Pillsbury Winthrop Shaw Pittman

Update on Maryland estate tax

By Travis Harrison and Ellen K Harrison

Maryland governor Martin O’Malley has signed into law HB 739, which contains revisions to the Maryland estate tax law. Specifically, the new law gradually increases the Maryland estate tax exemption amount over the next five years until the Maryland estate tax exemption is equal to the federal exemption. Additionally, beginning in 2019, portability will apply to the Maryland estate tax exemption, so that any Maryland estate tax exemption not used at the death of a spouse may be used at the surviving spouse’s death. By increasing the estate tax exemption amount and eventually allowing portability, the new law increases the number of estates that will pass free of Maryland estate tax.

Before the new law, the determination of Maryland estate tax payable for a decedent’s estate was calculated allowing the estate the benefit of a $1m (£600,000) exemption. Under the old law, a taxable estate that exceeded $1m would have owed Maryland estate tax. Portability did not apply to the Maryland estate tax exemption under the old law. Each spouse was limited to his or her own exemption amount upon his or her death, and if it was not used in the first spouse’s estate it was lost.

Under the new law, the determination of Maryland estate tax payable for a decedent’s estate will be calculated allowing the estate the benefit of an exemption of the ‘applicable exclusion amount’ in effect at the time of the decedent’s death. The applicable exclusion amount is set to increase gradually over the next five years as follows…

Click on the link below to read the rest of the Pillsbury briefing.

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