New Maryland Legislation Caps Estate Tax Exemption at $5 Million Beginning January 1, 2019


A new law changes both the exemption allowed and rules permitting use of estate tax exemptions in the state of Maryland. For individuals dying in 2018, the Maryland estate tax exemption is $4 million - a $1 million increase from the 2017 Maryland estate tax exemption. This change was part of a 2014 law that incrementally increased the Maryland estate tax exemption each year until 2019, when the exemption was scheduled to match the federal applicable exclusion amount.

Federal Estate Tax Exclusion for 2019
As a result of the recently-enacted, sweeping federal tax reform known as the Tax Cuts and Jobs Act of 2017 (TCJA), the federal applicable estate tax exclusion amount is approximately $11.2 million for decedents dying in 2018. Under the federal law, the exclusion amount will adjust annually for inflation. It is estimated that the federal applicable estate tax exclusion amount will be approximately $11.4 million for decedents dying in 2019. Accordingly, under prior Maryland law, the Maryland estate tax exemption was scheduled to automatically jump from $4 million in 2018 to approximately $11.4 million starting January 1, 2019.

Maryland Estate Tax Exclusion for 2019
However, in early April 2018, new legislation was enacted in Maryland that will cap the amount exempt from Maryland estate tax at $5 million for people who die on or after January 1, 2019. This new law replaces the prior 2014 Maryland law that was scheduled to bring the Maryland estate tax exemption in line with the federal applicable exclusion amount in 2019. In addition, the new Maryland exemption amount will not adjust for inflation each year. So, the amount that a Maryland resident can transfer estate-tax free at death will remain frozen at $5 million until new legislation is passed in the future.

Portability Allowed in New Maryland Law
The new Maryland law also provides for “portability,” a rule permitting a surviving spouse to use, under certain circumstances, the portion of his or her deceased spouse’s unused Maryland estate tax exemption. While portability has been a permanent feature of the federal estate tax scheme for several years, this marks the first time that portability will be available in Maryland, making Maryland one of the few states that provide this relief to its citizens.

How the New Law Effects Estate Planning
Keep in mind that estate tax planning is only one aspect of a comprehensive estate plan. If your estate is not likely to be subject to federal estate tax or even Maryland estate tax under the new law, you should likely focus more on incapacity planning, asset and nursing home protection, guardianship of minor children, blended family issues, special needs children planning, business succession planning, and minimizing income taxes. Current estate plans may not have the intended consequences under the new rules, and no one should wait for a death to find out if they have a good estate plan.

David A. Lucas
is an Attorney in Miller, Miller & Canby’s Estates & Trusts and Business and Tax Practice Groups. David is committed to providing his clients with a well-crafted estate plan so they may avoid probate, protect their assets and legacies, and provide for the security of their loved ones. He takes a special interest in ensuring that the dreams parents have for their children and grandchildren are not lost to taxes, poor planning, or procrastination. He speaks frequently on a variety of estate planning topics to both the general public and private groups.

David has focused his practice on helping families preserve their financial wealth and legacies for future generations through the use of Trusts, Wills, Powers of Attorney, Advance Medical Directives, Living Wills, and other estate planning strategies.

Contact David
to discuss your estate plan to take advantage of the laws available today and ensure flexibility for future changes. For more information on Miller, Miller & Canby’s Estates & Trusts Practice, click here.





Donna McBride Appointed to Second Term for Maryland Court of Appeals Rules Committee


Miller, Miller & Canby's litigation attorney Donna McBride has been re-appointed to serve a second 5-year term as a Committee Member to the Standing Committee of Practice and Procedures.  Donna received her first appointment in 2013. The Committee assists the Court of Appeals in developing rules that govern the practice and procedure of law and judicial administration in Maryland. Also known as the Rules Committee, it was appointed by order of the Court of Appeals in 1946.

According the Maryland Constitution, the Court of Appeals is “empowered to regulate the practice and procedure in, and the judicial administration of, the courts of this State; and under Courts and Judicial Proceedings Article § 13-301, the Court of Appeals may appoint a standing committee of lawyers, judges, and other persons competent in judicial practice, procedure, or administration to assist the Court in the exercise of its rulemaking power.”

