Don’t Overlook the Massachusetts Estate Tax
Dear Friends,
When we talk about estate planning, most of us naturally focus on the legacy we’re leaving behind for our families. Taxes are rarely the first thing on anyone’s mind, yet here in Massachusetts, there is one specific detail that often catches families by surprise: the Massachusetts estate tax.
Unlike the federal estate tax law, Massachusetts does not allow for “portability” between spouses. In simpler terms, if one spouse passes away without utilizing their exemption, that unused portion cannot be carried over to the survivor. Without a strategy in place, this “use it or lose it” rule can lead to a significant, and often avoidable, tax bill later on. Here is why it matters:
- The $2 Million Threshold: Between rising home values, retirement accounts, and life insurance, many estates reach this limit faster than expected.
- Inflation Factors: Because the state exemption isn’t indexed for inflation, more families find themselves exceeding the threshold every year.
- Proactive Solutions: Fortunately, tools like trusts or lifetime gifting can help protect your assets, ensuring they go to your loved ones rather than the state.
Even if your estate is not large by federal standards, Massachusetts law can create surprises. Home values, retirement accounts, life insurance, and investment portfolios can add up quickly, so a plan that was sufficient years ago may no longer reflect current asset values or current law. Taking a little time now to review your plan can save your family stress and help ensure your wishes are carried out exactly as you intend.
Next Steps
If you are unsure whether your current plan accounts for the Massachusetts estate tax, it may be worth taking a closer look. Please contact Christina to schedule a consultation where we can talk through where things stand and discuss whether any adjustments make sense. A thoughtful review now can help avoid unnecessary complications later.
Sincerely,
Anna