If you live in Maine and leave behind more than $6.41 million (for deaths occurring in 2023), your estate might have to pay the Maine estate tax. The Maine estate tax is separate from the federal estate tax, which is imposed only on estates worth more than $12.92 million (for deaths in 2023). So even if your estate isn't large enough to owe federal estate tax, it might still owe Maine estate tax.
But it's not just Maine residents who might owe Maine estate tax. If you're a nonresident but own real estate or other tangible assets (a boat or plane, for example) located in Maine, your estate might also need to file a Maine estate tax return.
If you die while a resident of Maine, the personal representative or executor of your estate must file the Maine estate tax return if your "gross estate" plus all taxable gifts you made in the year prior to your death add up to more than $6.41 million. (Smaller estates won't need to file the return.)
The gross estate will include just about all of the property you leave behind, such as:
Co-owned property. If you own assets with someone else, generally only your share will be included in your estate. In other words, if you and your spouse own your house, half of its value would be included in your estate.
Nonprobate assets. Notably, your gross estate also includes non-probate assets. For example, the property you hold in a revocable living trust avoids probate, but it does not avoid estate taxes, and is counted in your gross estate.
Portability. The federal estate tax regime allows a surviving spouse to use the deceased spouse's unused portion of the exemption—a feature called "portability." However, Maine's estate tax does not offer portability between spouses; each spouse has a separate exemption amount of $6.41 million.
If you're not a resident of Maine at your death, your estate will need to file a Maine estate tax return if you owned property located in Maine and your estate is required to file a federal estate tax return (in other words, your gross estate is greater than $12.41 million).
But even if your estate does not need to file a Maine estate tax return, note that Maine places an automatic lien on any real property or tangible personal property you owned that is located in Maine. The date the automatic lien begins is the date of your death. To release the lien, your estate will have to file a form that states the value of the property (Statement 700-SOV) and a Certificate of Discharge of Estate Tax.
Even if a Maine estate tax return must be filed, it doesn't necessarily mean that the estate will owe estate tax. Your estate might be able to take certain deductions that lower the value of your estate below $6.41 million, in which case no estate tax will be due. These deductions include:
If your estate owes estate tax, how much will it actually owe? In Maine, the first $6.41 million of the estate is not taxed. On the portion that exceeds $6.41 million, the estate tax rate ranges from 8% to 12%. To calculate the exact amount of tax owed, see the Maine Revenue Services tables. (Compare these rates to the current federal estate tax rate of 40%.)
If you're a nonresident of Maine, a ratio (essentially the value of your property that is located in Maine to the total value of your gross estate) is then used to determine the tax your estate owes.
If a Maine estate tax return is required, it's due nine months after the date of death. An automatic six-month extension gives you additional time to file the tax return, but this extra time applies only to the return, not to the tax payment, which must be estimated and paid by the initial nine-month deadline.
If you owe Maine estate tax but not federal estate tax (that is, if you fall between the state and federal exclusion amounts), you'll also have to attach a "pro forma" version of the federal estate tax return with Maine—this federal return is not actually filed with the federal government, but is used by Maine as supporting documentation.
Your executor will likely have to hire professional help (an experienced lawyer or CPA) to prepare the Maine estate tax return. The estate's funds can be used to pay for professional fees. Estate tax forms and instructions are available at the estate tax page of the Maine Revenue Services.
For more on estate planning issues specific to Maine, see Nolo's Maine Estate Planning section.