Maryland Estate Planning Guide 2026

Maryland occupies a singular — and challenging — position in the landscape of American estate planning. It is the only state in the country that imposes both an estate tax and an inheritance tax, meaning that a single transfer of wealth can trigger two separate layers of state-level taxation on top of any applicable federal tax. For Maryland residents with meaningful assets, this dual-tax structure demands careful, proactive planning.

Overview: Why Maryland Is Different

Every state handles estate taxation differently. Some have no state-level death taxes at all. Others impose either an estate tax or an inheritance tax, but not both. Maryland is the sole exception: it has maintained both taxes simultaneously, making it the most complex state death-tax environment in the nation.

Understanding the distinction between the two taxes is essential before diving into planning:

What makes this especially consequential is that both taxes can apply to the same transfer. If you leave $1 million to your nephew, the estate may owe Maryland estate tax on that amount as part of the overall estate, and your nephew will separately owe Maryland inheritance tax on the $1 million he receives. The combined state tax burden can significantly reduce what beneficiaries actually receive.

Maryland Estate Tax

Maryland's estate tax applies to the taxable estates of Maryland residents who die with assets above the exemption threshold, as well as to certain Maryland-sited property owned by non-residents.

The $5 Million Exemption

Maryland's estate tax exemption is $5,000,000 per individual. It was raised to this level in 2019 and has remained fixed since — importantly, it is not indexed for inflation. As asset values rise over time, more estates will gradually be pulled into the taxable range without any legislative action required.

For married couples, Maryland adopted portability in 2018, following the federal model. Portability allows a surviving spouse to claim the unused portion of the deceased spouse's exemption, effectively creating a combined $10 million exemption for married couples — provided the portability election is properly made on the estate tax return. Unlike the federal exemption, Maryland's portability election must be specifically preserved; failing to file a timely estate tax return after the first spouse's death can forfeit this valuable option.

Estate Tax Rates

Maryland's estate tax uses a graduated rate structure. The first dollars above the exemption are taxed at lower rates, with the maximum rate of 16% applying to the largest estates. The table below shows the general structure:

Maryland's estate tax is calculated using a "credit" method that references the federal estate tax table. The actual computation involves applying the federal tentative tax formula, then crediting back the amount that would have been payable under the federal state death tax credit as it existed before 2001 reforms. In practice, consulting a tax advisor or using Maryland's estate tax return instructions for the precise calculation is strongly recommended.

What Is Included in the Maryland Taxable Estate?

Maryland's taxable estate mirrors the federal gross estate concept: it includes essentially all property a decedent owned or had an interest in at death. This encompasses:

• Real property located in Maryland (and non-Maryland real estate if the decedent was a Maryland resident)
• Bank accounts, investment accounts, and retirement accounts
• Life insurance proceeds where the decedent held incidents of ownership or the estate is the named beneficiary
• Business interests, including LLC memberships and partnership interests
• Jointly owned property (the decedent's proportionate share)
• Revocable trust assets

Federal vs. Maryland Comparison

Maryland Inheritance Tax

While most people have heard of estate taxes, far fewer are familiar with inheritance taxes — and Maryland is the only state still imposing both. Where an estate tax is levied on the decedent's estate before distribution, an inheritance tax is imposed on the beneficiary at the moment they receive assets. The distinction matters because different heirs face different tax exposure depending on their relationship to the deceased.

The 10% Flat Rate

Maryland's inheritance tax is a flat 10% rate on the value of property received by non-exempt beneficiaries. There are no graduated brackets — every dollar received by a taxable heir is subject to the same 10% rate. The tax is typically collected by the Register of Wills office as part of the probate process, though it also applies to non-probate transfers (such as jointly owned property passing to a non-exempt joint tenant and certain trust distributions).

Who Is Exempt from Maryland Inheritance Tax?

Maryland exempts "lineal heirs" — a legal term covering the direct bloodline and specific close relationships. The following beneficiaries pay no Maryland inheritance tax:

Registered Domestic Partners — 2023 Update

A significant change took effect in Maryland in 2023: registered domestic partners are now exempt from the Maryland inheritance tax, placing them on equal footing with spouses for inheritance tax purposes. However, this exemption applies only to officially registered domestic partners — informal long-term partners who have not registered do not qualify. Couples in unmarried relationships who wish to take advantage of this exemption should register their partnership formally.

What Assets Are Subject to the Inheritance Tax?

