Maryland Estate Planning: Probate and Business Succession

Why Estate Planning Matters for Maryland Business Owners

For Maryland entrepreneurs and family business owners, estate planning is about more than distributing personal assets—it safeguards jobs, preserves goodwill, and maintains continuity for customers and vendors. A well-structured plan can reduce administrative burdens in probate, provide liquidity for taxes and expenses, and clearly define who will lead or own the business when you step away or pass on.

How Maryland Probate Works

In Maryland, probate is overseen by the Orphans’ Court—or in Montgomery and Harford Counties, by the Circuit Court sitting as the Orphans’ Court—with filings handled by the local Register of Wills. See the Maryland Courts overview of the Orphans’ Court system here.

When a person dies owning assets in their sole name without a beneficiary designation, those assets typically must pass through probate. A personal representative (also called an executor) identifies assets, notifies interested persons and creditors, pays valid debts and expenses, and distributes the remainder according to the will or, if there is no will, Maryland intestacy law. Some assets transfer outside probate, such as interests held in a revocable trust, payable-on-death/transfer-on-death accounts, life insurance with named beneficiaries, or property titled as tenants by the entirety or joint tenants with right of survivorship (Register of Wills – Probate Information).

Small Estate vs. Regular Estate

Maryland provides a small estate process with streamlined filings when statutory conditions are met. As of this writing, estates generally qualify as “small” up to $50,000—or up to $100,000 if the surviving spouse is the sole heir/legatee (Register of Wills – Small Estates). Regular estates follow more comprehensive procedures, including ongoing accountings and court oversight. Business interests can complicate valuation and classification; professional appraisals or accountant input may be needed.

Key Roles: Personal Representative and Resident Agent

The personal representative manages the estate, files required inventories and accounts, handles tax reporting, and distributes assets. If the personal representative is not a Maryland resident, appointment of a Maryland resident agent for service of process may be required. Selecting a fiduciary who can coordinate with your CPA, attorney, and insurance advisors—and who understands your company operations—helps reduce risk and delay.

Creditor Claims and Notices

Maryland law provides a process for notifying interested persons and creditors and for presenting claims against the estate. Timing and method of notice can affect whether and when claims are barred or paid (Register of Wills – Probate Information). For business owners, special attention to vendor contracts, leases, loans, payroll, and tax filings helps prevent operational disruptions during administration.

Taxes: Estate, Inheritance, and Income

Maryland imposes an inheritance tax on certain transfers, and the state also maintains a separate estate tax—both distinct from federal estate and income taxes. Beneficiary relationships, the nature of the property, exemptions, and trust structures can materially affect exposure (Comptroller of Maryland – Estate and Inheritance Tax). Coordinating buy-sell funding, charitable strategies, and lifetime gifting with your federal plan can improve overall tax efficiency.

Business Succession Planning Essentials

• Buy-sell agreements: Cross-purchase or entity redemption structures that define triggers, pricing, and terms.
• Insurance funding: Key person coverage and buy-sell funding via life or disability insurance.
• Aligned governance: Operating agreements, shareholder agreements, and bylaws that match the succession plan.
• Trusts and titling: Use revocable trusts and coordinated beneficiary designations to keep interests out of probate when appropriate and permitted by governing documents.
• Management continuity: Employment/compensation agreements, retention plans, and clear interim authority.

Practical Tips for Maryland Business Owners

Coordinating Your Will, Trusts, and Operating Documents

Your will should dovetail with any revocable trust and your company governance documents. Inconsistencies—such as a will bequeathing shares that your operating agreement restricts—cause delay and disputes. Trust terms must respect transfer restrictions, rights of first refusal, and consent requirements. Keep capitalization tables, unit/share ledgers, and assignment documents current.

Valuation and Funding the Transition

Reduce conflict by adopting clear valuation methods—fixed price with scheduled updates, formula approaches tied to agreed metrics, or independent appraisals. Match funding (insurance, sinking funds, credit facilities, or installment notes) to the valuation method and cash-flow realities. Periodically stress-test funding against updated valuations.

Protecting Family and Co-Owners

Balance liquidity for your family, continuity for the business, and fairness for co-owners. Consider spousal rights, minority protections, and fiduciary duties. Trust structures can separate economic benefits from voting control, and independent fiduciaries can help when family members and managers have different interests or skills.

Common Pitfalls to Avoid

• Relying on a will alone where operating agreements restrict transfers
• Missing beneficiary updates on insurance or retirement accounts
• Failing to title interests into a revocable trust when intended
• Overlooking creditor protections or personal guarantees
• Letting valuation formulas go stale
• Not aligning tax elections and S-corp eligibility with trust planning
• Ignoring disability and short-term incapacity planning for key managers or owners

Action Steps to Get Started

When Probate Is Still Necessary

Even with careful planning, probate may be required for certain assets or to address unexpected issues. Maryland provides procedures for accountings, sales of property, interim distributions, and final closure. Business owners can ease the process by maintaining segregated accounts, clear books, and documented authority for managers to continue day-to-day operations while the estate is administered.

FAQs

What makes an estate qualify as a small estate in Maryland?

Generally, estates up to $50,000 qualify as small, or up to $100,000 if the surviving spouse is the sole heir or legatee. Specific requirements and forms are outlined by the Register of Wills.

Do business interests have to go through probate?

It depends on titling and governing documents. Interests held in a revocable trust or transferred under a buy-sell agreement may avoid probate, but restrictions in operating agreements must be followed.

How long does Maryland probate take?

Simple small estates can close in a few months; regular estates, especially those with operating businesses, often take 9 to 18 months or longer.

Will Maryland inheritance tax apply to transfers to my children?

Transfers to most lineal heirs (such as children) are generally exempt from Maryland inheritance tax, but other taxes may still apply depending on the assets and structure.

Should I name my company as owner or beneficiary of life insurance?

It depends on your buy-sell structure, tax goals, and creditor considerations. Coordinate ownership and beneficiary designations with your agreements and trust planning.

Citations

• Maryland Register of Wills – Probate Information (accessed 2025-10-31)
• Maryland Courts – Orphans’ Court (accessed 2025-10-31)
• Maryland Register of Wills – Small Estates (accessed 2025-10-31)
• Comptroller of Maryland – Estate and Inheritance Tax (accessed 2025-10-31)

Disclaimer

This blog is for general informational purposes only and is not legal, tax, or financial advice. Reading it does not create an attorney-client relationship. Laws change and vary by circumstance; consult a qualified Maryland attorney about your specific situation. For tailored guidance, contact us.