As we approach the end of 2025, a significant change looms on the horizon for estate planning: the expiration of key provisions in the Tax Cuts and Jobs Act (TCJA) of 2017. This federal law dramatically increased the estate and gift tax exemption, offering substantial tax relief for high-net-worth individuals. However, unless Congress acts, these provisions will sunset on December 31, 2025, potentially halving the exemption and increasing tax liabilities for many Maryland residents. Understanding these changes is critical for anyone with a sizable estate, as proactive planning can protect your wealth and ensure your legacy aligns with your wishes. For Maryland residents, the interplay of federal and state estate tax laws adds complexity, making it essential to act now. Frame & Frame Attorneys at Law, a trusted Maryland estate planning firm, can guide you through this process to minimize the impact on your estate.

What is the TCJA, and Why Does Its Expiration Matter?

The TCJA doubled the federal estate and gift tax exemption, which in 2025 stands at $13.99 million per individual ($27.98 million for married couples), adjusted for inflation. This exemption allows you to transfer significant wealth to heirs or beneficiaries without incurring federal estate taxes, which carry a top rate of 40%. The law also increased the generation-skipping transfer (GST) tax exemption to the same level, benefiting those transferring assets to grandchildren or later generations.

However, these higher exemptions are temporary. If the TCJA provisions expire as scheduled, the exemption will revert to pre-TCJA levels, estimated at around $7 million per individual ($14 million for couples) in 2026, adjusted for inflation. For Maryland residents, this reduction could mean that estates currently below the federal tax threshold will become taxable, potentially costing families hundreds of thousands—or millions—in taxes. Additionally, Maryland imposes its own estate tax with a lower exemption of $5 million (as of 2025), which complicates planning further.

How will the expiration of the TCJA affect estate plans?

The expiration of the TCJA could affect thousands of Maryland families, particularly those with estates valued between $7 million and $13.99 million. For example, a couple with a $12 million estate may currently avoid federal estate taxes, but post-2025, if their assets grow (e.g., at 6% annually), they could exceed the reduced federal threshold, triggering significant tax liabilities. Maryland’s estate tax, which applies to estates over $5 million at a 16% rate, could further erode wealth if not addressed.

Don’t let the TCJA expiration catch you off guard. Contact Frame & Frame Attorneys at Law today to review your estate plan and explore strategies to protect your wealth from increased taxes.

Maryland’s Unique Estate Tax Landscape

Maryland is one of only 12 states (plus Washington, D.C.) that imposes a state-level estate tax. Unlike the federal exemption, Maryland’s estate tax exemption is $5 million per individual, with no portability between spouses. This means that even if your estate is below the current federal exemption, it could still face Maryland estate taxes if it exceeds $5 million. For example, a $6 million estate might owe $160,000 in Maryland estate taxes, even if it’s exempt from federal taxes in 2025.

The TCJA expiration will exacerbate this issue. Estates that were previously shielded by the higher federal exemption may now face both federal and Maryland estate taxes, creating a double tax burden. For instance, a $10 million estate in 2026 could owe federal taxes on $3 million (assuming a $7 million exemption) at 40% ($1.2 million) and Maryland taxes on $5 million (assuming no credits) at 16% ($800,000), totaling $2 million in taxes. Proper planning can mitigate these costs, but it requires understanding both federal and state rules.

Moreover, Maryland’s estate tax laws are less flexible than federal laws. Unlike the federal system, which allows portability of unused exemptions between spouses, Maryland requires each spouse’s estate to use the $5 million exemption independently. This makes strategic planning, such as setting up trusts, even more critical for Maryland residents.

Frame & Frame Attorneys at Law specializes in navigating Maryland’s complex estate tax laws. Schedule a consultation to ensure your estate plan minimizes both federal and state tax liabilities.

Key Impacts of TCJA Expiration on Maryland Estate Planning

• Increased Tax Exposure:
  • The reduction in the federal exemption will push more Maryland estates into taxable territory. Families with estates between $5 million and $13.99 million need to act now to leverage the current higher exemption before it shrinks.
• Generation-Skipping Transfer (GST) Tax:
  • The GST tax exemption, which also doubles under the TCJA, will revert to around $7 million. Maryland families using trusts to pass wealth to grandchildren or beyond must reassess these plans to avoid unexpected GST taxes.
• Clawback Risks:
  • While the IRS has anti-clawback rules to protect gifts made under the higher TCJA exemption, certain strategies (e.g., Grantor Retained Annuity Trusts) could still face complications if the donor dies after 2025. Maryland’s strict estate tax rules add another layer of complexity, as state law may not align with federal protections.
• Outdated Estate Plans:
  • Many Maryland residents have estate plans drafted when exemptions were lower (e.g., $1 million in the early 2000s). These plans may include funding formulas that could unintentionally disinherit a spouse or overfund trusts, especially with Maryland’s $5 million exemption. Updating these documents is critical.
• Legislative Uncertainty:
  • With a Republican-led Congress and White House in 2025, there’s a chance the TCJA exemptions could be extended, possibly through bills like the “One Big Beautiful Bill Act.” However, relying on potential extensions is risky, as political priorities could shift, and Maryland’s estate tax will remain a factor regardless.

