When a loved one passes away, it’s difficult enough without having to sort out emotionally fraught estate issues. Plus, there are laws that govern the transfer of property which can make everything more complicated while you just need to grieve. It’s best to plan ahead so that you and your loved ones never have to experience this particular pain.
Have you heard about the Massachusetts estate tax? No need to fear: we can help you sort out your own estate issues. In the meantime, here’s a brief overview of the current state laws.
Estates Subject to the Massachusetts Estate Tax
Is your estate worth more than one million dollars? Have you made sizable gifts during your life? As of December 31, 2000, estate tax is due for any estate over one million dollars. If it’s not close, you can rest assured that the estate tax doesn’t apply to you—but if you are close, even a single dollar over one million, your estate will be subject to an estate tax. Keep in mind that if you made large gifts of property (cash, investments, or real estate), the value of the gifts plus the value of your estate could cause your estate to be taxable if they amount to more than $1 million together.
When your estate is subject to tax that means that the estate tax must be paid by your personal representative to the state before the remains are passed on to your survivors. Massachusetts has a marginal estate tax that is adjusted based on what the estate is worth. The tax applies to your entire estate, and can range from 0.8 to 16 percent. The calculations are based on a number of factors, including the value of your homes, retirement accounts, and other assets. This does include personal property, so yes, that includes jewelry and other personal effects that are worth money.
Transfers to a Surviving Spouse
Here’s the good news: you can transfer property to your surviving spouse, and as long as they’re a United States citizen, it won’t be taxable. In fact, there’s a lifetime guarantee for transfers to spouses, either during a lifetime gift or after their death. The only caveat is if your spouse isn’t a United States citizen, in which case their gifts have a ceiling of around $152,000 (as of 2019) and may be subject to the inflation index in future years.
What Do I Do Next?
When your loved one passes, the estate tax return must be filed no later than nine months after their death, and estate taxes must be paid at that time as well. Luckily, there are caveats to this law. You may be able to file for an extension, but will still be required to pay eighty percent of the estimated taxes due to the state in that nine months. If you fail to pay at least 80% of the amount that’s determined to be due on the final amount, you may be liable for late penalties and it will void your extension. We recommend consulting with us in order to make sure you never miss a deadline or filing date.
When you’re ready to discuss your Massachusetts estate planning and tax needs, call Baker Law Group, P.C., for more information and a free consultation. We’ll be happy to work with you in whatever capacity you need. Call 781-996-5656 or toll free at 800-701-0352 today.