Procedural rules (also known as court rules) guide the litigant, who usually is represented by an attorney, on how to proceed when bringing a legal dispute into a State or federal court in Maryland. These mandatory rules establish a uniform process for trying cases to ensure that justice is administered fairly.

Donna McBride
is a partner in Miller, Miller & Canby’s Litigation group. In her more than two decades of practice, she has tried hundreds of lawsuits throughout the state of Maryland and in the District of Columbia.  In addition to her extensive background as a trial lawyer, she is a member of the Trial Courts Judicial Nominating Commission, was elected to be Treasurer of the Montgomery County Bar Association in which capacity she will serve from May 2018-May 2019, and regularly volunteers as a settlement conference facilitator for the District Court.  Each year, she has been named a Super Lawyer in the state of Maryland and District of Columbia since 2014. To learn more about Miller, Miller & Canby’s Litigation practice, contact Donna at 301-762-5212.
 





Miller, Miller & Canby is a Sponsor of the 18th Annual Hopecam 5k Race/Walk on Sunday, May 6th


Miller, Miller & Canby is pleased to be a sponsor of the 18th annual Hopecam 5K Run / Walk to benefit children fighting cancer. This year marks the 18th anniversary of the race and the 4th year that Hopecam has included a team competition to create awareness among the community.

The Hopecam 5K is a USATF certified race-fast and flat for those wanting to set a personal best record. This is also the perfect race for families featuring an easy course for runners and walkers of all ages and fitness levels. This fun, family event is also stroller friendly.

The 18th Annual Hopecam 5k Race/Walk will take place on Sunday, May 6th at 1890 Preston White Drive in Reston, VA. The race will start at 8:15am with registration starting at 7:30am. Participants can register online at http://www.hopecam.org

About Hopecam
Development Director of Hopecam Lauren Priestas explains, “15,780 children will be diagnosed with cancer this year. Nearly every one of these children will have to be isolated from their friends and unable to attend school as a result of their treatment. Today, thanks to technology, this isolation can be overcome by giving the child a tablet or laptop computer and working with schools to establish a connection with the hospitalized and homebound child. For children who are being treated far from home, Hopecam provides a way to stay in touch with loved ones and support networks. Hopecam is the only charitable organization in the United States that provides this full-spectrum of service to ensure technology is used to bring sick children together with their classrooms and friends.”

Hopecam has connected over 1,500 children in 47 states and abroad. It costs approximately $1,000 to connect each child. About 50% of the children live in homes unable to afford Internet, which Hopecam provides at a cost of $500 per year. 70% of the children attend schools eligible for Title 1 financing.

Click here to veiw the full press release.

 





James Thompson Honored by Maryland State Bar Association as Senior Lawyer of the Year


Miller, Miller & Canby is pleased to announce James L. Thompson has been selected as the Senior Lawyer of the Year by the Maryland State Bar Association Senior Lawyer Section. Mr. Thompson’s distinguished career has spanned more than 45 years, during which he has served clients and the legal community.

Jim Thompson has been a leader in Miller, Miller & Canby’s Litigation Group for more than 35 years, concentrating his practice in eminent domain and in real estate valuation litigation, as well as in property tax assessment appeals and general civil litigation. For more than a decade, he represented Maryland as the sole member in the Owner’s Counsel of America, a national network of property rights attorneys with demonstrated excellence in this area, focusing upon the representation of landowners in eminent domain litigation. Additionally, he focuses in civil litigation, including complex real estate and business/commercial disputes. For his accomplishments, he has been named a Super Lawyer in the state of Maryland and the District of Columbia for the past 12 consecutive years, an AV-Rated Preeminent Lawyer for 30 years, a Fellow in the American College of Trial Lawyers, and a 2013 Lawyer of the Year Selection by Best Lawyers in the Eminent Domain/Condemnation area of practice. He has also received a number of prestigious leadership awards, including the Daily Record’s Leadership in Law Award and the Century of Service Award, recognizing the top judges and lawyers in the last 100 years in Montgomery County. In addition, he has served the legal community and the public as the President of both the Montgomery County Bar Association and the Maryland State Bar Association.

Learn more about MM&C's Litigation practice. To view the firm's formal press release, please click the download button below.





