On October 4, the Governor of Massachusetts signed a new law that makes significant changes to the Commonwealth’s tax code that will benefit taxpayers. Among the positive changes in the new law is a doubling of the Massachusetts estate tax exemption.
For estates of individuals who died on or after January 1, 2023, Massachusetts will not impose a tax until the estate exceeds $2 million in assets, and only the amount over $2 million will be subject to estate tax.
Under the previous system, Massachusetts taxed estates with more than $1 million in assets, and the tax applied to both the amount over $1 million and the underlying $1 million.
Married couples should be aware that, as before, planning is necessary in order to take advantage of each spouse’s $2 million estate tax exemption. Without any planning, a married couple with a combined estate of $4 million or less could still owe Massachusetts estate tax at the death of the surviving spouse.
Married couples with marital deduction trusts might also need to update their estate plans to address a situation in which the increased estate tax exemption will decrease the amount in the trust fund for the surviving spouse.
Estate Planning Awareness
October 16 – 22 is National Estate Planning Awareness Week, established in 2008 to educate the public on what estate planning is, and why it’s vital to overall financial wellness. In light of this, and the recent changes to the tax law, it’s a great time to revisit your estate plan–or put one into place if you haven’t already done so.
If you’d like to discuss your current estate plan, or work with us to create one, please contact us to schedule a consultation with one of our experienced estate planning attorneys.