After over a decade of uncertainty and confusion in the gift and estate tax laws Congress has finally made some decisions that are (purportedly) here to stay. The federal combined (or “unified”) gift and estate tax exemption is $5.49 million for 2017, with the only anticipated increases to be linked to inflation. Assets that are gifted or bequeathed in excess of this $5.49 million exemption could be taxed at a rate of as high as 40%.
Although the federal exemption is fairly generous, Massachusetts residents (or non-residents with property located in Massachusetts) also have a state estate tax to reckon with if assets exceed $1 million. Although the rates are far lower in Massachusetts than the federal rate, this can still be a significant tax that might be reduced or even eliminated in some circumstance with proper planning. Just some of the planning techniques for reducing or eliminating these taxes include: