Maine Estate Taxes

Beginning with estates of decedents dying in 2003, Maine has partially decoupled from federal estate tax law. In particular, the estate tax unified credit amount and the state death tax credit calculation are reduced to the levels existing prior to the Economic Growth and Tax Relief Reconciliation Act of 2001.

Reducing the unified credit amount (from $345,800 to $229,800 in 2003; from $555,800 to $287,300 in 2004) lowers the taxability threshold and raises the upper tax limit for estates. This means that 2003 Maine estates valued at more than $700,000 are subject to tax at the state level, despite the $1 million threshold at the federal level. Similarly, estates of 2004 decedents worth over $850,000 are subject to Maine estate tax, while $1.5 million is needed before federal estate taxes kick in.

A Maine estate tax return may still have to be filed even if the value of the estate is below the thresholds stated above. This is so if the estate contains real property or if the estate is going through probate.

The federal reductions in the state death tax credit (50 percent in 2003; 75 percent in 2004) do not apply when calculating Maine's estate tax. All other federal estate law provisions apply to estates subject to the Maine estate tax.

Deductions. Although not spelled out directly, the federal estate tax deductions are essentially built into Maine's estate tax laws.

Returns. The Maine estate tax return (Form 706ME) is due within nine months of the date of the decedent's death. An automatic six-month filing extension, equal to any federal extension, is granted for filing the Maine estate tax return . If there is no federal extension, the State Tax Assessor may grant a filing extension up to eight months.

Maine estate taxes are due within nine months of the decedent's death. An extension to file the Maine estate tax return does not apply to the payment of tax. If the estate owes money, at least 90 percent of the amount due must be paid by the original filing due date in order to avoid a failure to pay penalty.

Generation-skipping transfer tax. Maine does not impose this type of tax.