Previously on this blog, we discussed what assets may be subject to Maryland's state inheritance tax. Today, we are going to turn the tables on this legal issue and take a look at what types of assets are exempt from Maryland's state inheritance tax.
First, and perhaps most importantly, if an asset is passed down from the deceased to certain heirs such as the deceased's lineal descendants, including child, husband, wife, mother, father, grandmother, grandfather, stepmother, stepfather, stepchild or sibling, that asset may be exempt from the inheritance tax. The same is true if the decedent passes property down to a corporation, if all of that corporation's shareholders are lineal descendants of the deceased or are a surviving parent, spouse, sibling, stepchild or stepparent.
Also, property that is passed on to any person that is worth less than $1,000 may be exempt from the inheritance tax. Furthermore, if the deceased is not a resident of Maryland, his or her personal property may be exempt from the inheritance tax, except for tangible assets that are located in the state.
In addition, certain life insurance proceeds that are not payable to the insured's estate may be exempt from the inheritance tax. Assets that are passed on to a not-for-profit tax-exempt organization that has its place of incorporation in the state of Maryland may not be subject to the inheritance tax. Similarly, municipal corporations, county corporations and state corporations may be exempt from the inheritance tax.
These are only some examples of exemptions to the state inheritance tax. It is important for residents of Maryland to learn as much as they can about these and other exemptions and how they may apply to their estate or the estate of a loved one.