Estate Taxes by State - Understanding Maryland Inheritance Taxes

If you live in Maryland, then you're lucky enough to live in one of the two states that collects both a separate state inheritance tax and estate tax (the other is New Jersey). For decedents dying on or after July 1, 2000, the following rules apply with regard to the Maryland inheritance tax:

• Property passing to a spouse, child or other lineal descendant, spouse of a child or other lineal descendant, parent, grandparent, stepchild, stepparent, sibling, or a corporation having only certain of these persons as stockholders, is exempt from taxation.
• Update: Effective July 1, 2009, the transfer of a primary residence owned in joint tenancy by Maryland domestic partners is exempt from the Maryland inheritance tax.
• For all other individual beneficiaries (including domestic partners, nieces, nephews, cousins, aunts, uncles, step-grandchildren, friends, and non-exempt organizations), the tax rate is 10%.
• The tax applies to property that passes by will or under the intestacy laws of Maryland (whether the property passes outright or in trust), and to property owned as a joint tenant or as a tenant in common.
• The Register of Wills for each county is responsible for calculating the tax and collecting payment.
• When payment is due depends on the type of probate administration that the decedent's property is subject to: (1) For an estate subject to formal administration, the tax is due at the time the accounting for distribution is filed; (2) For an estate subject to modified administration, the tax is due when the final report under modified administration is filed; or (3) If there is no need for a probate estate, the person responsible for paying the inheritance tax shall pay the tax when the Register of Wills determines the amount due.

This information is courtesy of the Comptroller of Maryland.

The bottom line - if you're a Maryland resident and your estate is passing to someone other than your immediate family, or if you're a nonresident who owns real estate and/or tangible personal property located in Maryland and it's not passing to your immediate family, then your beneficiaries may owe a Maryland inheritance tax. Up next, Maryland estate taxes.

For a summary of the inheritance tax laws of the seven states that collect inheritance taxes (in addition to Maryland - Indiana, Iowa, Kentucky, Nebraska, New Jersey and Pennsylvania), refer to the State Inheritance Tax Chart.

• Understanding Death, Estate and Inheritance Taxes
• State Inheritance Tax Chart
• What's the Difference Between an Estate Tax and an Inheritance Tax?
• Update on Maryland Inheritance Taxes - Domestic Partners Get a Break
• Update on Maryland Inheritance Taxes - Yes, Maryland Can Tax What You Give Away Before You Die
• Understanding Maryland Estate Taxes
• Understanding Joint Ownership of Property