Estate Tax

The Federal Estate Tax exclusion amount is currently $12,920,000 per person or $25,840,000 per married couple. The Massachusetts State Estate Tax exclusion amount is currently $2,000,000 per person but cannot be “doubled” for the surviving spouse in the same fashion as the Federal Estate Tax Exemption.

In other words, even though the Massachusetts Estate Tax Exemption exclusion amount is $2,000,000, married couples typically need to engage in careful planning to ensure that they are positioned to take advantage of both of their Estate Tax Exemptions. Otherwise, under current Massachusetts Tax Law, the surviving spouse’s estate could be obligated to pay up to $320,000 more in estate tax than if there had been Estate Tax Savings strategies incorporated into the Estate Planning.

Estate Tax Planning tends to be one of the more complex parts of estate planning. Therefore, it is no wonder that many attorneys who do not focus their practice on Estate Planning tend to minimize the number of trusts that are created at the death of a client. In fact, in New England, where there tends to be a higher Death Tax than in other regions of the country, it is very common for “general practice” attorneys to provide that spouses automatically receive all of their inheritance outright, thereby foregoing potential Death Tax Minimization Strategies like using Estate Tax Savings Trusts. We have seen this trend in Western Massachusetts Estate Planning.

In our view, Estate planning is not just about “having a Will” or merely planning the transfer of assets from one generation to the next. Estate Planning while taking into consideration transfer taxes (Estate Tax, Gift Tax, and Generation-Skipping Tax) is particularly important in Massachusetts where there is a more onerous Death Tax than in most states. The estate planning process should always include an estate tax analysis, even if an estate does not currently exceed the estate tax exclusion amount.

Estate Tax Updates

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