Use Your Estate Tax Exclusions!

Each Massachusetts resident can pass up to $1 million at death without a Massachusetts estate tax. This is referred to as the estate tax exclusion. So, it seems to reason that a married couple can pass a total of $2 million to their children free of estate tax. However, without an estate plan, this would probably not be the case.

Consider a couple with $2 million in assets, all of which they hold jointly with rights of survivorship. When the first spouse dies, all of the assets automatically pass to the surviving spouse as the surviving joint owner. There is no Massachusetts estate tax because there is a full marital deduction for all assets passing to a surviving spouse at death – regardless of amount. The surviving spouse now has all $2 million in assets, but can only pass $1 million to the children free of estate tax. The first spouse’s $1 million exclusion was not used and is no longer available to the family. The estate tax due in this example would be about $99,600.

All it takes is some relatively simple estate planning to make use of both estate tax exclusions and pass the full $2 million to the children free of Massachusetts estate taxes!