Estate Taxes

If you're counting on a big inheritance to pay off your debt or pump up your lifestyle in retirement, you may be kidding yourself. According to a recent study from AARP, the median value of inheritances received by baby boomers has been around $48,000. That compares with a median inheritance for the previous generation of nearly $109,000; but, of course, many received no inheritances at all. Of the Gen-Xers who have benefited from inheritances, the news is worse: Their median inheritance was just more than $22,000.

Dear Mr. Azrael: Could you please tell me what we have to do to be certain that our children will inherit property we own in Maine? My husband and I are in our 80s, and we included those wishes in our will many years ago. However, after reading one of your recent columns, I'm wondering if there would be problems with this property. Any information you can provide would be appreciated. Yours sincerely, Virginia Starrett Baltimore Dear Mrs. Starrett: Since your wills were prepared many years ago, I recommend that you review them with your lawyer or estate planner.

With the economy sagging and state cuts likely, Mayor Martin O'Malley's administration will propose today a lean budget for the year starting July 1 that won't raise taxes but may require the elimination of 71 jobs through retirements, transfers or layoffs. The recommended $2.1 billion budget for fiscal 2004 would be 2.6 percent larger than the current year's budget, according to a briefing that acting budget Director Edward J. Gallagher gave to the mayor's Cabinet yesterday. "Our revenue growth is extremely flat," said Gallagher.

There are days when William Amoss -- Harford County's farm preservation chief -- feels as if he alone is fending off sprawl. At the moment, he's trying to protect a 50-acre cattle farm in the Thomas Run Valley from being subdivided for single-family homes. "This property will go one direction or the other," he said, referring to the farm's uncertain future. Amoss prefers farming, but he worries that Gov. Robert L. Ehrlich Jr.'s proposal to cut some state funding for land preservation could mean that the cows, and their pasture, will be replaced by houses.

With spring on the horizon, it seems like everyone's talking about income taxes. It sure looks like there will be new legislation this year. But before we go too far in speculating about what may be next, let's review the tax changes for 2003. Income taxes Although tax rates aren't scheduled to change until next year, the brackets have expanded. You can earn a little more before you are pushed into the next marginal tax bracket. Marginal brackets for 2004 and beyond are estimated by using a 3 percent increase per year over 2002 figures excluding the 10 percent bracket.

WHEN ROBERT L. Ehrlich Jr. returns to Annapolis as governor tomorrow, it's ironic that his biggest policy challenge will be the budget. Budget problems and solutions dominated during the eight years Mr. Ehrlich was in Annapolis before he left for eight years on Capitol Hill. Now he will find a budgetary challenge so severe that it will sorely test his administration, determine whether Republican legislators are fully in his corner and define his relationship with the Democratic leadership.

You recently responded to a question from a reader who was confused about whether married couples were limited to a $1 million estate-tax exemption this year. Your answer, that each person gets a $1 million exemption, was technically correct, but you missed an opportunity to educate people about the possibility of wasting their exemption and the importance of bypass trusts. Indeed, there is a danger that estate-tax exemptions can be wasted. Here's how it might play out: Say a husband dies this year and leaves his estate to his wife.

Dear Mr. Azrael, I have a rental property that is currently titled in my name. For asset protection purposes and estate planning, I want to place the property in a land trust and I have several questions: Are there any particular issues about land trusts in Maryland that I should consider? And I understand I can transfer title to this land trust entity without any transfer taxes due?, Jim Fuller Baltimore Dear Mr. Fuller: A transfer of real property is subject to transfer and recordation taxes unless a specific exemption applies.

HAVING FAILED in Congress this year to make permanent the Bush administration's sweeping tax-cut package passed last year, Republicans are bringing up its components cut by cut -- just in time to use them to attack their Democratic opponents in this fall's midterm elections. What better than taxes to define the stereotypic divisions between the party of the rich and the party of the rest? And what better to first throw on the table than the estate tax, the highly polarizing toll on what the well-off leave to heirs?

Two days after leading lawmakers pledged that Marylanders would see a cut in their income taxes this year, General Assembly leaders unveiled legislation yesterday that would eliminate new tax breaks on estates and college tuition. The $104.9 million revenue package - introduced by Senate and House leaders - creates an alternative to what lawmakers say are the most unpalatable components of Gov. Parris N. Glendening's proposed $22.2 billion spending plan for next fiscal year. The governor wants to delay the final 2 percent stage of a five-year, 10 percent income tax cut, and has suggested tapping a variety of surplus funds that lawmakers are reluctant to touch.