MA and Federal Estate Taxes
In Massachusetts, we have a MA estate tax as another type of tax we face. It is in addition to income taxes. On the federal level, it's been around since about 1920.
It's a tax on the total amount of property we own on our death. Property includes all the assets we control on our passing. Think of it as a tax on the pleasure - on your deathbed - of saying who will enjoy the asset after your passing. That is the fundamental concept of the MA estate tax for Lexington and nearby residents of the Commonwealth of Massachusetts.
Like the income tax, only some people face paying this post-death tax. It's called the 'estate tax' but some people call it the death tax.
Total 'Estate' value determines if tax is paid
Both the MA and the Federal tax law gives you an exemption from this tax, and the exemption amount differs for both.
Deductions from the Gross Estate are important
Apart from these exemptions, there are two central deductions that come into play. These are the:
Here is an overly simplified calculation:
Gross Estate (everything you own on death)
less Deductions (Marital or Charitable)
= Taxable Estate
less Exemption ($1 million MA, $11.58 Federal)
= Actual estate tax paid to govt. by nine months after the death
Marital deduction: Your estate can deduct from the Gross Estate any amount you leave to a spouse. For married persons, this deduction almost always leads to a zero tax on the death of the first spouse.
Charitable deduction: Another way to pay less estate tax is to leave money to a charity. After your death, this amount is subtracted from your gross estate to determine your Taxable Estate. If the Taxable Estate is under the exemption ($1 million MA, $11.58 million Federal), then your estate will pay no estate tax.
Green Card Holders (non-US citizens)
There is a particular issue involved if a surviving spouse is not a US Citizen.
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If you have estate planning questions or concerns, or would like to get started creating your estate plan, contact the experienced Lexington, Massachusetts estate planning attorneys at MA Wills and Trusts at 781 863-8606 to schedule your consultation. Or contact us at Contact