Recently, the Maine Legislature passed and Governor Lepage signed a significant estate tax reform package that, among other things, will increase Maine's estate tax exemption from $1,000,000 to $2,000,000 per taxpayer as of January 1, 2013. Married couples will be able to shelter $4,000,000 from Maine estate taxes if they plan ahead.
Under current law, family members who inherit estates valued at more than $1,000,000 are required to pay estate taxes to the State of Maine. Individuals are able to shelter $1,000,000 with married couples able to shelter $2,000,000 from Maine estate taxes.
In addition to the change in exemption amounts, the estate tax rate structure has been changed as of January 1, 2013, to eliminate the current “cliff tax” on estates which exceed the credit shelter amount. The rate will be 8% on amounts in excess of $2,000,000 and less than $5,000,000, 10% on amounts in excess of $5,000,000 and less than $8,000,000 and 12% on amounts in excess of $8,000,000.
Technical corrections have also been made to the Maine QTIP marital deduction for persons dying after December 31, 2010 so that Maine estate taxes can be deferred until the death of a surviving spouse.
In addition, the time for audit and assessment of estate taxes has been reduced, enabling estates to be closed and distributed sooner.
Estate planning professionals feel that these are positive developments which should improve the tax climate for Maine residents. I recommend that you check with your attorney to be sure that your estate planning is structured to enable you to benefit from these new provisions. If I can help, you can reach me at miles@dowslawoffice.com.
