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Inheritance Tax and Your Massachusetts Estate Plan

The terms "inheritance tax" and "estate tax" are often used interchangeably, but they are very different things.  The estate tax is a tax paid by the estate of a deceased person if the taxable assets are worth more than a set threshold amount ($1 million in Massachusetts).  Inheritance tax is a state tax paid by a beneficiary on the value of what they received as an inheritance.

Massachusetts has an estate tax, but not an inheritance tax.  It is still important for you to understand how inheritance tax works, however, because it still could affect you.

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What States Have Inheritance Taxes?

Iowa, Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania have state laws imposing inheritance taxes.  The specifics are based on the laws of those individual states.  Specifics include whether there is a threshold amount that triggers the tax.  Also certain immediate family members may be exempted from taxation on their inheritance based on state law (i.e., spouses and children).

At the federal level, inheritance is generally not considered taxable income.  This means any inheritance tax will only be owed in the state that imposes it, not on your federal taxes.

How Do Inheritance Taxes Affect Massachusetts Residents?

The inheritance tax is triggered by the state where the deceased person lives, not the state where the beneficiary receives the inheritance.  So if you or a loved one lives in Massachusetts at the time of death, you do not need to worry about this issue.

However, if you receive an inheritance from someone who lived in Iowa, Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania, there may be a tax owed to that state on what you received.

How Do Inheritance Taxes Affect Your Massachusetts Estate Plan?

For the most part, not at all.  Even if you have heirs that live in a state with inheritance taxes, they will not have to pay because you live in a state that does not impose them.

Both estate tax and inheritance tax may be relevant, however, to decisions you make later in life.  Many people relocate and downsize after their children are grown.  Sometimes this involves moving to another state.  Here in New England many people choose to relocate to warmer climates.  Neither of the most popular relocation states (Florida and Arizona) currently have inheritance taxes. 

But people make interstate moves for different reasons as well- to be closer to children and grandchildren, for example.  If you are considering a move to a state that does have inheritance tax, you should consider consulting with an estate planning lawyer to understand how that would impact your current plan and whether there are updates that you should make.

How Our Estate Planning Lawyers Can Help

Estate Planning Jenna Ordway slnlaw MA
Estate Plan Jenna Ordway slnlaw MA
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Estate Planning in Massachusetts
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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  • Home
  • Employment Law
    • Guide To Employment Law Content
    • Advice for Employers >
      • Hiring Independent Contractors in Massachusetts
      • Termination Best Practices
      • Workplace Discrimination Employer Guide
      • Employee Handbook >
        • Employee Handbook Basics
      • Paid Family Leave and Your Small Business
      • Overtime Law for Employers
      • Employee Complaints About Pay
      • Employee Non Competes
    • Advice for Employees >
      • Discrimination in the Workplace
      • Sexual Harassment at Work >
        • Sexual Harassment Resources
        • Sexual Harassment in a Small Business
        • Constructive Discharge
        • Sexual Harassment and Non Disclosure Agreements
        • Sexual Harassment and Remote Work
        • Sexual Harassment Case Studies
      • Massachusetts Paid Family Leave
      • Non Compete Agreements >
        • Are non competes enforceable
        • Massachusetts Non Compete Act
        • Pre 2018 Massachusetts Non Competes
        • Non Compete Case Studies
        • Can I Avoid My Non Compete
      • Independent Contractor Law >
        • Independent Contractor Test
        • Working As Independent Contractor
        • Independent Contractor Case Studies
        • Independent Contractor Roadmap
      • Wage and Hour Laws >
        • Massachusetts Minimum Wage
        • Overtime Law >
          • Overtime Exemptions
          • Employee Travel Time
          • Federal or State Overtime Law
        • Overtime Law Case Studies
        • Massachusetts Wage Act >
          • Payment of Commissions
          • Wage Deductions
          • Late Payment of Wages
          • Paid Time Off
        • Wage Act Case Studies
        • What Are Your Wage and Hour Rights
      • Employment Contracts in Massachusetts >
        • Restrictive Covenants
        • Promissory Estoppel
      • Employment Termination >
        • Severance Pay
        • Should I Accept a Severance?
      • Do I Have a Case?
    • Unemployment in Massachusetts >
      • Unemployment Overpayment
      • Pandemic Unemployment
      • Unemployment Case Studies
  • Estate Planning
    • Guide To Estate Planning Content
    • Legacy Protection >
      • Why You Need an Estate Plan >
        • Why You Don't Have an Estate Plan
      • Massachusetts Estate Tax
      • Asset Protection Trusts
      • Children with Special Needs
      • Planning for Assisted Living
    • Is Your Will Enough >
      • Special Circumstances >
        • Estate Planning for Blended Families
        • Estate Planning for a Non Citizen Spouse
        • Estate Planning and Divorce
        • Estate Planning for Small Business Owners
      • Surviving Spouse's Share
      • Disinheriting Children Massachusetts
      • Updating Your Estate Plan
    • Estate Planning Documents >
      • What is a Trust >
        • Revocable trust
        • Irrevocable trust
        • Irrevocable vs revocable trust
      • Last Will and Testament
      • Durable Power of Attorney
      • Massachusetts Health Care Proxy
      • Life Estates in Massachusetts
      • Massachusetts Pet Trust
    • Probate Process >
      • Non Probate Assets
  • Business Law
    • Guide To Business Law Content
    • Small Business Law
    • Business Contract Basics
    • Civil Suit Defense
    • Legal Issues for Start Ups
    • Trademark Basics
    • How to Incorporate
    • Sale of Business
  • About
    • Reviews
    • Slnlaw Offices
    • slnlaw core values
    • Publications and Interviews
    • New Client Intake and Consultation
    • Contact
  • Attorneys
    • Emily Smith-Lee >
      • 2018 Lawyer of the Year
    • Rebecca Rogers
    • Sharleen Tinnin
    • Elijah Bresley
  • Legal FAQs
    • Estate Planning FAQs
    • Probate FAQs
    • Small Business FAQs
    • Wage Act FAQs
    • Commission Pay FAQs
    • Overtime FAQs
    • Independent Contractor FAQs
    • Non Compete FAQs
    • Employment Discrimination FAQs
    • Employment Termination FAQs
    • Massachusettts Unemployment FAQs
    • Severance Package FAQs
    • Medical Leave FAQs
    • Sexual Harassment FAQs
    • Employer FAQs
    • Civil Lawsuit FAQs
  • Blog