As you prepare your estate plan, you may be wondering whether your assets will be subject to estate taxes and inheritance taxes when passed on to your beneficiaries. Well, if you reside in the state of Maryland, both will be collected. For more information, continue reading to understand how an experienced Montgomery County financial planning attorney at JDKatz, P.C. can help you navigate these taxes as a beneficiary.
Do I have to prepare for the federal estate tax?
The reality is that your estate may be too small to be charged a federal estate tax. As of 2021, this tax only applies if your assets are worth $11.7 million or more. And as of 2022, this exemption increased to $12.06 million or more. On the other hand, there is no federal inheritance tax in place.
How do estate taxes work in the state of Maryland?
Importantly, estate tax applicability is assessed by the state in which you were living at the time of your death. So, in the state of Maryland, the tax exemption amount is $5 million or more. And in this case, the estate tax rates can be anywhere between 0.8 percent to 16 percent. If this estate tax applies to you, it is important that you understand that you must make this payment within nine months after the deceased person’s date of death.
How do inheritance taxes work in the state of Maryland?
While there is no federal inheritance tax, some states, including Maryland, still tax some assets that are inherited from the estates of a deceased person. Notably, whether your inheritance will be taxed and at what rate it will be taxed depends on its value, your relationship with the deceased person, and the existing rules and rates of the state of Maryland.
Generally, the inheritance tax rates can be anywhere between 0 percent to 10 percent in the state of Maryland. But as a rule of thumb, the closer your relationship with the deceased person, the lower the rate you will have to pay. For example, if you are the surviving spouse of the deceased person, you will be exempt from the inheritance tax.
If you require assistance with navigating these taxes as a beneficiary, do not hesitate in consulting with a skilled Montgomery County estate planning attorney before it is too late. Our firm is prepared to help beneficiaries minimize the pitfalls of estate taxes when possible.
Contact our experienced Maryland firm
Our firm has experience with matters of estates & elder law, business law, tax law, and litigation. Contact JD Katz, PC today for assistance.