Why Estate Planning Matters in Maryland
Estate planning is a crucial step in protecting your assets, providing for your loved ones, and ensuring your final wishes are honored. Whether you’re safeguarding your family’s future, minimizing estate taxes, or establishing healthcare directives, a well-crafted estate plan offers peace of mind and legal security.
In Maryland, estate planning requires navigating specific state laws, including probate regulations and estate tax considerations. This guide walks you through the essential steps to create a thorough and legally sound estate plan.
Step 1: Take Inventory of Your Assets
The foundation of any estate plan begins with a detailed list of your assets and liabilities, including:
- Real estate: Primary residence, vacation homes, or investment properties.
- Financial accounts: Bank accounts, stocks, retirement plans (401k, IRA), and pensions.
- Valuables: Jewelry, collectibles, artwork, and vehicles.
- Life insurance policies: Include the policy details and beneficiaries.
- Business interests: If you own or co-own a business, include partnership agreements.
💡 Tip: Organizing these details upfront streamlines the estate planning process and ensures nothing is overlooked.
Step 2: Draft a Will
A Last Will and Testament outlines how you want your assets distributed after your passing. In Maryland, a valid will must:
- Be in writing.
- Be signed by the testator (you) in the presence of two witnesses.
- Clearly designate beneficiaries and asset distribution.
✅ Key Decisions in Your Will:
- Executor: Appoint a trusted individual to manage your estate.
- Guardianship: If you have minor children, name a guardian.
- Asset Distribution: Specify who will receive your property, financial accounts, and personal items.
Step 3: Consider Trusts for Added Protection
Establishing a revocable living trust or irrevocable trust can help you avoid probate, reduce estate taxes, and protect your privacy.
-
Revocable Living Trust:
- Allows you to control your assets during your lifetime.
- Can be amended or revoked at any time.
- Avoids probate, making asset distribution faster and more private.
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Irrevocable Trust:
- Cannot be changed once established.
- Offers protection from creditors and reduces estate tax exposure.
💡 Maryland-Specific Tip:
If your estate exceeds $5 million, creating a trust may help you avoid Maryland’s estate tax, which applies to estates above this threshold.
Step 4: Establish Power of Attorney (POA)
A Power of Attorney (POA) gives someone the legal authority to act on your behalf if you become incapacitated. Maryland recognizes two primary types:
- Financial Power of Attorney: Manages your financial affairs (e.g., banking, real estate, taxes).
- Medical Power of Attorney (Healthcare Proxy): Makes healthcare decisions for you if you are unable to do so.
✅ Why It Matters:
Without a POA, your loved ones may need to go through a lengthy and costly guardianship process to make decisions on your behalf.
Step 5: Create an Advance Healthcare Directive
An Advance Directive (also known as a living will) specifies your medical preferences in case you are unable to communicate. This document covers:
- Life-sustaining treatments: Your preferences regarding CPR, ventilators, or feeding tubes.
- End-of-life care: Instructions on pain management and palliative care.
- Organ donation preferences.
💡 Maryland-Specific Tip:
Register your Advance Directive with the Maryland Advance Directive Registry to ensure it’s accessible to healthcare providers.
Step 6: Review Your Beneficiaries
Many financial accounts, such as retirement plans and life insurance policies, allow you to designate beneficiaries.
- Double-check and update beneficiaries regularly.
- Ensure they align with your current wishes to avoid conflicting distributions.
✅ Pro Tip:
Maryland law does not allow beneficiaries to be automatically revoked after divorce. You’ll need to manually update your designations.
Step 7: Minimize Estate Taxes in Maryland
Maryland is one of the few states with both an estate tax and an inheritance tax, making tax planning a critical part of your estate plan.
- Estate Tax: Applies to estates valued over $5 million (as of 2025).
- Inheritance Tax: 10% tax on assets left to non-lineal heirs (nieces, nephews, friends).
✅ Strategies to Reduce Taxes:
- Use trusts to reduce taxable estate value.
- Leverage lifetime gifting to distribute wealth gradually.
- Make charitable donations to reduce your estate’s value.
Step 8: Regularly Review and Update Your Estate Plan
Life changes, such as marriage, divorce, the birth of children, or acquiring new assets, require you to update your estate plan regularly.
- Review your estate plan annually or after major life events.
- Ensure your executor and beneficiaries are still appropriate.
Protect Your Legacy with a Comprehensive Estate Plan
Creating a thorough estate plan in Maryland ensures your wishes are honored and your loved ones are protected. Working with an experienced Maryland estate planning attorney like JDKatz can help you navigate complex state laws and customize a plan that fits your needs.
Contact us today to schedule a consultation and start building your estate plan with confidence.