Estate Tax

At the Law Office of JANE FRANKEL SIMS, we draft wills and trusts that minimize federal and Maryland estate taxes by fully utilizing each client’s exemption from estate tax and deferring payment of estate tax until the death of the surviving spouse.

Many people are unaware that their assets may be subject to estate tax before passing to their children. Even after paying a lifetime of income tax on our earnings, the federal and state governments take another bite out of our wealth at death in the form of a tax on the transfer of assets to non-spouse beneficiaries.

The federal estate tax applies not only to probate assets but to assets that do not pass by will, such as life insurance proceeds and jointly titled real estate. The Federal government imposes an estate tax if the value of a decedent’s assets exceeds $5,000,000 (indexed for inflation beginning in 2012). The 2013 applicable exclusion amount is $5,250,000 and assets in excess of this amount are taxed at a 40% rate. Any applicable exclusion amount that remains unused to be available for use by the surviving spouse, in addition to the surviving spouse’s own exclusion amount.

Maryland imposes an estate tax if the value of a decedent’s assets exceeds $1,000,000. Because the value of your home, retirement accounts and life insurance proceeds are included in the taxable estate, many people fall into the Maryland estate tax net. The Maryland estate tax rate is approximately 16%.