About The WalshLaw BlogThe WalshLaw Blog is run by the professionals at Walsh & Company, P.A., a boutique law firm in Columbia, Maryland that specializes in estate planning, taxation, business planning, and elder law. At Walsh and Company, you will find a legal team that has close, caring relationships with clients. Contact us by calling 410-312-5690 to schedule a consultation with a qualified and experienced lawyer.
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As Maryland residents, there are probably several associations that immediately come to mind when thinking about our home — great seafood, Old Bay, sports teams named after birds. But “worst place to die” is probably not something we want associated with the Old Line State.
Unfortunately, because of a combination of a low estate tax exemption amount and its state inheritance tax, Forbes.com cited Maryland as one of the states in which not to die in 2014. Maryland currently has an estate tax rate of 16 percent for any estate valued over $1 million, an exemption amount far below the federal level for 2014 of $$5,340,000, indexed to inflation.
An Annapolis-area financial planner recently told the Capital Gazette that, while none of his clients have left Maryland solely because of the estate tax, it’s “the cherry on top of a heaping scoop of taxes.” Estate planning attorney Julie Garber made a similar argument in a blog post several years ago, saying that many of her clients had switched their domicile out of Maryland to avoid the estate tax.
Luckily for Maryland residents who might be reluctant to move to Florida, change is on the horizon for the state’s estate tax. Both the state House and Senate have passed a bill that would gradually raise the state’s estate tax threshold up to the federal level, and Gov. Martin O’Malley is expected to sign it.
While the reform does not go as far as it could — Delegate Susan Krebs (Republican) had proposed a bill that would repeal both the inheritance and estate tax in the state, but it didn’t get past a first reading in the house — it will alleviate some of the estate tax burden.
Under the approved changes, the state exclusion amount for the estate tax will be:
- $1.5 million for a decedent dying in calendar 2015
- $2.0 million for a decedent dying in calendar 2016
- $3.0 million for a decedent dying in calendar 2017
- $4.0 million for a decedent dying in calendar 2018
- the federal tax exclusion level, indexed to inflation, for a decedent dying after Jan. 1, 2019