Category: Probate

January 30, 2018

State Estate and Inheritance Taxes after the Tax Cuts and Jobs Act

James D. Saintvil

The doubling of the federal estate tax exemption under the Tax Cuts and Jobs Act has moved many wealthy Americans away from the impact of the federal estate tax.  However, state estate taxes and inheritance taxes remain a factor in estate planning for residents of a number of states, including Maryland and the District of Columbia.  Moreover, a state level estate or inheritance tax may be imposed on real estate located in a state with a tax even when the decedent resides elsewhere.

Currently, only a handful of jurisdictions have an estate tax.  These include the District of Columbia and Maryland as well as Connecticut, Hawaii, Illinois, Maine, Massachusetts, Minnesota, New York, Oregon, Rhode Island, Vermont, and Washington.  The District of Columbia’s estate tax exemption amount currently matches the federal estate tax exemption.  Maryland’s is currently set to match the federal exemption in 2019.  Jurisdictions with state exemptions that are tied to the federal exemption may react to the doubled federal exemption amount by capping their own; these states likely did not anticipate such a drastic increase in the federal exemption and may scramble to preserve their revenues.  The states that have not matched their estate tax exemptions to the federal exemption have significantly lower exemptions.  As state level changes may come in the wake of the changes to federal law, it is important to remain attuned to changes in state estate tax laws.

Presently, six states, in addition to or in lieu of an estate tax, have an inheritance tax:  Maryland, Kentucky, Nebraska, New Jersey, and Pennsylvania.  Inheritance tax is imposed on the receipt of property from a decedent’s estate by a beneficiary, unless the beneficiary is exempt.  There is no uniformity among state inheritance tax statutes; the rate varies by state as do the rules for determining which beneficiaries are exempt.  For example, a child of the decedent and the child’s spouse are both exempt from inheritance tax in Maryland.  In New Jersey, a child of the decedent is exempt, but the child’s spouse is not.

This disparity can be of particular importance when a decedent leaves real property, such as a vacation home, to his or her child and the child’s spouse.  If the vacation home is in New Jersey, the child’s spouse incurs an inheritance tax as to his or her 50 percent portion; if the home is in Maryland, the child’s spouse incurs no inheritance tax on the value of the home.  For another example, if a decedent whose principal residence is in the District of Columbia, which does not levy an inheritance tax, owns a cabin in Stroudsburg, Pennsylvania, and leaves it to his or her child, Pennsylvania will assess an inheritance tax on the value of the property; Pennsylvania has an inheritance tax and a child is not exempt from the tax.

When the federal estate tax exemption is low and its impact widespread, its significance eclipses state estate and inheritance taxes.  The recent doubling of the federal estate tax exemption diminishes its significance to many estate plans, making state estate tax and inheritance tax laws comparatively more important.


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October 17, 2017

“To my descendants, per stirpes…” (or… How do we pass the Packers’ tickets to our grandkids?)

Anne W. Coventry

Years ago, I described to a close friend (let’s call her Cathy) the difference between a division among descendants per stirpes and a division among the same descendants per capita at each generation.  In the midst of my explanation, Cathy suddenly exclaimed, “Oh!  You mean like the Packers’ tickets?”  This was a Eureka! moment; yes, […]

October 14, 2016

Nancy Fax named Lawyer of the Year in Trusts & Estates for DC Area for 2017

Pasternak & Fidis

Best Lawyers named partner Nancy Fax the Trust and Estates Lawyer of the Year in DC, Maryland and Virginia. Because the publication uses peer nominations to develop its selective list, we are especially proud of this recognition. Congratulations, Nancy! Additional Pasternak & Fidis attorneys were recognized as best lawyers in Maryland in their respective fields: Jan White in Collaborative Law: […]

May 16, 2016

Maryland enacts laws on Trusts and Digital Assets to take effect in October 2016

Anne W. Coventry

For a long time, the rule in Maryland has been that a divorce revokes the provisions of a will that benefit the former spouse, but we did not have the same rule for revocable trusts.  Beginning October 1, 2016, the same rule will apply to revocable trusts—divorce will revoke those provisions of the trust that […]

May 11, 2016

The PRINCE Act and “Name and Likeness” Rights: Sword and Shield?

Alex S. Tanouye

Lawmakers in Minnesota are acting quickly to pass the PRINCE Act, which is intended to protect one’s – specifically, Prince’s – name, voice, and likeness from unauthorized use for a 50-year period after death.  The law is aimed at protecting Prince’s legacy and the right of his estate to control future marketing of and revenues […]

February 12, 2016

Update on Fiduciary Access to Digital Assets

Anne W. Coventry

Your personal representative (the executor of your will) will need to read your emails.  This may not be something you’ve thought about before, but it’s true.  You get bank statements, bills, and even tax forms delivered to you only by email.  You have automatic, recurring payments set up from your checking account each month.  You […]