How Inheritance Tax Can Affect Your Massachusetts Estate Plan
Understanding Estate Tax vs. Inheritance Tax in MassachusettsEstate planning often involves navigating the complexities of estate tax, inheritance tax, and their implications. Let's clarify the differences and how they relate to Massachusetts residents:
Estate Tax vs. Inheritance Tax: The Basics
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Massachusetts Estate Tax
- Massachusetts imposes an estate tax but does not have an inheritance tax.
- Estate tax is triggered when the deceased person's assets surpass the state's threshold, affecting the estate itself.
States with Inheritance Taxes
- Some states, including Iowa, Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania, have laws imposing inheritance taxes.
- The specifics of these taxes vary, including the threshold amount that triggers taxation and exemptions for immediate family members (e.g., spouses and children).
- It's important to note that federal inheritance tax is generally not considered taxable income, and the tax is only levied by the state imposing it, not at the federal level.
Impact on Massachusetts Residents
- Inheritance tax is determined by the state where the deceased person lived, not where the beneficiary resides.
- If you or a loved one is a Massachusetts resident at the time of death, you need not worry about inheritance tax issues in Massachusetts.
- However, if you receive an inheritance from a person residing in a state with inheritance tax laws (mentioned above), there may be a tax obligation in that state based on what you inherit.
Considerations for Your Massachusetts Estate Plan
- Generally, inheritance tax in other states does not affect Massachusetts residents, given the absence of such tax in Massachusetts.
- Nonetheless, estate and inheritance taxes can influence decisions made later in life, especially if you plan to relocate to another state.
- If you contemplate moving to a state with inheritance tax or for any other reason, it's wise to consult with an estate planning lawyer. They can help you assess how such a move may impact your current estate plan and whether updates are advisable.
Meet Our Estate Planning Lawyers
Emily Smith-Lee is the owner and founder of slnlaw. She is a 1996 graduate of Boston College Law School. She was previously a partner at the Boston office of a large international firm, where she worked for thirteen years before starting the firm that became slnlaw in 2009. She has been recognized as Massachusetts Superlawyer each year since 2013, and in 2018 earned recognition as one of Massachusetts Lawyers Weekly's Lawyers of the Year.
Jenna Ordway: Jenna is a 2013 graduate of Quinnipiac Law School, and also earned an LLM in Taxation from Boston University in 2015. She has been affiliated with slnlaw since 2011, first as a law clerk and then as an attorney. Jenna has been recognized since 2019 as a "Rising Star" by Massachusetts Superlawyers. Jenna wrote a book on estate planning: The Road to Peace of Mind: What You Need to Know About Estate Planning. Jenna has helped many individuals and families with planning to protect their legacies and loved ones, and planning for the future and succession of their businesses.
Sharleen Tinnin: Sharleen is a 2010 graduate of Northeastern University School of Law, and earned her LLM in estate planning from Western New England Scool of Law in 2016. She has been with slnlaw since 2023. Prior to joining slnlaw, she worked with King, Tilden, McEttrick & Brink, P.C. on complex civil litigation matters. She previously worked for the United States Department of Justice, and received an "Excellence in Justice" award in 2017. Sharleen has helped many clients with planning for their legacies and their future, and navigating the probate process in Massachusetts after the death of a loved one.
How We Can Help
We are ready to help. We understand this can be a difficult issue to tackle, so we have designed our process to make it as easy as possible for you to get the plan in place that protects you and your family and accomplishes your goals. You can use the button below to schedule a free information call, or simply give us a call at 781-784-2322.
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