Maryland's inheritance tax reaches broadly, covering most assets that pass to non-exempt beneficiaries by any means — not just through a will. The following are generally taxable when received by non-exempt heirs:

• Probate assets passing by will or intestacy
• Real property in Maryland passing by any method
• Jointly owned property (Maryland situs) where the deceased co-owner and the surviving co-owner are non-exempt relative to each other
• Certain trust distributions to non-lineal beneficiaries

Notably, these assets are generally exempt from inheritance tax regardless of the beneficiary relationship:

• Life insurance payable to a named beneficiary (not the estate)
• Retirement accounts (IRA, 401(k)) paid to a named beneficiary
• Property passing to a charitable organization
• "Small estate" property in certain circumstances

Probate in Maryland

In Maryland, probate is administered by the Register of Wills in each county — not a court in the traditional sense, though the Orphans' Court (a specialized court with probate jurisdiction) oversees contested matters. Every Maryland county has its own Register of Wills office, and the estate is opened in the county where the decedent was domiciled at death.

Types of Estate Administration in Maryland

Maryland offers several administration tracks depending on estate size and complexity:

The Regular Probate Process

For estates that go through regular administration, the typical steps are:

1. File with Register of Wills. The personal representative (executor) files the will, a petition for probate, and pays the filing fee within three months of death.
2. Appointment of Personal Representative. The Register of Wills issues Letters of Administration, authorizing the personal representative to act on behalf of the estate.
3. Inventory. A complete inventory of estate assets (with estimated values) must be filed within three months of appointment.
4. Notice to Creditors. A notice to creditors must be published in a local newspaper; creditors typically have six months from the date of notice to file claims.
5. Payment of Debts and Taxes. The estate pays valid debts, Maryland inheritance tax (collected by the Register of Wills), funeral expenses, and any Maryland estate tax due.
6. Accounting. The personal representative files a final accounting showing all income received and disbursements made.
7. Distribution and Closing. Upon approval of the accounting, assets are distributed to beneficiaries and the estate is closed.

Probate Costs in Maryland

Maryland probate involves several layers of cost:

• Filing fees: Range from approximately $50 to several hundred dollars depending on the size of the estate.
• Personal representative's commission: Maryland sets a statutory commission of 9% on the first $20,000 of the estate, plus 3.6% on the remaining value. This is the maximum allowed and is taxable income to the personal representative.
• Attorney's fees: Estate attorneys typically charge hourly rates ($250–$450/hour for Maryland estate work) or a percentage of the estate.
• Publication costs: Newspaper notice to creditors typically runs $100–$300.

Avoiding Probate in Maryland

Given the cost, delay, and public nature of Maryland probate, many residents actively structure their estates to minimize or eliminate assets that must go through the process. Maryland law provides several effective tools for probate avoidance.

Revocable Living Trusts

A revocable living trust is the most comprehensive probate-avoidance tool available. You transfer ownership of your assets into the trust during your lifetime — real estate, investment accounts, bank accounts — and name yourself as the initial trustee. At death, a successor trustee you designate administers and distributes the trust assets to your beneficiaries entirely outside of probate, without court oversight, and with complete privacy (trust documents are not public records). For a short will-versus-trust decision, see Will vs. Living Trust.

For Maryland residents, a living trust also eliminates the need to go through probate in other states for any real estate held in the trust — an important consideration for those who own vacation property or rental property in other jurisdictions.

Joint Ownership with Right of Survivorship

Property held jointly with right of survivorship (JTWROS) passes automatically to the surviving co-owner at death, without probate. This is commonly used for real estate (spouses often hold Maryland real estate as tenants by the entirety, which provides both probate avoidance and creditor protection) and joint bank or investment accounts.

However, joint ownership carries planning risks: adding a joint owner makes them a co-owner immediately (with potential gift tax consequences), and the joint owner's creditors may have access to the jointly-held asset. For complex situations, a trust is generally preferable.

Beneficiary Designations

Retirement accounts (401(k)s, IRAs, 403(b)s), life insurance policies, and annuities with named beneficiaries pass directly to those beneficiaries outside of probate. This is one of the simplest and most overlooked planning tools. Reviewing and updating beneficiary designations regularly — especially after marriage, divorce, or the birth of children — is essential to ensuring these assets reach your intended heirs.

Payable-on-Death (POD) and Transfer-on-Death (TOD) Accounts

Maryland allows bank accounts to be designated as payable-on-death (POD) accounts, which transfer to the named beneficiary automatically at death without probate. Similarly, investment and brokerage accounts can be set up with transfer-on-death (TOD) designations. These designations are easy to add at your bank or brokerage and are revocable at any time during your lifetime.

