Maryland lawmakers have proposed legislation that would expand the Maryland estate tax exemption from $1 million to $5 million for estates in which the decedent owned a family farm. (See Gazette article, “Senators Come Together Around Handful of Bipartisan Bills.”) The proposed legislation has bi-partisan support as well as support from Governor Martin O’Malley. If passed, it would help family farms stay in business by lowering or eliminating the estate tax. Often when the older generation passes away, there is not enough cash on hand to pay the estate tax and the younger generation has to sell assets to meet the tax burden. Without that tax burden, the younger generation can maintain the farm without selling assets.
For our clients whose assets are primarily the family business, we always plan and take steps to avoid the hurdle of having to sell assets in order to pay estate taxes. That is an integral part of those clients’ estate and business succession plans. Thus, the proposed Maryland law would help family farmers because instead of worrying about who is paying the tax and how it’s getting paid, they can focus on business succession concerns such as who is taking over the farm; and, how the younger generation will allocate the business between those who are involved and those who are not.
– Gary Altman, Esq. and Michael Wolsh, Esq.