Should You Worry About Death Tax Liabilities?
The biggest difference between the inheritance and estate tax is who pays.
Save on Maryland Inheritance Tax if you are in a committed relationship.
Avoid Maryland Inheritance Tax With a Domestic Partnership – Annapolis and Towson Estate Planning
As of October 1, 2023, Maryland’s Senate Bill 792 introduced a significant legal framework for domestic partnerships, offering couples who choose not to marry a pathway to secure some of the same benefits as married spouses, such as saving on the Maryland Inheritance Tax at death. Awareness of this change in the law will help you make informed decisions about personal relationships, legal protections, and financial planning. Here is what you need to know about registering as domestic partners and the implications of not doing so. To establish a legal domestic partnership, Maryland Code Estates and trusts Section 2-214 requires two individuals to be at least 18 years old, the sole domestic partner of the other, not married, and in a committed relationship with the other individual. The process to register a domestic partnership has become more streamlined. Couples seeking to enter a domestic partnership must register their relationship with the Register of Wills in the county in which they are domiciled by filing a signed and notarized declaration form. They also need to pay the appropriate filing fee. Once registered, the relationship will be recognized in all counties regardless of where the partners passed away in Maryland. Registering as a qualified domestic partnership acts as a legal safety net which guarantees certain benefits during estate administration in Maryland, such as: Inheritance: Now, a surviving domestic partner inherits in the same manner as a surviving spouse if there is no will, potentially receiving the entire estate if there are no surviving descendants or sharing it equally with minor children of the deceased partner. Without registration, a domestic partner is treated as a legal stranger in the absence of a will, receiving no automatic inheritance rights. Tax Benefits: Assets inherited from a registered domestic partner are exempt from Maryland's 10% inheritance tax. Not registering means any inheritance could be subject to Maryland's inheritance tax, significantly reducing the net inheritance for the surviving partner. Priority as Personal Representative: Domestic partners have priority to serve as the personal representative of their deceased partner's estate. Without registration, there is no legal priority for serving as the personal representative of your partner's estate, which could lead to third parties or family members taking control. Family Allowance: A surviving registered domestic partner is entitled to a family allowance of $10,000 upon the death of their partner. In contrast, should one choose not to register as a qualified domestic partnership, in addition to losing the foregoing benefits, they risk a loss of other rights and interests, such as: Legal Complexity in Termination: While registered partnerships can be legally terminated, unregistered relationships might face more complex legal battles over property or support if they end, especially if there's no cohabitation agreement. Lifetime Protections: Registration provides clear legal protections in areas like hospital visitation, which might not be automatically recognized for unregistered partners. Future Legal Disputes: Without formal registration, disputes over shared property, support, or rights could be more contentious and less predictable in court. If for any reason…
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