Transfer-on-Death Deeds for Real Estate

Maryland enacted a transfer-on-death (TOD) deed statute, allowing homeowners to record a deed that names a beneficiary to receive the property at death — without going through probate. The deed takes effect only at death and can be revoked at any time. A TOD deed can be an effective, low-cost alternative to a living trust for simple real estate situations, though it doesn't provide the comprehensive benefits of a full trust-based plan.

Planning Strategies for Maryland Residents

Maryland's dual-tax environment requires more thoughtful planning than almost any other state. The strategies below address the most common challenges Maryland residents face — from maximizing the estate tax exemption to neutralizing the inheritance tax for non-lineal heirs.

Credit Shelter Trusts: The Cornerstone of Maryland Married-Couple Planning

When both spouses' estates are likely to exceed $5 million combined, a credit shelter trust (also called a bypass trust or family trust) is often the most important planning tool available. Here is how it works:

Without planning, a surviving spouse who inherits everything from the deceased spouse can use the full $10 million combined exemption — but only if a portability election is timely made. Even with portability, the survivor's estate grows over time with investment returns, potentially pushing it above the combined exemption by the time the survivor dies.

A credit shelter trust at the first spouse's death funds a trust with up to the Maryland estate tax exemption amount ($5 million). The surviving spouse can receive income from the trust and, depending on the trust's terms, access to principal for health, education, maintenance, and support. But the trust assets are not included in the surviving spouse's taxable estate at death. The second spouse's full $5 million exemption shelters their own assets. The result: up to $10 million passes to heirs with minimal Maryland estate tax — without relying on portability and regardless of how much the trust grows.

For estates between $5 million and $10 million, the credit shelter trust is often the single most impactful planning decision a Maryland couple can make.

Addressing the $5M–$15M "No-Man's Land"

Estates in the $5 million to $15 million range face a uniquely Maryland problem: they are too large to escape Maryland's estate tax, but not large enough to trigger federal estate tax. For these estates, state-level tax minimization takes priority. Key strategies include:

• Annual gifting programs to reduce the taxable estate below $5 million over time
• 529 plan superfunding (up to $95,000 per beneficiary in a lump sum using five-year gift tax averaging)
• Grantor Retained Annuity Trusts (GRATs) that transfer investment growth out of the estate
• Charitable lead trusts or charitable remainder trusts that reduce the taxable estate
• Family Limited Partnerships or LLCs that may achieve valuation discounts on closely-held business interests
• Intra-family loans and sales to intentionally defective grantor trusts (IDGTs) that freeze the estate's value

No Maryland Gift Tax: A Critical Advantage

Maryland does not impose a gift tax of its own. This means that lifetime gifts in excess of the federal annual exclusion are subject only to the federal gift tax rules — they consume federal lifetime exemption but trigger no separate Maryland tax. For Marylanders with estates between $5 million and $15 million (below the federal threshold but above Maryland's), this creates an opportunity: large lifetime gifts can reduce the Maryland taxable estate without any Maryland gift tax cost at all.

Powers of Attorney and Healthcare Directives

A complete Maryland estate plan extends beyond wills and trusts to cover what happens if you become incapacitated during your lifetime. Two critical documents — a financial power of attorney and a healthcare advance directive — protect you while you are still alive. Without them, your family may face costly and painful court proceedings to gain authority to manage your affairs.

Maryland Financial Power of Attorney

Maryland enacted a revised Power of Attorney Act that provides a statutory form and specific rules for financial POAs. Key points for Maryland residents:

• Statutory Form: Maryland provides an official statutory POA form that financial institutions are required to honor. Using the Maryland statutory form reduces the risk of a bank or brokerage refusing to recognize the document.
• Execution Requirements: A Maryland POA must be signed before a notary public and two adult witnesses. The agent (the person you designate) cannot also serve as a witness.
• Durable vs. Non-Durable: A "durable" POA remains effective if you become incapacitated — which is what most people want. A non-durable POA automatically terminates upon incapacity and has limited use in estate planning. Your POA should include explicit "durable" language.
• Springing POA: Some people prefer a "springing" POA that only activates upon a triggering event (such as physician certification of incapacity). While available in Maryland, springing POAs can create practical delays when urgency matters most — banks may require specific documentation before honoring them.
• Hot Powers: Certain high-risk powers — such as the ability to make gifts, create trusts, or change beneficiary designations — must be specifically enumerated in the POA for the agent to exercise them. These are not implied by general language.

