The Maryland General Assembly passed two bills this year that have significant effects on probate administration. Here is a breakdown of the bills and how they could affect you.
SB0073: Share of Intestate Estate
SB0073 increases the share of an intestate estate inherited by a surviving spouse from the first $15,000 to the first $40,000 plus half of the residual estate. When someone dies without a valid will, their estate becomes “intestate”. There are two scenarios in effect here. Scenario One: A decedent has no valid will but leaves a spouse with no children who are still minors. Scenario Two: A decedent has no valid will and has a spouse with no surviving children, but does have a surviving parent(s). This bills increases the distribution to the spouse from $15,000 to $40,000 from the estate before said estate is distributed to the spouse and adult children OR the surviving spouse and parent(s) of the decedent, which is divided evenly between the two parties.
If there’s a spouse and a minor child surviving the decedent, the share given to the spouse is equal to half. If there are no children or parents who survive the decedent, then the spouse receives the entire estate. The bill goes into effect on October 1, 2017.
How Does This Bill Affect You?
This would only affect those have do not have a will at all or do not have a legal will. It is wiser to create a will with an estate attorney than to have no will at all. However, if someone doesn’t have a will, then the share their spouse would receive prior to the distribution of the estate is increased. This means the spouse receives more of the estate than other potential beneficiaries.
SB0276/HB1104: Evidence of Domestic Partnership
Under the current law, an affidavit is required in order to prove that a beneficiary is a domestic partner of the deceased. Under HB1104 (SB0276 was vetoed as duplicative), the list of the types of documents which may be submitted to show proof of partnership is dramatically expanded. These documents are used to qualify for an inheritance tax exemption on property held jointly and which passes from the decedent to the domestic partner.
Now the documents that may be provided are taken from section 6-101(B)(2) of the Health code and include: a mortgage, lease, or loan document which is held jointly; life insurance policy showing the domestic partner as the primary beneficiary; the decedent’s will showing the partner as the primary beneficiary; durable power of attorney granted by one or the other individual; joint ownership of a motor vehicle; joint checking account, investments, or credit account; joint renter’s or homeownership policy; coverage on a health insurance policy; joint child care, such as guardianship or school documents; or finally, a relationship or cohabitation contract. Two of these documents must be provided in lieu of an affidavit in order to receive the exemption on the inheritance tax.
This bill went into effect on July 1, 2017.
How Does This Bill Affect You?
The new legislation would make it easier for domestic partners to prove their partnership status legally in order to receive the tax exemption. It can be expensive and time-consuming to compose, swear to, and notarize an affidavit, whereas providing two documents which prove a partnership is more cost-effective and saves time for all involved. Most people are able to provide two or more of the documents listed with little difficulty, but an affidavit is a special document that must be obtained through legal channels, making them somewhat prohibitive.