Having a will is an important tool in creating a plan for your family’s future after you are gone. However, if you live in Maryland, there are some tax issues you should plan for in addition to creating a will.
Understanding the state’s taxes
Maryland is one of only six states in the country that has both an estate tax and an inheritance tax. The federal government imposes an estate tax on estates that are evaluated with a worth of $11.7 million or more for an individual. That amount is doubled for a couple. There is no federal inheritance tax.
Maryland assesses an estate tax if the estate is valued at $5 million or more. An inheritance tax of 10% is assessed no matter the value of the estate. For this reason, estate planning is so important in Maryland to protect as many of your assets as possible.
Making your estate plan
One of the most important aspects of creating an estate plan is actually understanding it yourself. For example, several types of beneficiaries are exempt from inheritance taxes in Maryland. Close family members, such as children and spouses, fit the description of a close family member. Therefore, it could be advisable to leave the bulk of an estate to a close family member.
It is also important to update your inheritance designations when your family changes. If you remarry or have another child, it may be necessary to update your beneficiaries to make sure your estate is passed to your intended heirs.
Your particular case will have unique needs, so an important part of estate planning is to thoroughly evaluate those needs and state law. Then, you can create a plan that will protect your family after you are gone.