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2024 Legislative Recap: Estate Planning & Administration

MVLS was following several legislative updates regarding estate planning, estate administration, and property law. We especially were looking at issues that might affect our Tangled Title program. Tangled titles are legal issues that fracture families’ property title, resulting in housing destabilization. Tangled titles present a barrier to accessing essential home preservation services, such as a tax credit or home repair grant, due to the owner’s name not being on the deed. We have consistently seen tangled titles negatively overlap with mortgage and tax sale foreclosures to destabilize vulnerable homeowners. Our research has shown that this amplifies a wealth gap of nearly ten times between white and Black families. Our Tangled Title Program works to help people keep their homes and build intergenerational wealth by using estate planning, estate administration, and deed services. Here is a summary of a few relevant legislative updates.  

Getting Estates Over The Finish Line (“Clean Lien Sheet” Requirement) 
Prior to this session, the statutory framework around estates was creating a barrier for our clients. One of our biggest client wins this session was the passage of a bill that eliminates the clean lien sheet requirement. The current “clean lien sheet” requirement requires that public taxes and charges be paid prior to the transfer of property. This affected many of our clients and stranded them without access to their largest asset-their home.

From our testimony on the bill- “In many cases, when an heir can record the deed and apply for and receive housing stabilization assistance, they are in a stronger position to pay their property taxes on time. Without clear title, heirs do not qualify for the Homestead Tax Credit or home repair grants. The wealth in the home is inaccessible to the heirs as they cannot leverage their real property to pay taxes, replace the roof, send a kid to college or start a business.”

Thankfully, the law has changed. The change in the law will allow Marylanders to enter payment plans for the arrears on the property and effectuate a transfer. The law will take effect on July 1st, but the true timeline for implementation by the state remains unclear.

See the bill- Legislation – HB0054 (maryland.gov)

Other Estates Issues  
Two bills affected the rights of parties in estate administrations. One limited the definition of “interested persons,” by mainly removing parties whose interests may have lapsed. For example, a legatee whose interest has been fully paid or adeemed would cease to be an “interested person.” Effective October 1, 2024.  

See the bill- Legislation – HB0325 (maryland.gov) 

The second limits the class of people who can object to the appointment of a personal representative, limiting the class to “all interested persons or unpaid claimants.” Previously the law referenced “all persons having any objection.” Effective October 1, 2024. 

See the bill- Legislation – HB0326 (maryland.gov) 

The Inheritance Tax Holds On 
In our analysis, the inheritance tax is inequitable and helps limit the transfer of intergenerational wealth, when low-income clients cannot receive the property due to the tax. This tax particularly impacts non-traditional families. There were proposals, but no changes to the law.  

Property Tax Credits 
A bill failed that would have increased the combined gross income limits used to determine eligibility for the renters tax credit and homeowners tax credit in Maryland and raised the assessed property rate for homeowners to be eligible for those credits.  These credits are key to providing housing stability for low income homeowners – they can reduce the property tax burden by hundreds or even thousands of dollars per year. 

Even though more clients will not be eligible, it will be easier for clients to access the homeowner’s property tax credit. A bill was passed that allows applicants to the homeowner’s property tax credit who do not have to file a tax return to apply with an attestation of income. Previously, you would have to provide a tax return even if your income was low enough to not have to file a tax return. Effective June 1, 2024. 

See the bill- Legislation – SB0283 (maryland.gov)