Maryland's New Estate Tax Remedy: The “State-Only QTIP” -- IMMEDIATE ACTION REQUIRED

In 2004, Maryland capped the threshold for imposing an estate tax at $1,000,000 even though the federal exemption continued to increase beyond that (to $2,000,000 in 2006). This "decoupling" legislation poses a major tax trap for married couples and subjects Maryland couples who wish to utilize the full federal exemption to a Maryland estate tax on the death of the first spouse. The tax is $99,600 in 2007 (when the federal estate tax exemption is $2,000,000). This applies as well to our clients in New York and many other states which have also "decoupled" from the federal estate tax.

Beginnig in 2006, the State of Maryland has provided a "gift" to Maryland taxpayers. This gift is the "Maryland QTIP Election." What it means is that a married couple can now elect to defer, and possibly avoid, the Maryland estate tax if they include in their Wills an appropriate trust for the benefit of the surviving spouse and make a timely election after the death of the first spouse. We have been very busy developing solutions for our Maryland clients in order to take full advantage of the new Maryland QTIP. Our solutions were presented at the MICPEL Seminar on September 6, 2006 ("New, Improved 2006 Maryland Estate Tax: State-Only QTIP and More") and in the recently released 2006-2007 supplement to our Estate Planning Book (Chapter 28.13, "Maryland's Harsh But Improved Decoupled Estate Tax and the Advent of the State-only QTIP"). To take full advantage of this tax-savings opportunity, please complete our "short-form" financial update and set up a time to meet with Aryeh or Amanda.

Please see our Winter 2006-2007 edition of The Guttenberg Press for more information.

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