Maryland Healthcare Advance Directive

Maryland's healthcare advance directive statute combines what other states often call a "healthcare power of attorney" (naming a healthcare agent) and a "living will" (stating your end-of-life wishes) into a single document called an Advance Directive.

• Healthcare Agent: You designate one or more people (in priority order) to make medical decisions if you cannot make them yourself. Choose someone who understands your values and will advocate for your wishes under pressure.
• Treatment Directives: The advance directive allows you to specify your wishes regarding life-sustaining treatment, artificially administered nutrition and hydration, palliative care, and organ donation. Being specific reduces uncertainty for your healthcare agent and medical providers.
• Execution Requirements: The Maryland advance directive must be signed in the presence of two adult witnesses. Neither witness can be your healthcare agent, your healthcare provider, or a relative by blood or marriage.
• No Notarization Required: Unlike the financial POA, Maryland's advance directive does not require notarization — only two qualified witnesses.
• MOLST Form: For individuals with serious illness or advanced age, a Maryland Medical Orders for Life-Sustaining Treatment (MOLST) form is a separate, physician-signed medical order that travels with you across care settings. A MOLST is not a substitute for an advance directive but serves a complementary purpose in clinical settings.

Guardianship: The Consequence of Having No Documents

If you become incapacitated without a financial POA and healthcare advance directive in place, your family will need to petition the Maryland Circuit Court for guardianship of your person (to make healthcare decisions) and guardianship of your property (to manage your finances). This process is:

• Expensive — legal fees typically run $3,000–$10,000 or more
• Time-consuming — it may take months before a guardian is formally appointed
• Public — court guardianship proceedings are public record
• Ongoing — guardians must file annual reports with the court

A durable financial POA and advance directive, executed properly when you are healthy, cost a fraction of guardianship proceedings and give you far more control over who makes decisions and how.

When to Consult a Maryland Estate Planning Attorney

Maryland's combination of estate tax, inheritance tax, and the federal–state exemption gap makes it one of the states where professional legal advice provides the most measurable value. While many people can handle basic documents with online tools, certain situations in Maryland call strongly for attorney involvement.

You Should Consult an Attorney If:

• Your estate — including life insurance, retirement accounts, and real estate — exceeds or may approach $5 million
• You are married and have not established credit shelter trusts or made a portability election plan
• You want to leave significant assets to non-lineal heirs (nieces, nephews, friends, unmarried partners) and wish to minimize inheritance tax
• You are in an unmarried partnership and your partner is not a registered domestic partner
• You own a business and need succession planning coordinated with your estate plan
• You own real estate in multiple states
• You have a beneficiary with special needs who receives government benefits
• You have a blended family with children from prior relationships
• You want to incorporate charitable giving as part of your estate plan
• Your estate plan was drafted more than three to five years ago and your circumstances have changed

Finding a Qualified Maryland Estate Planning Attorney

When selecting an estate planning attorney in Maryland, look for:

• Active membership in the Maryland State Bar Association's Estate and Trust Law Section
• Experience with Maryland estate tax returns (Form MET-1) and inheritance tax filings
• An AV Preeminent rating from Martindale-Hubbell, or membership in the American College of Trust and Estate Counsel (ACTEC) — the gold standard credential for estate planning attorneys
• Clear communication about fees upfront (flat fee vs. hourly billing)

Typical fees for Maryland estate planning work range from $1,500–$3,500 for a basic estate plan (will, trust, POA, advance directive) to $5,000–$15,000 or more for complex taxable estates requiring trust drafting, tax analysis, and business succession coordination.

Additional Resources

For further research on Maryland estate planning, these official sources are authoritative:

• Maryland Register of Wills: Each county's office is listed at registers.maryland.gov — the starting point for probate filings and inheritance tax questions.
• Maryland Comptroller — Estate Tax: The Maryland Comptroller's office administers the state estate tax and publishes Form MET-1 with instructions at marylandtaxes.gov.
• Maryland Health Care Commission: Advance directive registration and forms are available at the Commission's website.

For a broader view of estate planning across the region, see our guides for all state guides, and compare Maryland's approach with neighboring jurisdictions. You can also explore our Tax Planning Guide for federal strategies that layer onto Maryland's state planning framework. If you are deciding whether an online kit is enough, see DIY vs. hiring an attorney.