Massachusetts Couple Risks $280,000 Estate Tax on $4 Million Without Trust Planning
Updated
Updated · 24/7 Wall St. · May 22
Massachusetts Couple Risks $280,000 Estate Tax on $4 Million Without Trust Planning
2 articles · Updated · 24/7 Wall St. · May 22
$4 million estates in Massachusetts can trigger about $280,000 in state estate tax at the second spouse’s death even though no federal estate tax is due.
The hit comes because assets usually pass tax-free to the survivor first, leaving only one $2 million state exemption if the first spouse’s exemption was not preserved through a funded credit-shelter or similar trust.
A properly drafted and funded bypass trust can effectively lift the couple’s Massachusetts exemption to $4 million and cut that tax bill to $0; changing domicile or making lifetime gifts can also reduce exposure.
The risk is growing because Massachusetts’ $2 million exemption is fixed while inflation erodes its real value, turning a planning gap that may cost a few thousand dollars to fix into a six-figure loss for heirs.
Is avoiding state estate tax worth creating a capital gains tax problem for your heirs?
Why do a dozen states maintain estate taxes that catch so many families by surprise?