“Understanding Maryland Inheritance Tax” by Attorney Beth Burgee (Audio)
In Maryland, residents pay a 10% inheritance tax on assets passing to beneficiaries who are not exempt from the tax. This tax is an important consideration for anyone planning their estate or expecting to inherit property. Let’s look at some of the issues associated with inheritance tax.
What is Inheritance Tax?
Inheritance tax is a tax imposed on the value of property that passes from a decedent to their beneficiaries. The estate planning document can direct where that tax is to be paid. For instance, a comprehensive estate plan could instruct that the beneficiary is responsible for paying the tax, or the documents could specify that the estate is responsible for paying the tax.
Who Is Exempt From Inheritance Tax?
In Maryland, the inheritance tax applies to beneficiaries, unless one of the exemptions applies. Some of the most notable exemptions are for spouses, children (including stepchildren), and their descendants, parents, and siblings. Additionally, certain assets, such as life insurance, can be exempt from inheritance tax. Some common beneficiaries who will be subject to the inheritance tax are nieces and nephews, cousins, and friends.
How is the Inheritance Tax Calculated?
The inheritance tax in Maryland is calculated at a rate of 10% on the date of death value of the property inherited from the decedent less expenses. Expenses associated with the administration and transfer of the property are deducted from the date of death value. The net value is what is taxed at 10%.
Reporting and Payment
The inheritance tax is collected by the Register of Wills in the county where the decedent lived or owned property. The Personal Representative of the estate is required to file an Information Report that reports the people who are subject to inheritance tax and the amounts they are receiving. In some instances, an accounting of the inheritance taxable assets and expenses may be required.
Contact Experienced Bowie Estate Planning Attorneys
Inheritance tax in Maryland is a significant factor in estate planning and estate administration. By understanding who is liable, how the tax is calculated, and the reporting requirements, you can better prepare for the future and ensure that your loved ones are not caught off guard by unexpected tax obligations.
Contact the experienced Bowie estate planning and estate administration attorneys at Sinclair Prosser Gasior to learn more about estate and inheritance taxes specific to Maryland residents.
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