How Do Small Estate Procedures Work in Maryland?

Maryland collects both an estate tax and an inheritance tax, and a Columbia, MD estate planning attorney can show you when each tax is likely to affect you and your loved ones and how best to minimize the effects. Maryland Estate and Inheritance Taxes The estate tax measures the value of what you leave as a whole; the inheritance tax is applied against individuals who inherit a particular asset. Maryland is the only state that still imposes both, though some assets are exempt from probate. Estate Tax Details The estate tax applies if your federal gross estate, plus adjusted taxable gifts, plus certain previously elected marital-trust property, equals or exceeds five million dollars. It only applies if you're a Maryland resident when you die, or if you're a nonresident owning real or tangible personal property with a taxable situs in Maryland. The return is due nine months after death, and the tax is due on that same date even if the Comptroller grants more time to file. Property passing to a surviving spouse who is a United States citizen can qualify for a marital deduction, which defers the estate tax until they pass away. Maryland also lets a surviving spouse use the unused portion of the first spouse's five-million-dollar exclusion. Inheritance Tax Details The inheritance tax is a tax on the "privilege" of receiving property from a decedent. Since 2000, neither a spouse, child, grandchild, great-grandchild, stepchild, parent, grandparent, sibling, nor the spouse of a child has to pay any inheritance tax, and a surviving registered domestic partner is exempt now, as well. Any organizations described in Internal Revenue Code section 501(c)(3) are also exempt. Nieces and nephews, uncles and aunts, cousins, friends, or unmarried partners who are not registered domestic partners have to pay 10% of the value of their inheritance to the state. This is true mostly without regard to the size of the estate, though gifts under $1,000 and anything that is dealt with as a small-estate filing are exempt. How They Work Together When both taxes overlap, the inheritance tax gets paid to the Register of Wills and is subtracted from the gross Maryland estate tax. If the inheritance tax equals or exceeds Maryland's computation of the credit for state death taxes, no Maryland estate tax remains. Get Help From an Estate Planning Attorney in Columbia, MD There are various strategies you can use to deal with both these taxes. Living trusts are a great way to take assets out of your estate and designate them for a beneficiary. Charitable giving can reduce the size of your estate, while strategic personal gifts under certain limits can give assets to your loved ones tax-free while reducing the size of the estate. There are more options available. Contact us today at Elville and Associates in Columbia or Rockville today to schedule a free consultation on your estate. We can look through your inventory, every beneficiary form, and the current draft of your will or trust and help you design an estate plan that protects you and your loved ones for the future.

If you are providing regular help to an aging parent or relative and considering getting formal payment for that work, be sure to talk to an elder law attorney in Columbia, MD. An experienced lawyer will know how to create a care agreement that protects both of you and satisfies Maryland law. What Caregivers Should Know About Creating a Care Agreement What is a care agreement? A care agreement is sometimes called a personal care agreement or a personal services contract, but it's basically a written document that sets out the specific help you will be giving, when you will give it, and how much you will be paid for that work. Families create these agreements most often when an adult child or other relative has to step in to handle daily tasks that otherwise a professional home-care worker would have to be hired to perform. Can't my relative just give me money? Without a written agreement, money that moves from the care recipient to you is considered a gift. The reason this is such a problem is that, if your relative ends up later needing long-term care and depends on Medicaid, Medicaid will review all financial transfers that took place for five years prior to approving any long-term care benefits. Any transfer of funds that was less than fair market value during that window can trigger a penalty period of ineligibility, and your loved one may not be able to get funds for the care they require. Medicaid has this look-back period to stop people from hiding assets to become eligible for care they're not actually eligible for. A properly drafted care agreement shows that the payments were made in exchange for documented services, not as gifts. Can we do a retroactive agreement? No, the agreement must look forward, never back. The agreement should have a start date, a list of duties, the schedule, and the pay rate. Can my loved one pay me extra because they have it? No, your compensation rate for this work has to be reasonable. Once again, Medicaid will compare the rate you received with what local home health and personal care aides earn, and if your rate was far above the local market, the payments - or at least the excess - will be treated as gifts. Do I need an elder law attorney for drafting an agreement here in Columbia, MD? The problem with drafting the document yourself is how easy it is to miss something that will later either cause problems with Medicaid or with other family members. When you have a professional review the language (or write it entirely for you), compare it to current state and federal rules, confirm that the pay rate is defensible, and make sure the contract fits any existing estate plan, power of attorney, or trust documents that might be in place, you'll have peace of mind that the agreement is doing what it's designed for. For help getting your care agreement in place, contact Elville and Associates in Columbia, Rockland, or Annapolis today to set up a free consultation. We proudly serve families across Central Maryland, the Washington Metro Area, and the Eastern Shore.

It's natural to assume that we'll be there for our children at least until they become adults. And while that's the most common scenario, life can throw anyone a surprise. Planning out your minor children's inheritance now with a Columbia, MD trusts and estates attorney allows you to provide for your children as the one who knows and loves them best, even if you should pass before they reach adulthood. How the Courts Deal With Orphaned Minors When a parent dies and their assets pass straight to a minor child through a will or beneficiary designation, the Maryland's Orphans' Court will often step in to appoint a guardian of the property to manage the inheritance. That guardian files reports, may need to post a bond, and must seek approval for many spending decisions. And while the courts are careful and most guardians are reliable, there are no guarantees: someone you do not know will still have control of your children's inheritance. How a Revocable Living Trust Keeps You in Charge A revocable living trust is an excellent way to keep the courts out of your children's inheritance. You create the trust now, name yourself as trustee, and then transfer ownership of the bank accounts, investments, real estate, and other assets you want to leave your children. You retain full control of these assets so long as you're alive, and the trust document spells out exactly what happens after your death. If you pass away, your successor trustee – someone you trust and name – steps in immediately to manage the assets and follow your written instructions. There's no need to file anything with the Probate or Orphans' court. Planning Your Trust Details Inside the trust, you can build the rules. You might, for instance, create a separate share for each child. You can direct the trustee to use the funds for everyday needs, education, or medical care. You set the schedule when your children receive any bulk sums; perhaps one-third is available at age 25, another third at 30, and the balance at 35. Some parents add milestones for money to be paid out, such as finishing college or starting a business. You can also make the trust itself the beneficiary of certain accounts, such as life insurance. The funds in those accounts would be added to the trust upon your death. This is often better than directly naming a minor child as a beneficiary, as this can create some complications many families prefer to sidestep. Talk to a Columbia, MD Trusts and Estates Attorney Making arrangements now is never easy, since it means contemplating life for our kids without us there to guide them. But if the unexpected should happen, your children will get the support you want for them with minimal outside interference. If you would like to explore how to put such a plan in place for your family, contact Elville and Associates in Columbia, Rockland, or Annapolis, MD to book a consultation. Our mission is “planning that works,” and we stick with you through our Client Care Program to ensure your plan is always up to date, reflects your wishes, and gives you peace of mind.