Domestic Partners Watch Out For Inheritance Tax

In 2009, the Maryland legislature created an exemption from the state inheritance tax for a domestic partner of a decedent.Md. Code Ann. [Tax Gen] 7-203 (l). The exemption applies to an interest in a joint primary residence that at the time of death was held in joint tenancy by the decedent and domestic partner, and passes from the decedent to or for the use of the domestic partner.In a recent letter of legal advice issued by the Maryland Attorney General’s Office, it was clarified that in order to obtain the exemption, the domestic partner claiming the exemption must provide evidence of the partnership. Evidence of the partnership must include a valid affidavit establishing the partnership as well as two other documents that establish the partnership. The other types of documents that can be used are found in Maryland’s law on domestic partners. Md. Code Ann. [Health Gen] 6-101. The affidavit and additional documents must be presented to the register of wills to obtain the exemption. Domestic partners should have a qualified attorney review their estate plan to ensure they can take advantage of the exemption. Such a review should include a determination of whether of their primary residence is properly titled, as well as whether their partnership affidavit and other documents will satisfy the exemption requirements.