Maine’s 2016 – 2017 budget approves significant changes to the state’s estate tax laws. The changes bring Maine’s tax exemption amount to the same level of the federal estate tax exemption of $5.43 million. The law will take affect for anyone that dies during or after 2016.
Maine’s current estate tax exemption is only $2 million.
Estates that surpass the new exemption amount will have to pay three different tax tiers, depending on the value of the estate.
- A tax rate of 8% is applied when an estate is valued between the exemption amount and up to $3 million more than the exemption amount.
- A tax rate of 10% is applied when an estate is valued between the current exemption amount plus $3 million and the exemption amount plus $6 million.
- Any estate that is valued over the exemption amount plus $6 million will be taxed at a rate of 12%.
The law takes into account the current exemption amount at the time of death and will vary depending on future state laws. Residents of Maine that were below the federal threshold have been using trusts and utilizing estate plans to minimize the effects of Maine’s estate tax laws. The new laws will ease this burden for estates that were valued over $2 million, but did not meet the federal exemption of $5.43 million.
While the current laws are favorable for wealthy estates, experts are urging clients to be diligent with their estate plans.
Laws can and do change as Maine’s new estate tax laws demonstrate. The same can happen in New York, New Jersey or any other state in the country. Taking proactive measures to safeguard your estate is recommended.
Revisiting estate plans after major law changes is advised and will help minimize the tax burden of heirs. Careful consideration and implementation is required to meet estate planning objectives.
The Micklin Law Group, LLC is a New Jersey law firm specializing in family law and estates. Attorney Brad Micklin was recently named to The National Advocates list of Top 100 attorneys from each state. To set up a consultation, call 973-562-0100.