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Blending Life, Wealth, Work & What's Next
May 9, 2018

Estate Tax Update for Maryland and D.C.

By Kathy Frakes, CFP®

In our last quarterly newsletter, we let you know about some changes in estate tax planning that are a result of the Tax Cut and Jobs Act.  We recently learned that, in response to the federal legislation, Maryland passed the following bill into law, which changes the information we provided regarding estate taxes for Maryland:

Basically, this means that instead of matching the federal exemption amount of approximately $11 million per person, Maryland is limiting the exemption amount to $5 million per person.  The maximum estate tax rate is still limited to 16% of the estate value that exceeds the $5 million exemption.

This new law also adds “portability” for married couples. In simple terms, this means that if the first spouse dies, and the value of the estate does not require the use of that spouse’s entire exemption amount, the surviving spouse can use whatever portion was not used.  This can result in significant tax savings for married couples.

Additionally, the District of Columbia is considering legislation to cap the exemption amount to $5.6 million.  These legislative actions mean more households will need to continue to plan for estate taxes (e.g., use special trusts), at least at the state level.  If you would like to talk with us about estate planning as part of your overall financial plan, feel free to contact us!

Categories: life planning

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