This week, Maryland Governor Wes Moore unveiled his proposed budget and submitted House Bill 352 to the Maryland Assembly for review and approval. The proposed changes in the budget have important implications for estate planning, particularly regarding Maryland’s death taxes.
Notably, the Governor’s budget includes a proposal to eliminate Maryland’s Collateral Inheritance Tax on both probate and non-probate transfers, as well as inter vivos gifts made within two years of death. While this is a significant change, the proposed budget does not eliminate Maryland’s Estate Tax. However, it does propose a substantial reduction in the estate tax exemption which may negatively affect wealthy Maryland residents.
Currently, Maryland’s estate tax exemption is $5,000,000 for individuals and $10,000,000 for married couples. Under the new proposal, the exemption would be reduced to $2,000,000 per individual and $4,000,000 per married couple. These changes to Maryland’s estate tax exemption are set to take effect in July 2025 if approved.
If these changes are approved by the Maryland assembly, many Maryland residents will need to reassess their estate plans to address the impact of the new, lower estate tax exemption threshold. Now is an ideal time to consult with an estate planning attorney to understand how these changes may affect your plan and explore strategies to minimize potential estate tax liability.