benefits:

·         Revocable Trusts: Often used for their flexibility, revocable trusts don’t typically offer direct estate tax benefits as the assets in these trusts are still considered part of your taxable estate.

·         Irrevocable Trusts: These are more complex but can provide significant estate tax advantages. Since assets in an irrevocable trust are no longer owned by the trust maker, they're often not included in the taxable estate.

Tax implications are only one facet of building out a trust. It’s essential to work with an estate planning attorney who can look at the full landscape of your assets and end-of-life plan and advise you on the best combination of documents to set your heirs up for success.

Working with an Attorney for Estate Tax Planning

Ensuring your estate plan, including any trusts, is up to date is crucial for effective tax planning. An experienced estate planning attorney can help in several ways:

1.      Evaluating Your Estate Plan:

They can assess your current plan and suggest adjustments to optimize tax benefits.

2.      Trust Formation and Maintenance:

Attorneys can assist in creating and maintaining trusts that comply with Maryland’s estate tax laws.

3.      Referring to Trusted Tax Advisors:

Once your trust is prepared, your attorney can refer you to a trusted tax advisor who can assist you with filing your estate taxes. Your attorney can also be a resource for both you and your tax advisor should any questions or issues arise before, during, or after the tax filing process.

If you’re ready to get the process started with an expert estate planning attorney, you can contact us for a FREE consultation today. Our expert estate planning attorney has over 25 years of experience in the Maryland/DC area and can help you skillfully navigate every aspect of creating a future-proof estate plan that can be executed with ease.

Preparing for Estate Tax Filing in Maryland

As you prepare for estate tax filings, gathering all necessary documents and ensuring your estate plan reflects any recent changes in your assets or family structure is essential.

If your family experienced any of the following events, it may be time to revisit your estate plan prior to filing taxes:

·        Marriage

·        Divorce

·        Birth of a Child

·        Change in Health Status

·        Retirement

·        Home/Real Estate Purchase

·        Vehicle Purchase

·        Other Large Asset Acquisition or Loss

Working closely with an estate planning attorney can simplify this process and provide peace of mind. Estate planning attorneys can quickly spot key issues or changes within your life that may be relevant to keeping your estate plan comprehensive and future-proof.

When to File Maryland Estate Taxes

According to the Comptroller of Maryland’s office:

“The Maryland estate tax return must be filed within nine (9) months of the decedent's date of death unless an extension has been granted by the Comptroller's Office. Please note that Maryland estate tax payments are due to the Comptroller of Maryland on or before the nine (9) month due date of the estate tax return, regardless of whether an extension has been granted.”

For specific guidance on how and when to file your Maryland estate tax return, make sure to contact your attorney or tax professional.

Conclusion

Understanding and planning for estate taxes in Maryland is a critical component of effective estate management. As laws and regulations evolve, staying informed and seeking professional guidance is more important than ever.

For tailored advice and assistance in navigating Maryland’s estate tax landscape for the 2023-2024 period, consider scheduling a FREE estate planning consultation with our Maryland law office so we can help you prepare for filing with confidence. Call us at (301) 456-0982 or contact us here to schedule your FREE consultation.

Our office is dedicated to making sure each of our clients gets a hands-on, personalized approach to creating and maintaining their estate plan. We offer accessible services designed to fit every unique situation and budget because we believe everyone deserves to leave behind a secure legacy for the ones they love. We’re not just in the law business, we’re in the family business.