Here in Massachusetts, there is a state estate tax for estates that exceed $1 million in value. There are many different kinds of people that could potentially end up with an estate that could cross this threshold. And it is not limited to just the people society typically would view as being very wealthy.
For example, it is possible for a small business owner to have an estate that exceeds $1 million, as their interest in their business could potentially have a pretty big dollar value assigned to it.
Some critics of the current state estate tax argue that it has the potential to be very impactful on small business owners in the state. One big effect an estate being subject to the estate tax can have is that it can reduce how much of the estate will go to a person’s beneficiaries, as some of the estate assets will be redirected towards paying the tax. One could see how such a reduction could possibly be disruptive to a small business owner’s plans for what to leave their family and loved ones.
Arguments regarding the estate tax and small business owners are among the arguments critics of the state estate tax have put forward in their attempts to get the state estate tax eliminated or the estate value threshold for this tax raised. Do you think that an elimination of the state estate tax or a raising of the threshold would have a significant positive impact for small business owners in Massachusetts? What do you think should happen with the state estate tax?
It is very important for a small business owner to be aware if their financial situation is such that they should be looking into estate tax planning. When a person has an estate that could trigger an estate tax liability, and they fail to put any estate tax planning in place, they could be missing out on opportunities to decrease or eliminate their estate’s estate tax liability. Small business owners who are concerned about whether their estate would have a substantial risk of triggering the estate tax should consider talking over their financial situation with an experienced estate planning lawyer.
Source: WWLP, “Critics argue estate tax hits more than just the wealthy,” Katie Lannan, Oct. 20, 2015