On March 20, the Maryland Senate voted to increase the lifetime estate tax exemption from $1 million per person gradually to match the federal exemption ($5.34 million in 2014). This follows passage of similar legislation by the Maryland House on March 7. The increase would be phased in over 5 years, starting with an increase to $1.5 million in 2015.
This change will radically and positively affect estate plans for Maryland residents. Instead of being forced to use the so-called double QTIP to minimize the effects of the lower exemption, Maryland residents’ estate plans eventually will be simplified to mirror those of other states that track the federal exemption. The change was enacted purportedly to stem the flight of Maryland residents to other nearby states (i.e., Virginia) that have higher exemptions or no estate tax.
D.C. residents will continue to be subject to a lower lifetime exemption of $1 million, while Virginia residents are not subject to state estate tax on their assets.
For more information on how this change may affect Maryland residents, please contact Zell Law.