What Are the Inheritance Laws in Maryland?

Maryland’s inheritance laws are unique in the sense that they operate alongside both state estate tax rules and federal thresholds. Moreover, they leave beneficiaries with more than a few questions when assets change hands. Instead of many states, Maryland enforces a separate inheritance tax. Whether a person is taxed depends largely on their relationship to the deceased.

Who Pays Inheritance Tax in Maryland?

Maryland applies a 10% inheritance tax on assets received by individuals who do not fall into one of the exempt categories. There’s no exemption amount in accordance with the asset’s value. A $1,000 inheritance and a $1 million one are treated the same if the recipient is a non-exempt heir.

Individuals subject to taxation usually fall into the categories presented below:

• Nieces and nephews
• Cousins or distant relatives
• Friends and unrelated individuals
• Step-grandchildren
• Family members not defined under the exempt status

The inheritance tax applies to cash, real estate, and securities as well as personal property.

Who Is Exempt from Maryland Inheritance Tax?

According to Maryland inheritance tax laws, fully exempt individuals can be listed as below:

• Spouses
• Children and stepchildren
• Parents and stepparents
• Grandchildren
• Siblings

This exemption list makes the relationship a deciding factor—not the dollar amount inherited. However, when distant family members or non-family friends inherit, tax is due on the entire amount.

Maryland’s Inheritance Laws Without a Will

When someone passes away in Maryland without a valid will, intestate succession laws take over. These laws distribute the estate in a specific order depending on surviving relatives.

The general order followed can be outlined as below:

• Spouse and children share the estate
• If no children exist, the estate goes to the spouse and parents
• If there are no spouse or children, parents and siblings may inherit
• In the absence of close relatives, extended family such as nieces or cousins receive the assets

It should be acknowledged that these rules do not override tax liability. Even when someone inherits through intestate succession, inheritance tax might still be applied unless that person is an exempt heir.

Summary: Maryland Inheritance Law Basics

• A 10% inheritance tax applies to non-exempt heirs
• There’s no exemption amount for small inheritances
• Relationships determine tax liability—not the dollar value
• Spouses, children, parents, and siblings are fully exempt
• Federal estate tax applies only to estates over $13.61 million
• Maryland inheritance tax may still apply even with no will

For tax strategies or filing assistance, a Maryland inheritance tax accountant is definitely recommended—especially if there is interest in ways to avoid inheritance tax in Maryland legally through trusts, planned gifting, or estate restructuring. Watter CPA presents expert aid in inheritance tax in Maryland.