When it comes to estate taxes, much of the discussion tends to focus on the federal estate tax. However, if a loved one who resides here in Massachusetts passes away, know this is a state with its own estate tax in place. This means the state can sometimes take a percentage of the value of an estate. This state estate tax can affect those estates worth upwards of $1 million.
Looking to the future for Massachusetts residents though, this may all change. A state representative is introducing a bill that would raise the exemption level to a higher dollar amount. If the bill passes, fewer estates would be hit with the state tax.
Currently, estates under $1 million are generally exempt from Massachusetts estate taxes. Under the representative's proposal, the exemption level would be raised to half of the exemption cutoff for the federal estate tax, which is $5.2 million. Thus, under his proposal, the state estate tax would generally not apply to estates of less than $2.6 million.
According to the representative, one of the aims of the bill is to make individuals from Massachusetts less likely to leave the state in their elderly years to avoid estate taxes.
An elderly person generally wants as much of the fruits of their hard work to go to their loved ones upon their death as possible. Estate taxes can end up greatly reducing what a deceased person's loved ones are able to receive. Thus, when a person from Massachusetts with a large estate is making after-death plans regarding their assets, the state estate tax can be a major area of concern and can be a reason for them wanting to relocate.
The good news though is that, regardless of whether or not this bill passes, someone does not necessarily need to move just because his or her estate is of a size that it may qualify for the state estate tax. Rather, know that there may be a variety of different legitimate estate planning tactics available to those individuals with large estates. Attorneys can assist with estate tax planning and help to develop an estate plan that is aimed at ensuring assets are preserved after death.
Source: The Sun Chronicle, "Attleboro area state rep proposes cut in Mass. estate tax," Jim Hand, Jan. 13, 2015