Depending on the type of estate, the taxes that may be owed can differ. For example, inheritance tax can only be collected on a regular estate, not a small estate. Taxes can always be difficult to digest, but this section will break the basics down for a personal representative.
An inheritance tax is imposed on the right to receive property through the estate process, if the decedent has a taxable location in Maryland. Inheritance tax may be collected on the net value of all probate property reported in a regular estate, but no inheritance tax may be collected on probate property reported in a small estate.
Inheritance tax may also be collected on all non-probate property (including trusts) reportable on the Information Report or Application to Fix Inheritance Tax.
For decedents dying after July 1, 2000, there is no inheritance tax on receipt of property that passes from the decedent to the decedent’s:
- child or other lineal descendant;
- spouse of a child or other lineal descendant;
- brother or sister;
- corporation if all the stockholders consist of no other persons other than those related to the decedent as mentioned above.
Note: “Child” includes stepchild or former stepchild; “Parent” includes a stepparent or former stepparent.
What about property passed to others not listed above?
Anyone not on the list of 1-7 above will have the property passed by the decedent taxed at a 10% rate.
Property exempted from inheritance tax
- property that passes to any one person if the total value does not exceed $1,000;
- property that passes to a charitable organization that is exempt from tax as a 501 (c)(3), or certain deductible transfers under Section 2055 of the IRS code;
- a life insurance policy that is payable to a named beneficiary (other than the estate);
- property not in excess of $500 that passes from the decedent for grave maintenance;
- Income on probate assets- for deaths after January 1, 1998, property that is income, including gains and losses, accrued on probate assets after the date of death of the decedent are not subject to inheritance tax.
Note: Holocaust monies are also not taxable–please see the Register of Wills for further details.
When are the taxes due?
For inheritance tax due on probate property, it is due when then personal representative accounts for the distribution of the taxable property.
For non-probate property, the tax is due when the Register of Wills assesses and bills for the amount based on the taxable property reported on the Information Report.