Maryland Estate & Inheritance Tax Cases
Last updated: 11 Nov 2025 •
Maryland Estate Tax — Case Notes & Authorities
Maryland imposes a modern estate tax under the Tax–General Article (Title 7) administered by the Comptroller of Maryland, plus a separate inheritance tax administered by the county Orphans’ Courts/Registers of Wills. Appellate decisions focused on post-2019 mechanics are limited, so practitioners rely on statute, Comptroller guidance, and federal conformity for valuation, deductions, and elections. Below are “authorities-first” case-style notes that map to common filing issues. Md. Code, Tax–General • Comptroller guidance
Framework & Federal Touchpoints (Tax–General Title 7)
What it’s about
Maryland computes a state estate tax from a Maryland taxable estate derived from federal concepts, applying a $5,000,000 state exclusion (post-2019) and Maryland-specific elections (e.g., state-only QTIP).
Holding / Rule
Use federal schedules (706/706-NA) for valuation and categories; apply Maryland exclusion, rates, and state-specific elections in the Comptroller’s return packet.
Comment
If no federal filing is required, attach a pro-forma 706 set (schedules, appraisals, wills/trusts) so Maryland positions are fully supported.
Marital Deduction & State-Only QTIP
What it’s about
Maryland recognizes marital-deduction planning aligned with federal concepts and permits a state-only QTIP election to defer Maryland tax to the surviving spouse’s death.
Holding / Rule
Qualified income-interest terms and a timely state election are required. State-QTIP property is included in the survivor’s Maryland taxable estate at revaluation.
Comment
Trade-off analysis: capture the first decedent’s state exclusion in a bypass trust vs. defer with a Maryland QTIP; track basis and remainder interests where the federal election differs.
Nonresident Situs & Filing
What it’s about
Residents are taxed on a Maryland-computed worldwide base; nonresidents are generally taxed on Maryland-situs real property and tangible personal property located in Maryland.
Holding / Rule
Intangibles of nonresidents are typically not Maryland-situs unless business-situs facts apply. Deduct general expenses by reasonable allocation; document the method.
Comment
Maintain deeds/titles, storage and insurance proofs, and appraisal workpapers. Coordinate inheritance-tax filings if county practice requires.
Estate Tax vs. Inheritance Tax (Coordination)
What it’s about
Maryland’s inheritance tax (often 10% on certain non-exempt transferees; spouse/lineals commonly exempt) interacts with the estate tax through credits and tax-allocation clauses.
Holding / Rule
Inheritance-tax payments borne by the estate may affect deductions/credits on the Maryland estate tax. Keep timing and receipts aligned across filings.
Comment
Draft allocation clauses deliberately to prevent inequities between exempt and non-exempt beneficiaries; retain Register of Wills receipts with the Maryland estate return attachments.
Administration Expenses, Claims & Probate Timing
What it’s about
Deductibility of fees, commissions, and debts depends on documentation and, where applicable, probate approval.
Holding / Rule
Provide invoices, engagement letters, proofs of payment, and court approvals. Where estates include non-MD assets (nonresidents), allocate general expenses on a reasonable, consistent basis.
Comment
Consider protective/tentative payments by month 9 if amounts are uncertain; amend when values and approvals finalize to reduce interest exposure.
Valuation & Difficult Assets
What it’s about
Real estate, closely held entities, and significant tangibles require robust valuation consistent across federal and Maryland filings.
Holding / Rule
Use contemporaneous appraisals and reconcile to probate inventories and any inheritance-tax submissions; support discounts with recognized methods and clear rights analysis.
Comment
Prefer local appraisers for Maryland property; ensure entity valuation reports explicitly address control, marketability, and governing-document constraints.
References
- Md. Code, Tax–General, Title 7 — Maryland Estate Tax provisions (scope, exclusion, deductions, elections).
- Comptroller of Maryland — Estate Tax return packet, instructions, administrative guidance, and FAQs.
- Registers of Wills / Orphans’ Courts — Maryland Inheritance Tax procedures, exemptions, and local filing practice.
- IRS Form 706 / 706-NA & Instructions — federal valuation and deduction scaffolding where applicable.