Change in Maine Estate Tax

Tuesday, August 4, 2015

January 2016 will herald a very important change in the Maine estate tax. The Maine estate tax exemption, now $2 million (the amount that may pass free of estate tax in addition to what may pass to a spouse or charity), will increase to match the level of the federal exemption – this is a dramatic increase! The federal exemption, currently $5.43 million per decedent, is indexed upward annually. Although we do not know what the amount will be in 2016, it should be significantly more than it has ever been. This means that many estates will no longer be subject to the Maine estate tax. As a result, many people can simplify their plans starting in 2016 to omit unneeded tax planning and focus only on the concerns of how assets should be left for survivors without the overlay of tax complexity. The federal estate tax and the Maine estate tax are not identical, however. For individuals and couples with larger estates tax planning is still warranted, as the federal concepts of portability and generation-skipping planning are often not well served by a simple plan for a Maine resident. In addition, trusts will continue to serve an important role for many clients who have incorporated them in their documents for reasons other than pure tax planning. The change in the Maine exemption creates some planning opportunities that may help families who have existing Credit Shelter and Family Trusts left in the plan of a deceased parent or spouse. We will address some of these opportunities more comprehensively in a tax planning alert that we will be sending soon. Should you have questions, please feel free to talk with any of the lawyers at LeBlanc & Young to explore how this change in Maine law might affect you and your estate plan.