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Helping People Age with Dignity

Gifting history can have state estate tax implications

When it comes to the Massachusetts estate tax, a very critical number is $1 million. This is the state's exclusion amount. Whether or not a deceased's estate will be subject to the state estate tax depends on whether this threshold is crossed.

What things are considered when determining whether this threshold has been exceeded (which would trigger the state estate tax)? The main thing is the gross value of the deceased's estate. There are a variety of rules regarding what sorts of things are and are not considered part of a deceased's estate when it comes to calculating estate value for estate tax purposes.

Now, there is also something that is added on top of the estate's gross value to determine if the $1 million exclusion amount has been crossed. This is the value of certain gifts. Specifically, the value of adjusted taxable gifts made by the deceased during their lifetime is added.

Generally, taxable gifts are gifts made in excess of the annual gift tax exclusion amount in the year they were made.

So, how a person handled the making of gifts during their lifetime could have the potential to have state estate tax implications for them. There could be situations in which how a person acted when it came to lifetime gifting could be the difference between their estate being subject to the estate tax and their estate being free of estate tax liability.

As this underscores, a range of different things during a person's lifetime could have impacts on whether or not their estate would have to pay the state estate tax when they die. Thus, when a person's financial situation is such that it could potentially trigger future estate tax concerns, incorporating estate tax planning strategies into their overall plans, including their gifting plans, early can be important. Estate planning attorneys can give such individuals assessments on what estate tax planning strategies they may want to include in their overall estate and gifting plans.

Source: Massachusetts Department of Revenue, "A Guide to Estate Taxes (Applicable to dates of death on or after January 1, 2003)," Accessed April 1, 2016

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