Massachusetts Estate Tax
You May Be Richer Than You Think |
Many people believe they do not need to worry about estate taxes because the federal exemption is so high. But here in Massachusetts, it is easier to reach our $1 million exemption than you think...
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What Are Estate Taxes?
Estate Taxes (sometimes called the Death Tax) are taxes collected from your estate if your assets or at or over a certain value. In Massachusetts, your heirs will not pay taxes on the income they receive through your estate, but the estate itself will owe taxes if it is worth $1 million or more. This means indirectly your heirs do pay taxes, because that money comes out of the estate before it is distributed to them.
What Assets Are Counted In Your Taxable Estate?
HoYour taxable estate is not only the things that pass through the probate process. Things like life insurance proceeds and the value of your home and joint bank accounts (even though in most cases those pass automatically without probate) count toward the value of your taxable estate. This means that if you have life insurance, equity in your home, and retirement savings, you may be at risk for crossing the $1 million threshold even if the last thing you think you are is a millionaire.
How Much Estate Tax Will Your Estate Have to Pay?
The amount of estate tax that will be applied depends on the overall value of your estate. What you need to know is that even if you are just barely over the $1 million mark, your entire estate will be subject to the tax, not just the amount over $1 million. Massachusetts has a graduated tax rate starting at 0.8% and capping out at 16%. Taxes on a $1 million estate applying these graduated rates are approximately $36,000, but there are no taxes on an estate that is $999,999.
How Can slnlaw Help?
Though you may not be able to avoid the estate tax entirely, there are many ways of planning to shelter as much as possible and minimize or eliminate the burden on your heirs. These include trusts that allow spouses to combine their exemption amount, gifting strategies during your lifetime, and irrevocable trusts that take assets out of your estate and hold them for your heirs.
Ready to Get Started?
We are ready to help. We have a simple process for getting you from wherever you are now to executed and final documents. It starts with an initial consultation, which is absolutely free. You can use the button below to schedule your consultation, or simply give us a call at (781) 784-2322.
We are ready to help. We have a simple process for getting you from wherever you are now to executed and final documents. It starts with an initial consultation, which is absolutely free. You can use the button below to schedule your consultation, or simply give us a call at (781) 784-2322.
