The state of Maryland imposes a tax on estates worth more than $5 million. Furthermore, there is an inheritance tax of 10% that may apply to property worth more than $1,000. However, the state exempts many heirs from the obligation to pay this additional fee.
Important information about Maryland’s estate tax
Estate tax rates range from 0.8% to 16% depending on the value of most property a person kept in his or her name at the time of that individual’s passing. According to state law, a gross estate can be made up of both tangible and intangible items that the decedent had a valid interest in.
What you should know about inheritance taxes
An inheritance tax may be applied to any asset that is transferred to an heir through a will or trust. Furthermore, this tax may be owed on assets obtained through state intestacy laws. State law exempts a decedent’s grandparents, parents and children from paying taxes on any items obtained from this individual.
There may be ways to reduce the value of your estate
It may be possible to reduce the taxable value of your estate by placing assets inside of a trust. Generally speaking, the trust is considered to be the owner of any item titled in its name. Alternatively, making gifts during your lifetime can be an effective estate planning strategy if you aren’t interested in writing the government a check from the grave.
Understanding estate tax laws can help ensure that the government doesn’t get to take assets that were earmarked for friends, family members or charitable organizations. Ideally, you’ll review your estate plan on a regular basis to determine if it still meets your goal of minimizing your estate tax bill.