Estate planning can be significantly challenging when minimizing your estate taxes. In Maryland, state and federal estate taxes may apply based on the value of your estate. Here is what you need to know to handle these taxes well.
Maryland estate tax
Maryland taxes estates worth more than $5 million. If your estate’s value exceeds this amount, you will pay taxes ranging from 0.8% to 16%. You calculate this tax based on the total value of your estate, including real estate, personal items and money assets.
Federal estate tax
Your estate may also face federal taxes in addition to the state tax. The federal estate tax limit is much higher, at $12.92 million for one person. Estates above this amount will face up to 40% federal tax rates.
Planning to lower estate taxes
To reduce the impact of estate taxes, think about these methods:
- Gifting: You can lower your taxable estate by giving assets to your heirs while alive. Maryland allows yearly gifts up to $15,000 per person without gift taxes.
- Trusts: Setting up trusts can help manage and protect your assets while possibly lowering estate taxes. Trusts can also provide for your heirs as you wish.
- Giving to charity: Donating to charities can lower your estate’s taxable value. These gifts reduce your estate, lowering the overall tax burden.
There may be other ways to reduce your tax burden. Talk to your tax accountant and estate lawyer about it.
Why professional help matters
Dealing with estate taxes requires careful planning and a good grasp of state and federal laws. Talking to an estate planning lawyer can help ensure your estate plan is complete and tax-efficient.
