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Do I currently have an estate tax liability?

Most people, throughout their lives, accumulate a subsatntial amount of assets that they own. Upon their death, these assets change title and are passed on to their heirs.  Based on current estate tax laws, this transfer of assets is considered a taxable transaction. The total value of the estate is calculated and is subjected to a tax rate which the heirs must pay to the government.  Estate taxes can be imposed at both the federal and state level.

What Compromises an Individual’s Estate

An individual’s estate is comprised of all assets that are owned or have certain interests in at the date of death. Some items that are factored into your estate calculation include:

  • Cash
  • Stocks
  • Bonds
  • Real estate
  • Life insurance
  • Annuities
  • Business interests
  • Personal assets

These assets make up your gross estate, which is the starting point for determining if you have an estate tax liability.

How to Calculate an Adjusted Gross Estate

Once the gross estate figure is determined, certain items are deducted, resulting in an individual’s adjusted gross estate. The following are subtracted from your gross estate:

  • Debt
  • Funeral and burial expenses
  • Administration expenses
  • Outstanding taxes
  • Casualty losses

If you have made any taxable gifts, a gift to someone that exceeded the annual exclusion ($14,000 in 2014), those gift amounts are added to your adjusted gross estate to determine your tax base.

About the Exemption Amount

A key component in determining if you have an estate tax liability is the exemption amount. The exemption amount is the threshold for which taxes are imposed on any dollars over the limit. Therefore, the exemption amount is often the target level we use when making an effort to reduce an estate. The current federal exemption level is $5,340,000 per individual. Married couples receive the benefit of portability, or combining their individual exemption, if their spouse passes, thus increasing the total level to $10,680,000. For Maryland, the exemption level is $1,000,000. Portability does not currently exist for married couples. If your estate taxable estate exceeds either of these levels, you will be subject to estate tax. Assets exceeding the federal exemption are taxed at a maximum rate of 40%. For Maryland, the estate tax rate is 16% for all assets that surpass the $1 million limit.

Maryland Estate Planning

Let us ensure that your estate is managed and your liabilities are contained. We can help you with a customized estate plan. If we determine that your estate most likely will exceed exemption levels, we can assist you in various transfer mechanisms that are designed to minimize both estate taxes and the need for probate. Some examples are trusts, lifetime gifting, and retitling of certain assets. If taxes are unavoidable, we can help plan for the cash to be available to the heirs when the tax payment is due.

Understanding the laws, implementing a plan, and strategically minimizing your estate will result in significant savings for your beneficiaries. If you have any questions about estate tax liability or estate planning, don’t hesitate to contact us today.

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Who We are

Meet our dedicated and experienced team at Geier Asset Management. We handle tax planning, investment management, financial planning, and retirement plan services for clients nationwide.
Joseph N. Geier, CPA

President/Client Manager
Brian Woods

Vice President/Client Manager
Gregory Palacorolla, CFP®

Director, Wealth Management
Daniel Mules, CPA

Client Manager
Brendan Winkler, CPA

Portfolio Accountant
Deborah Kresslein

Portfolio Administrator
Julie Keller

Executive Assistant