Inheriting is natural. It should never feel like an extra burden. Yet in Maryland, what portion of an inheritance might be subject to taxation should be recognized as a necessity, since estate tax and inheritance tax are applied separately. These are not interchangeable terms. The mentioned terms change in parallel to the relationship between the decedent and the beneficiary.
Let’s make it clear: there is no mere number that presents a shield to every heir against taxes. Instead, the outcome varies in line with two questions—how large the estate is and who receives the assets.
Maryland inheritance tax does not apply when assets are passed to the following individuals. These beneficiaries are fully exempt. Regardless of the amount, no inheritance tax is assessed:
A full exemption is not for every individual. A 10% Maryland inheritance tax is applied to the value of the assets received once property is transferred to individuals outside the exempt circle, like the below:
Estates valued at more than $5 million are open to Maryland estate tax. Such a tax is applied on the estate itself before any allocations are incurred. It is correct that it is not paid by the heirs.
What counts toward this limit is presented below:
Smart actions taken in advance can present assistance in preserving wealth and minimizing Maryland estate tax liabilities. Contact Watter CPA for further assistance and full compliance.
