Planning For Estate Taxes
After paying taxes all their lives, our clients want to ensure their families are not burdened with unnecessary tax payments after they are gone. With careful advance planning, our board-Certified Elder Law Attorneys at Curley Law Firm LLP can help. While not all estate tax can be avoided in every situation, proactive planning can significantly minimize or, for many estates, completely eliminate this tax burden.
Even after a death, it may not be too late for a surviving spouse. While the standard deadline for filing an estate tax return is nine months, it’s wise to consult with a qualified estate and tax planning attorney even if that date has passed. Our lawyers can walk you through your options.
A Brief Guide To Massachusetts And Federal Estate Tax
Since January 1, 2023, Massachusetts has imposed an estate tax for estates over $2 million, which is not indexed for inflation and will require an act of the legislature to change. On the federal level, the threshold for estate taxes (as of 2026) is $15 million per person, indexed for inflation. Estates over the federal threshold can pay 40% or more in taxes.
This means that anyone who passes away with a gross estate of $2 million or more is subject to estate taxes. It is important to note that prior adjusted taxable gifts are added to the assets one owns at death. An estate may still be required to file a tax return if this combined total exceeds $2 million, even if the assets at death do not.
Many people fail to plan, and their loved ones discover too late that massive tax payments may be avoided with careful advance planning. Estate tax planning can also be used advantageously for life insurance policies and retirement plans to eliminate or minimize estate taxes for generations. The laws are clear and give a variety of opportunities to people to plan around estate taxes. However, you must take action to enjoy the benefit of these laws.
For additional information about our qualifications and the benefits of retaining our services, please see our page entitled “Why Choose Us.”
Key Questions On Estate Tax Planning
Estate tax laws are complex and change often. Here are answers to some of the most common questions we receive:
How can lifetime gifting strategies reduce future estate taxes?
Lifetime gifting, or giving assets to your loved ones while you are alive, can remove that asset’s value (and any future appreciation) from your estate, where it might otherwise be taxed. The Internal Revenue Service (IRS) allows you to give a specific amount, known as the “annual exclusion,” to any number of people each year without any gift tax consequences.
As of 2026, this amount is $19,000 per person. This means you and your spouse together could give $38,000 to each of your children, grandchildren or others. However, take note that this amount can change over time due to inflation and excess gifts may not always generate taxation. Our lawyers can help you develop a gifting strategy that aligns with changing laws and your financial goals.
When does a credit shelter or marital trust make sense for tax planning?
When a spouse passes away, the surviving spouse can fund a credit shelter trust with any amount up to $2 million. This is particularly beneficial to couples with combined assets over the $2 million state exemption limit.
This trust is not taxed and benefits the surviving spouse. However, it bypasses their estate upon their death. This allows the couple to pass around $4 million (twice the $2 million benchmark) to their children tax-free, rather than wasting the first spouse’s exemption. A marital trust is often used alongside this to hold assets over the exemption amount for the survivor. Our attorneys can walk you through this option in more detail during your consultation.
How does estate tax planning interact with MassHealth planning and capital gains taxes?
These three areas often have conflicting goals. For example, to reduce your estate for tax purposes, you might want to gift assets away. However, to qualify for MassHealth (Medicaid), this gifting could trigger a five-year look back penalty.
Moreover, how you gift assets impacts capital gains taxes. Gifting an appreciated asset, such as a house or stock, during your lifetime gives the recipient your original cost basis. This could result in a large capital gains tax if they sell it. In contrast, inheriting that same asset often provides a step-up in basis, which wipes out the capital gains.
These complicated interactions highlight why working with a Certified Elder Law Attorney is so important. Our lawyers can help you navigate these conflicts to find the right balance for your specific situation and family.
I heard the IRS allows an $19,000 annual gift. What does MassHealth think of this?
This is one of the most dangerous misconceptions in elder law. The IRS annual gift tax exclusion, set at $19,000 as of 2026, has absolutely no connection to MassHealth (Medicaid) eligibility. The IRS rule is for gift tax purposes, allowing you to make gifts without filing a gift tax return.
MassHealth, however, may treat any and all uncompensated transfers (gifts) as disqualifying, regardless of the amount. If you give $19,000 to your child, that gift is a transfer that must be disclosed to MassHealth on an application for benefits and it may trigger a disqualifying penalty under the five-year look back rules. It does not matter that the IRS considers it tax-free. It’s wise to first consult with an attorney who understands the impact of gifting on MassHealth eligibility before transferring any assets.
Contact A Massachusetts Estate Tax Attorney
To review your estate tax planning goals with an experienced lawyer, please call us at 866-406-8582 to schedule a confidential consultation. You can also reach our team by filling out our online form. Curley Law Firm LLP serves clients in Wakefield, and throughout Essex, Suffolk and Middlesex counties, and we can arrange for out-of-office consultations by appointment.