The Statement
The Statement

Maryland estate planning reminder

Submitted by Carol I. Katz
Member, MACPA Estate and Gift Tax Committee

On Thursday, Nov. 21, 2002, the MACPA Estate and Gift Tax Committee hosted Janet Mann from the Comptroller's Office, who gave an update on the changes to Maryland's estate tax laws that took effect for decedents dying after Dec. 31, 2001.

Ms. Mann reminded all CPAs and attorneys who prepare Maryland estate tax returns (Form MET 1) that Maryland has decoupled from federal law regarding the state death tax credit provisions. That is, although for federal purposes the state death tax credit will be phased out, for Maryland purposes it will continue in tact.

There are now two Maryland MET 1 forms — one for decedents dying on or before Dec. 31, 2001 and one for those dying after Dec. 31, 2001. CPAs should be certain not only to use the correct Maryland form, but also to use the correct Federal Form 706. To comply with the decoupling provisions, a new Schedule B will need to be filed with the Form MET 1 to calculate the tax. The new form is available on the Comptroller's Web site.

Administrative Release No. 30 explains the law changes.

Remember that a Maryland estate tax return is only due if a federal estate tax return is due, so as the unified credit amount gradually increases for federal purposes, it also will increase the filing threshold for Maryland purposes.

Ms. Mann also reminded practitioners that Form MET-2 ADJ is available for moving estate tax remittances to inheritance tax due (when there is enough estate tax paid to Maryland to cover inheritance tax). This form eliminates the necessity of amending the MET 1 to get a refund after paying more inheritance tax.

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