Estate Planning Attorney David Lucas is a Featured Speaker on Trusts at NBI Estate Planning Seminar


The National Business Institute (NBI) is holding a two day conference on “Estate Planning A-Z” in Timonium, Maryland on May 9-10, 2018. The two-day comprehensive course is an ultimate guide to estate planning. From client intake through tax planning and business succession strategies, attendees will receive tips, sample forms and answers to the most pressing questions. The conference will also cover the latest knowledge on effective will and trust planning techniques.

Miller, Miller & Canby Estates & Trusts Attorney, David Lucas, will give a presentation on “Trusts 101”on the second day of the conference, May 10th. Mr. Lucas’ presentation will cover:

•    Types, Goals and Functions of Trusts;
•    Major Laws Governing Trust Creation and Administration;
•    Who are the Main Parties? Their Duties and Responsibilities to a Trust;
•    Revocable vs. Irrevocable Trusts;
•    Choosing Trust Status; and
•    Trust Funding Basics.

Who Should Attend?

•    Attorneys
•    Estate and Financial Planners
•    Trust Officers
•    Paralegals
•    Accountants
•    Tax Professionals

Click here for the NBI conference overview and to REGISTER.

Mr. Lucas
is an attorney in Miller, Miller & Canby’s Estates & Trusts and Business & Tax practice groups where he focuses his practice on Estate Planning, Trust and Estate Administration, Elder Law and Business Law. David is committed to providing his clients with a well-crafted estate plan so they may avoid probate, protect their assets and legacies, and provide for the security of their loved ones. He takes a special interest in ensuring that the dreams parents have for their children and grandchildren are not lost to taxes, poor planning, or procrastination. He speaks frequently on a variety of estate planning topics to both the general public and private groups.

For more information about Miller, Miller & Canby’s Estates & Trusts and Business & Tax Practices, click here or contact David at 301-762-5212.
 





March 2018 Legal News & Notes


The March 2018 issue of Miller, Miller & Canby's Legal News & Notes quarterly email newsletter covers Tax Reform and your Estate Plan, a Maryland Tax Court Determination of Casino Land Value, 5G Wireless Infrastructure Development and much more.  Click here to view newsletter.





Maryland Property Tax News: Tax Court Determines Value of Casino Land in Case of First Impression


In a case of first impression, the Maryland Tax Court recently considered how to value property subject to a 99-year ground lease with a percentage rent arrangement.   The unusual property tax case involved a lease that was entered into by a casino operator and shopping mall owner, in which the casino was responsible for the property taxes.  Casinos are highly regulated entities in Maryland, with operators required to obtain approval from the Maryland Lottery and Gaming Control Commission and pay a large licensing fee.

 Under the ground lease, the casino was required to pay fixed minimum annual rent plus a variable 1% of annual  gross revenues (known as “percentage rent”) generated from gaming and retail sales.  The issue before the court was whether the ground lease should be used as the measure to assess fair market value of the land for ad valorem tax purposes.  The State argued that the lease must be relied upon under an income approach to value.  The casino argued that the ground lease could not be relied upon at all due to its connection to casino revenues.  Instead, the casino urged the court to utilize the sales comparable approach as the only reliable measure of land value.

In analyzing the issue, the Tax Court reviewed Maryland and Federal law related to valuing property subject to leases.  The general rule is that an assessor must consider the effect of a lease on valuation, but it should not be the controlling document in assessing value.  In this case, it was especially true because the ground lease was not a good indicator of property value for these reasons:

  1. The percentage rent provision in the ground lease was speculative and the revenue unknown at the time of execution; and

  2. Including percentage rent in an income approach risks valuing property based on business value instead of property value. Here, approximately two-thirds of the ground rent was derived from the casino business as percentage rent. 

The Maryland Tax Court held that such business income was not indicative of property value, particularly since the property cannot be freely sold in its current use due to the special licensing arrangement with the State.   

