In the United States your estate may owe taxes when you die. In 2019, the State of Maryland Estate Tax Exemption is $5 million. The Federal Estate Tax Exemption is $11.4 million. Unless your assets at your death exceed either exemption, your estate does not owe estate tax when you die. With such high exemptions, relatively few people in the country are impacted by estate taxes when they die. Does that mean you should not worry about estate taxes? Not necessarily, as these laws could change. If you worry about having a backup plan or a flexible solution for estate tax planning, you should learn about Disclaimers and Disclaimer Trusts.
In an estate context, a Disclaimer means declining to take an inheritance one is legally entitled to. Disclaimers are often a means of correcting mistitled assets. When people don’t realize how the ownership of their assets impacts their estate plan, family members can disclaim assets that would otherwise pass to them. This can either move assets to a contingent beneficiary or move them back into an estate to be handled through the probate process.
Disclaimers can be used in estate planning as well. Oftentimes they are done intentionally in a Disclaimer Trust. A Disclaimer Trust allows a surviving spouse to take advantage of estate tax exclusions at the time of their spouse’s death. In the event that tax laws or circumstances would make putting the asset in trust favorable, the surviving spouse can disclaim the asset passing it into a trust. If it is not necessary, the trust can be avoided. This Disclaimer Trust can be drafted to take advantage of certain tax options available to a surviving spouse. The decision is left up to the surviving spouse, and he or she can appoint him or herself trustee of any trust created under such a plan. This allows a married couple to maintain control over their finances for as long as one of them is alive.
Hire Attorney Damian Halstad or Dennis Twigg to provide expert advice to make sure you know all of your legal options for your estate and tax planning. They have a wealth of experience in Carroll County courts and have helped clients throughout the area, including Westminster, Eldersburg, Taneytown, Hampstead, Manchester, Sykesville and Mt. Airy. Dennis M. Twigg is also licensed in Pennsylvania and has many clients in York County and Adams County.