Estate Planning Alert For Maryland Residents.

The State of Maryland recently enacted legislation which may have a considerable impact on the estate plans of many Maryland residents. Under this law, which was signed on May 26, 2004, the Maryland estate tax exclusion was frozen at $1,000,000 for decedents dying after December 31, 2003. This will be the case even though the federal estate tax exemption currently is, and in the future will be, considerably larger than this amount. In addition, starting in 2005, the Maryland estate tax will be computed without reference to the deduction under federal law for state death taxes. The net result of these changes will be to subject Maryland residents with a taxable estates greater than $1,000,000 to state estate taxes even though there may be no federal estate tax due.

I. FEDERAL ESTATE TAX EXCLUSIONS

As many of you know, federal estate tax exclusions have increased considerably and are currently scheduled to increase under the following table:

ESTATE AND GIFT TAX RATES AND UNIFIED CREDIT EXEMPTION AMOUNT

Under the legislation that is currently in force, the federal estate tax will reappear in the year 2011 with a $1,000,000 exclusion. Although virtually every one expects this …