Don’t wait for Congress to decide your estate’s fate. Contact Frame & Frame Attorneys at Law to update your estate plan and secure your legacy.

Strategies to Minimize the Impact in Maryland

To protect your estate from the TCJA expiration and Maryland’s estate tax, consider these proactive strategies:

• Maximize Current Exemptions:
  • Gift assets up to the $13.99 million federal exemption (per person) before 2026 to lock in the higher exemption. This removes the gifted assets and their future appreciation from your taxable estate. For example, transferring real estate or investments now could save millions in federal and Maryland taxes.
  • Frame & Frame can help structure gifts to align with both federal and Maryland tax rules.
• Utilize Trusts:
  • Credit Shelter Trusts: These trusts maximize exemptions for married couples, sheltering assets from both federal and Maryland estate taxes upon the second spouse’s death. With Maryland’s lower exemption, this is especially important.
  • Irrevocable Life Insurance Trusts (ILITs): ILITs remove life insurance proceeds from your taxable estate, preserving wealth for heirs. This is particularly valuable in Maryland, where estate taxes apply to smaller estates.
• Leverage Spousal Portability (Federal Only):
  • While Maryland doesn’t allow portability, the federal system does. Couples can combine federal exemptions, but this requires proper planning to avoid wasting the first spouse’s exemption. Frame & Frame can coordinate federal and state strategies to maximize tax savings.
• Charitable Planning:
  • Charitable trusts or direct donations can reduce your taxable estate while supporting causes you care about. The TCJA’s increased charitable deduction limit (60% of AGI for cash gifts) reverts to 50% in 2026, so acting now maximizes benefits.
  • Frame & Frame can design charitable strategies that align with your philanthropic and tax goals.
• Update Your Estate Plan:
  • Review wills, trusts, and beneficiary designations to ensure they reflect current exemptions and your wishes. Outdated plans could lead to unintended tax consequences or asset distribution issues in Maryland.
  • Frame & Frame’s experienced attorneys can revise your plan to address both federal and Maryland tax changes.
• Act Early:
  • With the TCJA sunset approaching, demand for estate planning services in Maryland will surge in 2025. Starting now ensures you have time to implement complex strategies like trusts or large gifts.

Time is running out to protect your estate from the TCJA expiration. Reach out to Frame & Frame Attorneys at Law to start planning today.

Why Maryland Residents Must Act Now

The combination of the TCJA expiration and Maryland’s estate tax creates a perfect storm for high-net-worth individuals. Failing to plan could result in significant tax bills, reducing the wealth you pass to your heirs. Beyond taxes, estate planning ensures your assets are distributed according to your wishes, protects minor children or special needs beneficiaries, and supports family business succession.

Frame & Frame Attorneys at Law, with four locations in Maryland, understands the unique challenges of estate planning in this state. The team of experienced attorneys can craft personalized strategies to minimize federal and Maryland estate taxes, navigate complex trust structures, and update outdated plans. Whether you’re gifting assets, setting up trusts, or exploring charitable options, Frame & Frame provides comprehensive guidance tailored to your needs.  With offices in Pasadena, Annapolis, Stevensville, and Mount Airy, Maryland – you have the convenience of an attorney just a short distance from where you live.

More Information is Available

The TCJA expiration at the end of 2025 will have far-reaching implications for Maryland estate planning, reducing the federal exemption and increasing tax exposure for many families. Coupled with Maryland’s $5 million estate tax exemption, the stakes are high for high-net-worth individuals. Asset protection strategies are key. By acting now—gifting assets, establishing trusts, and updating your plan—you can minimize the impact and secure your legacy.

Don’t leave your estate’s future to chance. Contact Frame & Frame Attorneys at Law today at FrameAndFrame.com to schedule a consultation. Their team will help you navigate the TCJA expiration and Maryland’s estate tax laws to protect your wealth for future generations.

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