In rejecting the States reliance on an income approach using the ground lease, the Tax Court turned to the casino’s appraisal using a sales comparison approach.  The appraisal report listed sales of other properties on which casinos were ultimately constructed – Horseshoe Casino in Baltimore City and the MGM National Harbor Casino on Prince George’s County.   The court deemed that sales are the best indicator of land value for the subject property and reduced the land assessment by a whopping $71M for the 2011 tax cycle and $70M for the 2013 tax cycle, which resulted in a massive tax savings for the casino.  The case is PPE Casino Resorts Maryland LLC vs. Supervisor of Assessments of Anne Arundel County, Case Nos. 14-RP-AA-0503 (1-2) and 14-RP-AA-1276.

Miller, Miller & Canby has been handling assessment appeals of various types of commercial properties in Maryland for more than 30 years.  In 2016, we obtained over $20,000,000 in property assessment reductions for our clients.  Our litigation attorneys regularly represent clients at the assessor level, before the Property Tax Assessment Appeals Board (PTAAB) and in the Maryland Tax Court.  We have successfully appealed the assessments on office buildings, hotels, casinos, retail stores, industrial sites, warehouses, apartment buildings and land at various stages of development.  

Michael Campbell is a partner in the litigation group at Miller, Miller & Canby. In addition to trial and appellate advocacy, his practice focuses on real estate litigation and property tax assessment appeals.  Please feel free to contact Mr. Campbell at 301.762.5212 or send him an email for property tax guidance.  For more information about the firm’s Maryland property tax appeals practice and representative cases, click here.





MD DC Wireless Association Launches 2018 Speaker Series Luncheon on March 22


Miller, Miller & Canby’s Sean Hughes to moderate keynote speech of FCC Commissioner

As part of its annual Speaker Series, the Maryland-DC Wireless Association will hold a symposium luncheon on March 22 at Living Classroom’s Frederick Douglass-Isaac Myers Maritime Park in Baltimore. Over 150 attendees are expected to attend and Sean Hughes of Miller, Miller & Canby, a MD DC Wireless Association board member, will serve as moderator of a keynote speech and question and answer session.  Speakers will include:

Marc Ganzi, Executive Chairman of Vertical Bridge. Marc is the co-founder and Chief Executive Officer of Digital Bridge Holdings, LLC. He previously co-founded Global Tower Partners (GTP), an owner and operator of communications, real estate and related companies, where he played an instrumental role in building the business, which was ultimately sold in 2013 for over $4.8 billion.

Jennifer Fritzsche, Managing Director, Equity Research Group - Wells Fargo Securities. Jennifer is a top-ranked leader among 75 analysts in getting companies to meet clients via non-deal road shows. She lead a 3-member, award-winning research team as Senior Analyst covering the Telecommunications Services (Wired and Wireless), fiber, data centers and tower sectors. 

Brendan Carr, FCC Commissioner. Brendan was nominated to serve as a Commissioner of the FCC by President Donald J. Trump and was confirmed unanimously by the United States Senate on August 3, 2017. Commissioner Carr brings to the position over a dozen years of public and private sector experience in technology and communications law and policy.

Most recently, Commissioner Carr served as the General Counsel of the FCC. In that role, he served as the chief legal advisor to the Commission and FCC staff on all matters within the agency's jurisdiction. Previously, he served as the lead advisor to FCC Commissioner Ajit Pai on wireless, public safety, and international issues. Before that, he worked as an attorney in the FCC's Office of General Counsel, where he provided legal advice on a wide range of spectrum policy, competition, and public safety matters.

“The Speaker Series brings industry veterans together to identify issues and opportunities in wireless telecommunications,” said Sean Hughes, a telecommunications attorney in Miller, Miller & Canby’s Land Use practice and MDDCWA Board Member. “We are dedicated to advancing our industry and providing a productive and valuable platform for the exchange of ideas.”


Founded in 2007, the MDDCWA includes members who are involved with the deployment, operations and maintenance of wireless networks, including cell carriers, tower companies, A&E firms, surveyors, general contractors and others. Issues such as infrastructure, zoning and regulatory matters are key priorities for the organization. In 2017 the Association donated over $40,000 to charitable organizations.

Founded in Baltimore in 1985, Living Classrooms Foundation has grown into an educational and economic force that combines one of the city's most cherished assets - it’s beautiful and historic harbor - with some of its most overlooked - the thousands of bright, ambitious children and young adults who are struggling to succeed against terrible odds. What began with one program in one city has grown into dozens of programs across a region that now encompasses Washington, DC, Virginia, and Maryland.

