Estate Tax in Montgomery County Probate Cases

When a person dies, their debts and financial obligations do not disappear. Instead, assets in their estate may be used or sold to pay off creditors. Before any assets are distributed to the deceased’s heirs, the personal representative must pay outstanding debts like funeral expenses, hospital bills, and back taxes.

Marylanders whose estates will be worth several million dollars or more may need to worry about another significant expense: the state and federal estate tax. A seasoned probate lawyer could help you plan to avoid or minimize the estate tax in Montgomery County probate cases, protecting your family’s inheritance.

What is the Estate Tax?

The estate tax is a state (and federal) tax on the transfer of property after death. The tax only applies if the gross value of the estate after exemptions and deductions exceeds a certain threshold.
Currently, Maryland law only taxes an estate on assets that exceed five million dollars. An estate worth four million dollars would not owe estate tax. In contrast, an estate worth six million dollars might pay tax on the million dollars in assets above the statewide exemption.

The federal government also collects estate tax, but exemption protects twice as much property. As of 2019, only estates with a gross value of over $11,400,000 will be subject to the federal tax. There are many differences between the state and federal estate tax laws, and it is essential to work with an attorney who understands both. For more information about the estate tax in Montgomery County probate cases, reach out to a lawyer.

Protecting an Estate from Taxation in Probate

Calculating the amount of an estate for tax purposes is different from valuing the estate in probate court. In probate, the assets that make up the estate are those that a person owned individually before death. Some types of property, like those with a joint owner or a with a named beneficiary who will inherit after death, do not become part of the probate estate and instead pass outside probate directly to the beneficiary.

Unlike in probate, all of the assets that a person owns at the date of their death count toward the taxable value of the estate. Everything from real estate to stock certificates will be appraised and valued as of the date of death to come up with an accurate value. It is this total value of all assets that determine the decedent’s tax liability.

While an individual’s estate may exceed the filing threshold to file an estate tax return, no taxes may be due. For instance, Marylanders may give unlimited gifts to their spouse. These gifts may be deducted from the value of the estate. An estate planning lawyer can use this marital deduction to decrease the taxable value of the estate and avoid the estate tax.

Other types of deductions that may decrease the value of the estate include deductions for charitable donations, costs for the estate’s administrative expenses, and payments for certain debts of the deceased.

Get Legal Help Avoiding the Estate Tax in Montgomery County Probate Cases

If you expect the total of your estate to be worth over five million dollars after you die, it is vital to speak with an estate planning attorney. These legal professionals can help you plan for the distribution of assets after your death and may help you avoid the estate tax in Montgomery County probate cases to the extent possible.

Careful planning can mean the difference between leaving millions to your heirs and giving a large chunk of your estate to the government. Contact a Maryland trusts and estates lawyer now to protect your legacy and your family’s inheritance.