The recently proposed budget by Maryland Governor Wes Moore includes significant changes that could impact estate planning for Maryland residents.
The budget proposes to eliminate the Collateral Inheritance tax on both probate and non-probate transfers, as well as inter vivos gifts made within two years of death. Currently there is a 10% tax on any inheritance distributed to a person who is not a lineal descendant.
While this is a significant change, and perhaps a benefit to some, the more concerning proposal is related to the estate tax. Currently, Maryland has an estate tax exemption of $5,000,000 for individuals and $10,000,000 for married couples. Under the Governor’s proposal, the exemption would be reduced to $2,000,000 per individual and $4,000,000 per married couple. The Governor has proposed this reduction in exemption amounts take effect July 2025.
If approved, the reduced exemption could lead to estate tax liability for individuals who had previously been exempt, particularly those with estates valued between $2 million and $5 million. This will require many residents to revise their estate plans.
If the Maryland Assembly approves these proposed changes, Maryland residents will need to review and, most likely, revise their estate plans to mitigate the impact of the lower exemption amounts. Given the potential for higher estate taxes due to the lower exemption, it is advisable for Maryland residents to consult with an estate planning attorney.
Diane S. Kotkin and the attorneys at RKW Law Group are here to keep you informed, help you navigate the proposed changes and create strategies to minimize estate tax exposure. Call Diane today for a consult.