To learn more about future association events, contact Sean Hughes, or visit the MDDCWA website.

Sean P. Hughes is an attorney in Miller, Miller & Canby’s Land Use practice group. His career spans more than two decades of focus in legal and wireless telecommunications and he has represented clients in land use and zoning matters throughout the Mid-Atlantic.  To learn more about the firm’s Land Use and Zoning practice, contact Sean.





How Does Tax Reform Affect Your Estate Plan?


In December 2017, a sweeping tax reform bill, commonly known as the Tax Cuts and Jobs Act of 2017 (TCJA), was passed by Congress and signed into law by the President. The TCJA reduces individual and corporate tax rates, eliminates a host of deductions, enhances other breaks, and makes numerous other changes. But how does the TCJA affect your estate plan?  

One thing the TCJA did not do is repeal the federal gift and estate tax, as initially planned by the House of Representative’s version of the bill. Instead, the TCJA temporarily doubles the combined gift and estate tax exemption and the generation-skipping transfer (GST) tax exemption from $5 million to $10 million (adjusted for inflation after 2011). For 2018, the exemption is now $11.2 million per person ($22.4 million for a married couple). This doubled exemption will adjust for inflation each year and will remain in effect until December 31, 2025. If Congress doesn’t act before 2026, the law will sunset and the exemptions will revert to the $5 million level (indexed for inflation).


New Estate Planning Opportunities

These changes open considerable opportunities for people to remove assets from their taxable estates and permanently exempt future appreciation of those assets from estate, gift, and GST tax. For example, by using the increased exemption amount to make tax-free lifetime gifts, you can protect that wealth (and any future appreciation in value) from taxation in your estate, even if smaller exemptions are reinstated before death. Be aware though, that unlike assets transferred at death, lifetime gifts will not receive a stepped-up tax basis. This could cause an increase in income taxes on any gain realized by the recipient when they sell the gifted asset. It is therefore critical to weigh the potential estate tax savings against the potential income tax costs when considering this strategy.


Lifetime Gifting Strategy with 529 College Savings Plan

If you can benefit from a lifetime gifting strategy, then you may want to consider combining that strategy with a 529 college savings plan. The TCJA permanently expands the benefits of these plans, which now permit tax-free withdrawals for qualified elementary and secondary school expenses and not just higher-education expenses. Contributions to 529 plans are removed from your taxable estate even though you can change the beneficiaries at any time and even get your money back (Note: a penalty will be assessed for any non-qualified distributions).  And, you can combine 5 years’ worth of annual gift tax exclusions (currently $15,000 per year) into one year, so an individual could gift $75,000 to a 529 plan this year (or $150,000 for married couples) without triggering gift or GST tax or using any of your exemptions.


Dynasty Trust

It may also be an ideal time to establish a “Dynasty trust.” Significant amounts of wealth can grow and compound free of federal estate, gift, and GST tax with this type of irrevocable trust, providing tax-free benefits for your grandchildren and future generations. In Maryland and a few other states, a dynasty trust can last forever, but some states restrict the length of time these trusts can exist. Avoiding the GST tax is imperative as it imposes an additional 40% tax on transfers to grandchildren and others that skip a generation. Clearly, this tax will quickly erode large amounts of wealth. The key to avoiding the GST tax is to leverage your new, doubled GST tax exemption.

For example, let’s assume that you have not yet used any of your estate and gift tax exemptions and you transfer $10 million to a properly-crafted dynasty trust. There would be no gift tax because you are within your exemption amount. Now, the funds in the dynasty trust, and all future appreciation of those funds, are out of your taxable estate. Then, by allocating your GST tax exemption to your $10 million trust contribution, you can ensure that any distributions from the dynasty trust to your grandchildren (or subsequent generations) avoid GST tax. This is true even if the trust’s funds grow well beyond the exemption amount and even if the exemption amount is reduced in the future.


