SoMD Estate Planning

Estate Planning Attorneys in Southern Maryland

inheritance

How the SECURE Act Changed Inherited Retirement Accounts

The SECURE Act of 2019 eliminated the “stretch IRA” for most non-spouse beneficiaries, replacing it with a 10-year distribution rule. This means inherited IRAs and 401(k)s must generally be fully distributed within 10 years of the original owner’s death, potentially pushing beneficiaries into higher tax brackets. Spouses, minor children, disabled beneficiaries, and those less than 10 years younger are exempt. This change makes it more important than ever to coordinate your retirement account beneficiary designations with your overall estate plan.

At SoMD Estate Planning, we stay current on evolving legal issues to protect Southern Maryland families. Contact us about our $1,500 flat-fee estate plan.

What Happens to Joint Bank Accounts When Someone Dies in Maryland?

In Maryland, when one owner of a joint bank account dies, the surviving owner generally receives full ownership of the account immediately — without going through probate. This makes joint accounts a simple probate avoidance tool. However, there are important caveats. The full account balance may be considered part of the deceased owner’s estate for tax purposes. Family disputes can arise if others believe they were entitled to a portion. Adding someone to your account gives them immediate access to all funds, which carries risk.

At SoMD Estate Planning, we stay current on evolving legal issues to protect Southern Maryland families. Contact us about our $1,500 flat-fee estate plan.

Estate Planning for Grandparents: Leaving a Legacy for Future Generations

Grandparents play a unique role in estate planning — you want to provide for grandchildren while navigating complex family dynamics and tax considerations. Options include setting up education trusts or 529 plans, making annual exclusion gifts, creating generation-skipping trusts for larger estates, leaving specific bequests in your will, and naming grandchildren as trust beneficiaries with age-appropriate distribution schedules. Consider how gifts to grandchildren interact with your children’s inheritance.

At SoMD Estate Planning, we help families across Southern Maryland create comprehensive, personalized plans. Contact us about our $1,500 flat-fee estate plan.

Understanding Intestacy: What Happens When Maryland Decides for You

When someone dies without a will in Maryland, the state’s intestacy statutes determine who inherits — and the results often surprise families. If you are married with children, your spouse gets the first $40,000 plus half the remainder. If you have minor children, the court appoints a guardian without your input. If you are unmarried with no children, assets pass to parents, then siblings, then increasingly distant relatives. Your unmarried partner receives nothing. Your favorite charity receives nothing. Your intentions are irrelevant.

At SoMD Estate Planning, we help families across Southern Maryland navigate these important decisions. Contact us about our $1,500 flat-fee estate plan.

Maryland Estate Tax vs. Inheritance Tax: What Is the Difference?

Maryland is one of only a few states in the nation that imposes both an estate tax and an inheritance tax. These are two separate taxes that can significantly impact what your family receives. Understanding the difference — and how to plan for both — is essential for protecting your legacy.

The Maryland Estate Tax

The estate tax is a tax on the total value of a deceased person’s estate before it is distributed to heirs. Maryland’s estate tax exemption is $5 million — meaning estates valued above this threshold are subject to Maryland estate tax at rates up to 16%. This is separate from and in addition to the federal estate tax exemption, which is significantly higher.

The Maryland Inheritance Tax

The inheritance tax is different — it is a tax on what individual beneficiaries receive, not on the estate as a whole. Maryland’s inheritance tax rate is 10% on the value of assets received. However, certain beneficiaries are exempt: spouses, parents, grandparents, children, grandchildren, siblings, and certain other close relatives pay no inheritance tax. The tax primarily affects more distant relatives and non-related beneficiaries.

How Both Taxes Can Apply Simultaneously

In a worst-case scenario, a large estate could be hit with both the estate tax on the overall estate value and the inheritance tax on distributions to non-exempt beneficiaries. Proper planning can minimize or eliminate both taxes through strategies like lifetime gifting, charitable giving, trust structures, and proper use of marital deductions.

Plan Ahead to Protect Your Family

Tax planning is a critical component of estate planning in Maryland. At SoMD Estate Planning, we help families understand their potential tax exposure and implement strategies to minimize it. Contact us to review your situation.