You don’t need to worry about estate taxes if you have an experienced Massachusetts wills and trusts lawyer on your side. Without a good lawyer, you and your family could find that estate taxes are a costly part of handling a relative’s estate.
What Are Estate Taxes?
Estate taxes are usually taxes on the value of someone’s estate, assessed before the property is transferred to heirs or beneficiaries. In other words, after the personal representative or executor locates all the deceased person’s property, they must determine how much must be paid from the estate in taxes before giving that property to heirs.
In Massachusetts, estates only have to pay an estate tax if they meet the following requirements:
- The federal gross estate, plus adjusted taxable gifts, is greater than $1 million (for decedents who died from January 1, 2016 to December 31, 2022)
- The federal gross estate, plus adjusted taxable gifts, is greater than $2 million (for decedents who died on or after January 1, 2023)
Federal gross estate is a legal term defined by the IRS. Moreover, Massachusetts law permits a “credit of $99,600 to reduce the amount of the estate tax” for decedents who died on or after January 1, 2023.
If the estate meets the federal gross estate requirements above, Massachusetts law requires the estate’s personal representative to file an estate tax return and make the tax payment within 9 months of the decedent’s death.
Federal Estate and Gift Taxes
Federal estate taxes are assessed in a somewhat similar fashion to Massachusetts estate taxes. To determine if estate taxes are due, the personal representative must assess the federal gross estate’s value. Then, federal law allows some deductions to this value, such as a deduction for some kinds of debt. Further, federal law then requires adding the value of lifetime taxable gifts to this value. After gifts are added, the tax is computed and then may be reduced by any available unified tax credit.
The IRS provides a table on its website that indicates the filing threshold for an estate tax return depending on the date of death. For example, if someone died in 2024 and their federal gross estate’s value exceeded $13,610,000, then their personal representative would need to file a federal estate tax return and make a tax payment.
Importantly, as the IRS website notes, “estates of decedents survived by a spouse may elect to pass any of the decedent’s unused exemption to the surviving spouse.” In other words, spouses can benefit by receiving this unused exemption amount, which could reduce their own estate tax liability in the future.
Estate Planning for Tax Issues
Anyone who owns valuable assets that could lead to a federal gross estate in the millions should hire a qualified estate planning lawyer to advise on tax issues. There are many opportunities to structure an estate in ways that potentially lower estate tax liability in the future. For example, many people choose to take advantage of trusts and investments that do not become part of their taxable estate. Further, as mentioned above, there are available credits, deductions, and exemptions that, if properly employed, could substantially reduce tax liability for a decedent or their spouse.
How an Estate Administration Lawyer Can Help Your Family with Taxes
Sometimes, families discover that there was no estate plan in place after their relative’s death. Or there was an estate plan that took no special consideration for estate and gift tax issues, potentially leaving the estate with a hefty tax bill. That’s where a good estate administration lawyer can step in. At Daigle Law Office, our attorneys can assess the situation and determine if tax strategies (such as using the unified credit or passing unused exemption onto a surviving spouse) could help reduce tax liability now or in the future. Also, our attorneys assist with contested wills, fiduciary litigation, and other common issues in estate administration that may arise as you wrap up your relative’s estate. Working with trusted professionals gives you peace of mind that tax issues or inheritance fights will not take up all your time. Instead, you have knowledgeable attorneys to handle it for you and advise you on your rights.
We’re Here for Your Family
Do you have questions about estate taxes? Are you looking for a dependable, experienced lawyer who can help? Daigle Law Office’s attorneys can provide you with experienced Massachusetts estate administration advice. It’s not easy to deal with taxes, probate, and other estate issues, especially if you have lost a loved one or are coping with family disputes. We help clients dealing with tough situations who need solid, reliable legal advice. To schedule a consultation, call 508-771-7444 or use our convenient Contact Form.