Other Estate Planning Considerations

Keep this in mind though: estate, gift, and GST tax planning is only one aspect of estate planning. Given that some pundits are predicting that the TCJA has reduced the number of U.S. estates subject to estate tax from approximately 5,000 to 2,000, most families should likely focus more on non-estate tax issues, like incapacity planning, asset and nursing home protection, guardianship of minor children, blended family issues, special needs children planning, business succession planning, and minimizing income taxes.

In fact, it may be preferable to engage in strategies to reduce income tax now and then transfer those savings to your beneficiaries at death with as little transfer tax as possible. This can be done in a variety of ways, including, but not limited to:

  •  Shifting income to someone else: make a lifetime gift of an asset that produces a lot of income to a trust that distributes the taxable income to a beneficiary that is in a lower tax bracket;

  • Charitable giving: contribute more to charity. The TCJA increases the adjusted gross income limitation for deductions of cash donations to public charities from 50% to 60%; and

  • Delaying capital gains taxation: make a gift of an asset that has already appreciated and that you want to sell to a charitable remainder trust (CRT). A sale by the CRT avoids immediate capital gains taxation. 100% of the proceeds of the sale are then reinvested. Distributions from the CRT each year will be taxed to the beneficiary, but may avoid income taxation at top rates.

The TCJA is perhaps the most significant tax legislation in over 30 years. Continued review and experience with the Act will unquestionably reveal numerous new planning opportunities in the coming months and years. Don’t fall into the trap that you don’t need a well-crafted estate plan because of the increased federal estate, gift, and GST tax exemption. Current estate plans may not have the intended consequences under the new rules, and no one should wait for a death to find out if they have a good estate plan.

David A. Lucas is an Attorney in Miller, Miller & Canby’s Estates & Trusts and Business and Tax Practice Groups. David is committed to providing his clients with a well-crafted estate plan so they may avoid probate, protect their assets and legacies, and provide for the security of their loved ones. He takes a special interest in ensuring that the dreams parents have for their children and grandchildren are not lost to taxes, poor planning, or procrastination. He speaks frequently on a variety of estate planning topics to both the general public and private groups.

David has focused his practice on helping families preserve their financial wealth and legacies for future generations through the use of Trusts, Wills, Powers of Attorney, Advance Medical Directives, Living Wills, and other estate planning strategies.

Contact David
to discuss your estate plan to take advantage of the laws available today and ensure flexibility for future changes. For more information on Miller, Miller & Canby’s Estates & Trusts Practice, click here.





Jody Kline Participates in University of Maryland Real Estate Development Program as Guest Lecturer


On Thursday, February 8, the University of Maryland’s Colvin Institute Real Estate Development Program hosted Miller, Miller & Canby’s land use and planning attorney Jody Kline. Mr. Kline addressed students in  “Introduction to the Principles, Practice and Process of Real Estate Development.” He was invited to speak by University of Maryland Professor Stephen Shapiro; Mr. Kline and Mr. Shapiro are both members in Lamda Alpha, an honorary land economics society.

The main objective of the comprehensive course is to provide a foundation for study of all aspects of real estate, to acquaint students with an overview of the real estate industry, including the development process, and to help students understand the roles of multiple parties, politics and citizens in real estate development.  The class also serves to help students understand how to analyze the development potential of real property sites.

In a lively question and answer discussion led by Professor Shapiro, Mr. Kline engaged with students representing a variety of different disciplines of study.  Drawing on his more than 45 years of experience in a successful land use and zoning practice, Mr. Kline brought valuable hands-on knowledge and perspectives to the students to help illustrate the concepts and skills they had been learning in the course.  Mr. Kline used real-world examples of several projects that have been impacted by zoning, in the context of discussing the personnel, processes and risks involved with the development of land.

Mr. Kline
has served as head of Miller, Miller & Canby’s Land Development practice group since 1981. He concentrates his practice in land use, zoning, and subdivision law.  During the course of his career, he has been involved in a number of important land development projects that have helped to shape Montgomery County. He has been featured as a Washingtonian Magazine “Top Lawyer”, and has also been named a Super Lawyer in the state of Maryland every year since 2008, as well as a recognized Best Lawyer for the past 11 consecutive years.  To learn more about Jody Kline  and Miller, Miller & Canby’s land development practice click here or contact Mr. Kline at 301.762.5212 or via email.

 





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