When a person dies, what happens to the estate; the bank and savings accounts, the stock and bond accounts, the real estate, insurance, trusts, annuities, business interests and other assets? It depends.
Was a Living Trust established before the decedent’s death? If a Living Trust was established then there is no probate of the estate.
Was there a will or not? According to The Peoples Law Library, “If the decedent did not have a will, Maryland law determines how the decedent’s property will pass to the family of the decedent.”
If there was a will In Maryland there are two kinds of probate – “administrative and judicial. Administrative probate is for uncontested wills and is handled by the county register of wills. Judicial probate is usually for contested wills and is handled by the county Orphan’s Courts.”
Now what about estate taxes and inheritance taxes?
For deaths in 2014, if you are a Maryland resident, or own valuable property in Maryland, and leave assets with a gross value of more than $1 million, your executor will have to file a state estate tax return. If you have a larger estate than $1 million try to hold on, the ceiling is going up:
2015: $1.5 million
2016: $2 million
2017: $3 million
2018: $4 million
As for inheritance taxes, the inheritance tax does not apply when property is inherited by the deceased person’s:
- child (biological or legally adopted), stepchild, former stepchild, grandchild, or other lineal descendant
- parent (including stepparent or former stepparent)
- grandparent, or
- brother or sister
Back to the Living Trust, for a moment. The Living Trust does not pay taxes on any income, such as rent, but when the income is distributed to the heirs, they must include the payout on their tax return.
Disclosure: We believe this information comes from reliable sources in Maryland. Estate taxes, wills, and probate are complex areas that need the expertise of a lawyer who specializes in these areas. Always seek professional advice.
For further reading see our article: Selling an Inherited House.