Maryland Estate Tax – Qualified Agricultural Property – Transfer to Limited Liability Company
Summary
SB704 amends Maryland’s estate tax rules for qualified agricultural property. Under current law, certain farm property can receive estate tax relief when it passes from a decedent to a qualified recipient who agrees to keep the property in farming use. This bill adds a new option allowing that qualified recipient to transfer legal ownership of the agricultural property to a limited liability company, so long as the LLC is owned only by qualified recipients.
The bill also protects that transfer from estate tax recapture, but only if the property continues to be used for farming purposes for at least 10 years after the decedent’s death. The Comptroller is directed to adopt regulations to carry out the new provisions. The bill applies prospectively to decedents dying after the effective date specified in the act, which was amended to July 1, 2027.
Impact
The bill amends § 7-309(c) of the Tax-General Article, expanding the estate tax exemption/deferral framework for qualified agricultural property by recognizing LLC ownership as an allowable post-death ownership structure. It changes how farm property may be held without triggering recapture, provided the LLC is composed only of qualified recipients and the property remains in farming use for the required period. The Comptroller must issue implementing regulations, and the change affects estates, heirs, family farms, and agricultural landowners planning succession through LLCs.
Sentiment
The bill appears to have been broadly favorable and noncontroversial. It received a favorable committee report with amendments and passed the Senate and House unanimously, with 42-0 and 130-0 votes on third reading. The voting pattern suggests strong bipartisan support for the measure and little visible opposition in the available record.
Contention
No committee transcript is available, and the vote history shows no recorded dissent, so there is no documented floor-level controversy. The main policy issue implicit in the bill is whether allowing LLC ownership could weaken estate tax recapture protections for agricultural property; the bill addresses that concern by limiting LLC ownership to qualified recipients and requiring continued farming use for 10 years. Any practical contention would likely center on administrative oversight and whether the LLC structure could be used to preserve farm succession benefits while maintaining the tax preference.