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As of July 2017, It’s Easier for Domestic Partners To Avoid Maryland Inheritance Tax

people-2557423_640Estate planning is difficult for many Americans. While most experts recommend that anyone 40 or older have a will, the process is often very emotional for people. For those Maryland couples in a domestic relationship, however, things just became a little easier.

As of July 1, a new state law has gone into effect, reducing the requirement for evidentiary documentation in order for domestic partners to experience the inheritance tax exemption on their joint primary residence.

Domestic partnerships first came into law in 2008 and were enacted on January 1, 2009. At the time it was limited to same-sex partners age 18 or older who were “committed to the maintenance” and support of one another. Since then, domestic partnerships have expanded to include opposite-sex partners as well.

But like many domestic partnerships, this legal union never had all the rights of marriage. Since equal marriage rights were legalized in the state in 2012, domestic partnerships have lost even more of their rights.

In 2013, then governor Martin O’Malley notified state employees in domestic partnerships that their partners would no longer be covered by their health insurance unless the couple married.

Several governments around the country soon followed suit, including Montgomery County back in 2016. At the time, Council member George Leventhal said these benefits were antiquated.

“Why would we extend domestic partner benefits to opposite-sex partners? It’s a vestige of an earlier time,” Bethesda Magazine quoted Leventhal saying.

This latest change means that a surviving partner needs only show either an affidavit from both members of the partnership stating that they have established a domestic partnership, or two documents of proof, which can include joint liabilities like a mortgage or loan, designation as the primary beneficiary on life insurance, joint responsibility of childcare on school documents, or several other forms. Previously, couples were required to supply both an affidavit and two documents of proof.

By removing the extra step, surviving partners will not have to worry about paying a 10% inheritance tax on their primary property so long as it is their primary residence and it was jointly held during the deceased partner’s lifetime.

While this is a good step in equality for domestic partnership, there are still important disadvantages. For instance, there is no form for domestic partnerships through the Register of Wills, the department which oversees the exception to the inheritance tax.

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