If you live in Maine, then you live in one of a handful of states that still collect a state death tax. The estates of Maine residents who die in 2013 and later years, as well as the estates of nonresidents who own real estate, tangible personal property, and/or one or more business entities located in Maine, are subject to a state death tax under the following guidelines.
NOTE: State laws change frequently and the following information may not reflect recent changes. For current tax or legal advice, please consult with an accountant or an attorney since the information contained in this article is not tax or legal advice and is not a substitute for tax or legal advice.
How have the Maine estate tax laws changed over the past few years?
In June 2011, significant changes were made to the laws governing Maine estate taxes. First and foremost, the Maine exemption from estate taxes increased from $1,000,000 in 2012 and prior years to $2,000,000 for 2013 and beyond. In addition, in 2013 the Maine estate tax will only apply to the value of an estate that exceeds the exemption and at reduced estate tax rates. Finally, adjustments were made for 2011 and 2012 that will allow a surviving spouse to make a special Maine-only election with regard to the deceased spouse's estate that will eliminate estate taxes at both the state and federal levels.
For more information about the changes that were made to the Maine estate tax laws in June 2011, refer to Major Maine Estate Tax Changes.
The information presented below applies to deaths that occur in 2013 and later years. For information about the Maine estate tax rules that apply in 2012 and prior years, refer to Maine Estate Tax Laws for 2012 and Prior Years.
When is an estate subject to the Maine estate tax in 2013 and future years?
For Maine residents, an estate may be subject to the Maine estate tax if the total gross value of the estate exceeds $2,000,000.
For nonresidents of Maine, an estate may be subject to the Maine estate tax if it includes real estate, tangible personal property, and/or one or more business entities having a situs within the state of Maine and the gross value of the estate exceeds $2,000,000.
To determine if an estate is required to file a Maine estate tax return in 2013 or the last few years, refer to the following worksheets provided by Maine Revenue Services:
What Maine estate tax forms must be filed?
The estate representative of an estate that is subject to the Maine estate tax must file a Maine Estate Tax Return, Form 706ME, as well as a pro forma 2009 federal estate tax return, IRS Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return. The pro forma 2009 IRS Form 706 must include all schedules, appraisals, wills, trusts, attachments, etc.
Are transfers to a surviving spouse taxable?
Outright transfers to a surviving spouse are not taxable.
For married couples who have used AB Trust planning to reduce their federal estate tax bill, a Maine death tax may be due on the B Trust as a result of a gap between the Maine exemption and the federal exemption. In 2013, that gap is $3,250,000. Nonetheless, a married decedent's estate can make a Maine-only election to treat a trust of which the surviving spouse is the sole beneficiary as "qualified terminable interest property" ("QTIP Trust" for short) for purposes of calculating the Maine estate tax. Thus, since there is a gap between the Maine estate tax exemption and the federal exemption and a state-only QTIP election is allowed, married Maine residents can defer payment of both Maine and federal death taxes until after the death of the surviving spouse using ABC Trust planning.
Note that for 2012 decedents, a Maine-only QTIP election could be made on the difference of $4,120,000 between the Maine and federal exemptions; for 2011 decedents, a Maine-only QTIP election could be made on the difference of $4,000,000 between the Maine and federal exemptions, and in 2009 and prior years the Maine-only QTIP election could be made on the total difference between the Maine exemption and the federal exemption. For 2010 decedents, the Maine-only QTIP election was capped at $2,500,000, although the difference between the Maine exemption and federal exemption was $4,000,000.
When are the Maine estate tax return and tax payment due?
The Maine estate tax return must be filed, and any estate tax due must be paid, within nine months after the decedent's date of death.
An automatic six-month extension of time to file the Maine estate tax return and related forms may be requested; however, this will not extend the time to pay the tax, and interest will accrue during the extension period. In addition, a payment of least 90% of the estate tax due must be made by the original due date, otherwise a failure to pay penalty will be assessed.
Where are the Maine estate tax return filed and tax payment made?
If a Maine estate tax is due, make the check payable to "Treasurer, State of Maine." Also, please write the decedent’s name and social security number and “Form 706ME” on the check to ensure proper credit.
Mail any payment and all required documentation to the following address:
Maine Revenue Services
P.O. Box 1065
Augusta, ME 04332-1065
What is the Maine estate tax rate?
For 2013 and later years, the Maine estate will only be applied to value of the estate that exceeds the $2,000,000 exemption, and the rates are as follows:
- Estates valued between $2,000,000 and $5,000,000: 8% of the excess over $2,000,000
- Estates valued between $5,000,000 and $8,000,000: $240,000 plus 10% of the excess over $5,000,000
- Estates valued over $8,000,000: $540,000 plus 12% of the excess over $8,000,000
Note that for 2012 and prior years, the Maine estate tax was applied to the first dollar of the estate's value (in other words, the first $1,000,000 of a taxable estate was not exempt from the tax), and the rate was a progressive rate that increased to 16% for the amount above $10,040,000.
How is a Maine estate tax lien release requested?
An automatic Maine estate tax lien is attached to the property of an individual who dies owning real property (buildings and land) or tangible personal property (cars, boats, jewelry, etc.) located in Maine. In order to request a release of the Maine estate tax lien, the estate's representative must take the following steps:
- Complete an appropriate Certificate of Discharge of Estate Tax Lien (one for real property and one for tangible personal property). The applicable forms for each tax year can be found on Maine Revenue Services estate tax webpage.
- Complete Form 706ME, Form 706ME-EZ or Form 700-SOV as appropriate. The applicable forms for each tax year can be found on Maine Revenue Services estate tax webpage.
- Submit the completed tax form listed above, including documentation of value if required, with the appropriate Certificate of Discharge of Estate Tax Lien, to the tax assessor's office (refer to the section on where to file the return below for the address). Include any payment due with the tax return (Form 706ME only). The return must show that all tax, interest, and penalties are being or have been paid.
- Upon receipt of the appropriate documentation and payment of any tax due, each Certificate of Discharge of Estate Tax Lien, signed by the state tax assessor, will be mailed back to the estate representative. The original lien releases should then be filed for recording with the applicable county's Registry of Deeds. For a list of the county Registries of Deeds, go to List of Registry of Deed Office by County.
Where can I find additional information about Maine estate taxes?
For more information about Maine estate taxes, refer to the Maine Revenue Services estate tax webpage, which contains links to forms and other documents for all tax years, a list of frequently asked questions, tax laws for 2012 and prior years, and the new 2013 laws.
You can also email your estate tax questions to firstname.lastname@example.org, or contact the estate tax division by phone at 207-626-8480, or by fax at 207-624-9694.