Estate Planning Guide: Maryland

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    🦀 Estate Planning in Maryland: Key Things Every Client Should Know

    Maryland’s estate laws have some unique tax rules and probate requirements that make planning especially important. Here is what clients in Maryland should consider when putting together an estate plan.

    1. Maryland Has Both an Estate Tax and an Inheritance Tax

    Maryland is one of the only states in the country with both taxes.

    Maryland Estate Tax

    • Applies to estates over $5 million (not tied to federal exemption).

    • Proper planning—such as credit shelter trusts—can help married couples protect more assets.

    Maryland Inheritance Tax

    Rates depend on the relationship:

    • 0% — Spouse, children, grandchildren, parents, siblings, and certain other close relatives

    • 10% — Anyone else (friends, unmarried partners, nieces/nephews, etc.)

    What this means: beneficiary designations and asset-titling choices have major tax consequences.

    2. Maryland Probate: Important Considerations

    Maryland probate can be more involved than in many states because:

    • Estates are classified as “small” or “regular”, depending on value.

    • Executors (“personal representatives”) must follow detailed procedures.

    • There are required court filings and potential attorney involvement.

    Clients should consider using:

    • Transfer-on-death (TOD) or payable-on-death (POD) designations

    • Joint ownership

    • Revocable living trusts (especially helpful for privacy or multi-state property)

    3. Creating a Valid Maryland Will

    A Maryland will must be:

    ✔️ In writing
    ✔️ Signed by the person making it
    ✔️ Witnessed by two disinterested witnesses

    Self-proving affidavits can help streamline probate but must follow strict rules.

    A will should clearly identify:

    • Beneficiaries

    • Guardians for minor children

    • Personal representative

    • Distribution of property and personal belongings

    4. Financial Power of Attorney

    Maryland has a statutory POA form, and banks/financial institutions are required by law to accept it unless they have a valid reason not to.

    A Durable Financial POA:

    • Lets someone manage money, property, and legal decisions

    • Helps avoid court guardianship and conservatorship proceedings

    • Must be up-to-date, especially after MD’s 2010 and 2011 law updates

    5. Advance Medical Directive (Healthcare POA + Living Will)

    Maryland uses a single document called an Advance Medical Directive, which includes:

    • Appointment of a healthcare agent

    • Medical decision-making authority

    • End-of-life care preferences

    • Optional organ donation instructions

    This ensures family members and doctors follow the client’s wishes if they cannot speak for themselves.

    6. Trusts for Maryland Clients

    Trusts can be extremely useful for:

    • Avoiding Maryland probate

    • Blended family planning

    • Providing for minor children

    • Protecting loved ones with special needs

    • Avoiding or reducing MD estate tax

    • Medicaid and long-term care planning

    Because Maryland has income tax on trusts, it’s important to consider where the trust will be administered and who the trustee is.

    7. Real Estate Planning

    Maryland real estate issues to consider:

    • Tenancy by the Entirety for married couples offers creditor protection and automatic transfer at death.

    • Out-of-state property may require ancillary probate unless placed in a trust.

    • Some counties have additional property tax considerations for elderly or disabled homeowners.

    8. Long-Term Care & Medicaid (Very Important in MD)

    Maryland Medicaid rules include:

    • 5-year lookback period

    • Limits on allowable assets and income

    • Home equity rules that vary depending on marital status

    Planning tools may include:

    • Irrevocable income-only trusts

    • Spend-down strategies

    • Caregiver agreements

    • Asset restructuring for eligibility

    Early planning is critical to protect the home and savings.

    9. Beneficiary Designations

    Many assets bypass probate entirely:

    • Life insurance

    • IRAs/401(k)s

    • Annuities

    • POD/TOD accounts

    These must be reviewed and updated regularly—especially after marriage, divorce, or the birth of a child.
    Maryland does not tax life insurance paid directly to beneficiaries.

    10. Digital Assets

    Maryland recognizes the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA), allowing clients to grant fiduciaries access to:

    • Email

    • Online banking

    • Cryptocurrency

    • Cloud storage

    • Social media accounts

    • Digital photos and documents

    Permission must be clearly stated in the will, POA, or trust.

    11. Special Planning Situations in Maryland

    Clients should also think about:

    • Unmarried partners (inheritance tax applies!)

    • Second marriages and blended families

    • Special-needs beneficiaries (must use proper SNTs)

    • Business continuity planning

    • Estate liquidity for MD estate/inheritance tax obligations

    ✔️ Recommended Estate Plan for Most Maryland Residents

    A complete plan typically includes:

    • Last Will and Testament

    • Durable Financial Power of Attorney

    • Advance Medical Directive (MD form)

    • Updated beneficiary designations

    • Trusts if appropriate (tax planning, special needs, Medicaid planning, probate avoidance)