Maryland Estate Planning Considerations
Maryland is a Common Law State which means the rules governing the ownership, division and inheritance of income and property acquired by a husband or wife during the course of their marriage holds that, subject to various qualifications, each spouse owns and has complete control over his or her own income and property.
Last Will and Testament
The minimum age of a person competent to make a will is 18.The number of witnesses necessary to execute a will is two.
Uniform Transfers to Minors Act (UTMA)
The original custodial gift may be a life insurance policy or annuity contract.
Custodial property may be invested in or used to pay premiums on (1) a policy on the minor’s life if the minor’s estate is the sole beneficiary, or (2) a policy on a third party in whom the minor has an insurable interest, if the minor or the custodian is the irrevocable beneficiary.
The custodial arrangement terminates when:
- The minor child reaches age 21 for custodial transfers made by irrevocable lifetime gift, will, or trust, or exercise of power of appointment.
- The minor child reaches age 18 for other custodial transfers.
- The minor child dies.
Dying without a Last Will, the Maryland laws of Intestacy
The estate goes to the surviving spouse, as follows:
- If there is no surviving descendant or parent—100% of the estate
- If there is a surviving minor child—50%
- If there is no surviving minor child, but surviving descendants—$40,000 plus 50% of the balance of the estate
- If there is no surviving descendant but one or both parents are surviving—$40,000 plus 50% of the balance of the estate
If there is no surviving spouse, or if a portion of the estate does not go to the spouse:
- 100% to surviving descendants, by representation (see Md. Code, ET §1‐210)
If there is no surviving spouse or descendant:
- 100% to surviving parent or parents equally
If there is no surviving spouse, descendant, or parent:
- 100% equally to the descendants of parents, by representation (see Md. Code, ET §1‐210)
If none of the above:
- Intestacy laws outline further distribution steps to the level of grandparents, then stepchildren and descendants. See Md. Code, ET §3‐104(c), (d), (e).
- If no legally described recipient can be found, estate assets go to the state of Maryland.
Maryland Living Wills Statutes
Living wills statutes in Maryland are highlighted in the chart below.
|Code Section||HG §5-601, et seq. Health Care Decisions Act|
|Specific Powers, Life-Prolonging Acts||Any medical procedure, treatment, or intervention which uses mechanical or other artificial means to maintain, restore a spontaneous vital function or of such a nature as to afford patient no reasonable expectation of recovery from a terminal condition, persistent vegetative state, or end-stage condition; includes artificially administered hydration, nutrition, and CPR. Does not include medication or procedure necessary to alleviate pain or provide comfort care; may include an anatomical gift directive|
|Legal Requirements for Valid Living Will||(1) Voluntary; (2) dated and in writing; (3) signed by declarant or at express direction of declarant; (4) subscribed by 2 witnesses; (5) effective when attending physician and second physician certify in writing that patient is incapable of making an informed decision on basis of physical examination within 2 hrs. of certification (if patient is unconscious, 2nd physician not required); (6) oral directives must be made in presence of attending physician and one witness; physician must sign and date documentation in patient’s medical record. (suggested forms §5-603)|
|Revocation of Living Will||Revocable at any time by (1) signed and dated in writing; (2) oral statement to health care practitioner; (3) execution of subsequent directive; (4) destruction of directive.|
|Validity from State-to-State||Declaration executed out-of-state by nonresident is effective if declaration is in compliance with the laws of Maryland or the laws of the state where executed (to the extent permitted by the laws of Maryland)|
|If Physician Unwilling to Follow Durable Power of Attorney||Attending physician shall make every reasonable effort to transfer declarant to another health care provider; assist in transfer; and pending transfer, comply with competent individual or health care agent/surrogate for person incapable of making a decision if failure to comply would likely result in death of individual.|
|Immunity for Attending Physician||Any health care provider who withholds or withdraws health care or life-sustaining procedures in accordance with this subtitle and in good faith, is not subject to civil or criminal liability and may not be found to have committed professional misconduct|
Maryland follows the Uniform Fiduciary Access to Digital Assets Act to ensure that testators can retain control of their digital property and plan for its ultimate disposition
Maryland imposes an inheritance tax. The inheritance tax rate and exemption amount depend on the relationship between the decedent and the beneficiary.
- Unlimited exemption for surviving spouse, child, another lineal descendant, parent, grandparent, sibling, spouse of child or other lineal descendant of decedent, or stepparent or stepchild of decedent
- Other beneficiaries have a $1,000 exemption and a tax rate of 10%
- Full exemption for life insurance proceeds payable to a named beneficiary other than the insured’s estate
Credit Estate Tax
- Maryland imposes an estate tax with an exemption amount set at $5 million (beginning in 2019 and not indexed for inflation).
- Maryland allows portability between spouses. Any unused exemption at the death of the first spouse to die may be used by the surviving spouse.
- Prior to H.B. 739, Maryland imposed an estate tax equal to the maximum credit permitted for paid state estate and inheritance taxes without regard to any deduction for state death taxes under the federal tax code (essentially, the applicable federal tax code before the enactment of EGTRRA in 2001).
- The exemption amount was set at $1,000,000 and the top tax rate was (and remains) 16%.
Generation Skipping Transfer Tax (GST Tax)
Maryland imposes a GST tax equal to the maximum credit permitted for paid state GST tax under the federal tax code. The current federal tax code does not permit a credit for state GST tax paid. Therefore, there is no current GST tax.
Maryland does not impose a gift tax.