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Is the level for estate tax the same at the state and federal level?
It used to be so, but now it is not. As of 2022, Maryland taxes any estate valued in excess of $5 million (or $10 million per couple, which means that whatever is not “used up” by the first to die is available to the surviving spouse upon the death of the surviving spouse provided tax returns are correctly filed.) The District of Columbia taxes any estate valued above $ 4 million (as of 2021) (and this is per person and is not “portable” to the surviving spouse.) The federal government imposes an estate tax on estates valued above $12,060,000 per person or $24,120,000 per couple.
Disadvantages
- Initial cost and trouble of set up or “funding” of the trust. Property must be transferred to the trust and if you do not do that, then the trust is perhaps not worth doing.
- It slightly complicates subsequent dealings with the property (but only slightly).
- It may require payment of an annual trustee’s fee if an institution is the trustee.
- At the time of termination, there may be fees to the trustee or for property recordation and transfer.
- There are no immediate tax advantages. Tax planning can be done in a Will or in a trust.
