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Estate tax exemption issues for married individuals

Currently, the federal estate tax exemption amount is nearly five and a half million dollars. When confronted with this high number, many people might immediately assume that estate taxes would never apply to them and that they don’t have to worry about estate tax planning.

There are some important things to remember on this front though. One is that there are many types of assets people have (such as land) that could carry an especially high value. Also, some types of assets have the potential to grow quite a bit in value, possibly posing future estate tax concerns.

Also, for people here in Massachusetts, it is important to be aware that the state has its own estate tax and that the exemption amount for this tax is well under the federal amount. Specifically, the Massachusetts exemption amount is only $1 million. So, individuals here in Massachusetts who have assets that are far below the federal exemption amount could still be facing estate tax issues.

Having an accurate understanding of whether there are, in fact, any estate tax issues raised by their estate can be very important for a person when working on their estate plan. Skilled attorneys can provide individuals with assessments of their estate tax situation.

For married individuals, there is an added concern. For such individuals, minimizing estate tax exposure may not be a goal they just have for their own estate, but also for the estate of their spouse if they end up dying prior to their spouse.

Now, there are various tactics a married person could use to address these sorts of concerns (such as concerns related to exemption issues) in their estate planning. Examples include setting up a trust or relying on the federal portability provisions. The available tactics vary in many ways, including in whether they just address federal exemption issues or state ones as well, how much control they provide and how well-suited they are for a person’s family situation. When a married person is addressing estate tax concerns in their estate plan, the decisions they make on what tactics to go with can be very impactful. Skilled estate planning lawyers can advise married individuals on the suitability of the different available estate tax planning tactics to their situation.

Source: Barron’s, “How to Protect Your Estate-Tax Exemption,” Matt Miller, March 25, 2017

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