McNamee Hosea News & Press


Re-Coupling of the Maryland and Federal Estate Tax Law

On May 15, 2014, Governor Martin O'Malley signed into law a bill that will re-couple the Maryland and federal estate tax law in five years. In 2004, the State of Maryland "decoupled" or disconnected its estate tax system from the federal estate system and enacted a cap of $1,000,000 on its estate tax exemption, regardless of the level of the federal estate tax exemption. The maximum Maryland estate tax rate is 16%.

The Maryland estate tax bill signed by the Governor will increase the Maryland estate tax exemption in stages over a five (5) year period and in 2019 the re-coupling of the Maryland and federal estate tax law will occur. Specifically, the bill provides the following:

1. Specifically, the Maryland exemption will be
        a. $1,000,000.00 in 2014,
        b. $1,500,000.00 in 2015,
        c. $2,000,000.00 in 2016,
        d. $3,000,000.00 in 2017,
        e. $4,000,000.00 in 2018, and
        f. equal to the federal exemption amount in 2019.

 The federal exemption is currently $5,340,000  and it is indexed for inflation.

2. The re-coupling of the Maryland and federal estate tax law will result in Portability being available in Maryland, but not until 2019. Portability is a surviving spouse's ability to use a deceased spouse's unused estate tax exemption provided certain requirements are met.

3. The new law also minimizes the Maryland estate tax related to qualified agricultural property ("Property") which passes to a qualified recipient. Specifically, it caps the Maryland estate tax assessed on an estate that includes such Property, assuming it is valued in excess of $5,000,000.

4. The New law is effective July 1, 2014.

Feel free to contact Esther Streete regarding the status of the estate tax law and your estate planning needs. She can be reached at 410-266-9909 Ext. 316.