Q: If I am inheriting money from a parent’s retail account with Merril Lynch, will I owe Maryland tax on that money?
I was told there is no federal tax but I know Maryland can be tricky with inheritance and taxes.
A: Maryland does not tax inheritance of lineal heirs, parents or spouses. A lineal heir is the the direct descendant of the decedent (son, daughter, granddaughter, etc.). Maryland also does not tax a named beneficiary's receipt of funds from a financial account or life insurance policy under a transfer-on-death beneficiary designation in the contract governing the financial account or insurance policy. Any taxes or fees that may be due in connection with the probate estate, would be paid from the estate assets prior to distribution to the heirs, and would only apply to estate assets that exceed the Maryland exemption amount, which is currently $5,000,000.
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