Wills, Trusts & Estates

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Change to the Maryland Estate Tax Exemption

Digital Assets Panel

I recently participated in a panel discussion at the Maryland House of Delegates. The topic was Digital Assets and the group sponsoring the discussion is trying to get momentum for a bill in next year’s season. The Legislators who attended appreciated our topic, but private discussions before and after the session centered on the Maryland Estate Tax. House Bill 739 and Senate Bill 602 will increase the estate tax exemption incrementally over the next 5 years. More Legislators notice constituents who are voting with their feet to change state residency. Maryland Estate Tax and Income Tax are prime reasons to spur movement. The revenue lost to the state in reducing the estate tax is far less than reducing the income tax. The other problem with the estate tax is compliance in collecting the tax. Many families do not realize that the value of property passing outside of probate through beneficiary designations on bank accounts, retirement accounts, and life insurance accounts as well as transfer on death designation on brokerage accounts should be included in the estate tax computation. Large gifts even if given just prior to death avoid the estate tax. All these factors add up to a very good chance to get an increase in estate tax exemption through the Maryland Legislature this year. The bills as written will provide some relief to families who do not have an estate plan designed to minimize taxes. The benefits to those families that plan will be even greater and help keep wealthy families as Maryland residents. I will write more the opportunities a change in the estate tax exemption will present once the law changes in Maryland to reflect the will of the people.