Share

Estate Taxes


 
 

"The only thing in life that is certain is death and taxes."
Benjamin Franklin.


Taxes are complicated. Estate taxes (sometimes referred to as Death Taxes) can be even more complicated. Layer on gay marriage and it becomes downright dizzying.
 


 

Here are the 3 most important things to know and remember about estate taxes:

1.  They are calculated based on all of the property you own or control at the time of your death. This can include, for example, proceeds from life insurance. This is so although beneficiaries generally do not owe income taxes on life insurance proceeds.

2.  Estate taxes are due and payable within 9 months of the date of death. Whether or not your property is liquid (e.g. real estate or a family business) , if you have a taxable estate the IRS and/or Massachusetts Department of Revenue will assess a tax on your estate as of the date of death  and payment becomes due in 9 months!   

3.  These taxes are the only taxes in our system that are purely VOLUNTARY ! What we mean by this is that estate taxes can be substantially mitigated, if not entirely eliminated; but doing so requires pro-active planning. You cannot get out of paying income taxes…but estate taxes can legitimately be avoided.

 


There are Federal Taxes that may become due and often State taxes as well.

Federal Estate Taxes are currently set at 40% and for 2016, there is an exemption amount of $5,450,000.00.  This amount has been indexed to inflation and will adjust accordingly.  Federal estate taxes are usually paid on the passing of the second spouse, if married.  However, in order to receive the complete amount of federal exemption, an estate tax return may still need to be filed for the first spouse.   

MA Estate Taxes are currently ”decoupled” from the Federal law, which  means that they are no longer calculated, as they used to be, based on the amount of the federal estate tax. Today, any estate with a value over $1 million (and remember – this can include life insurance if it is not removed from your taxable estate) –may be subject to estate tax at the State level. The current rate is progressive and graduates up to 16%. Many people forget about the state estate tax or have old trusts that do not account for the current differences between the federal and the Massachusetts estate tax amounts, which may result in an unnecessary state estate tax being assessed upon the death of the first spouse to die.  We therefore strongly advise you to have your old trusts reviewed to make sure that your spouse or other heirs will not have to pay any unnecessary taxes.

Other States:  Property situated in other states may be subject to that state’s estate or inheritance taxes at death. Each state has different rules. Our firm works with a network of attorneys nationally to determine whether such taxes may become due and how to plan for them.

Since Massachusetts is a state that fully recognizes same-sex marriages for all state law purposes, it is possible to have an UNLIMITED marital deduction for same-sex surviving spouses upon the passing of the first spouse at the state level. Careful planning is needed, typically in the form of trusts, to ensure that the exempt amount (currently $1 million) can be available for both spouses so that the same assets are not subject to this transfer tax twice.
 
With the recognition of same-sex couples for federal tax reasons, a new challenge has emerged with couples that live in non-recognition states that also have estate and inheritance taxes. There can now be a conflict for the way exemptions work at the federal and state level.  A local law expert should be consulted. Our firm works closely with people in all these jurisdictions and is on top of the ever-changing dynamics. 


Estate and Gift Tax Returns:  Attorneys in our firm are fully conversant regarding estate, generation-skipping and gift tax liability and filing requirements.  We prepare Federal and Massachusetts estate tax returns, as well as Gift Tax returns.  It has been our experience that the attorneys who draft your estate plans or have counseled you regarding gifting, are often the ones best able to prepare those returns.  For more information, please contact our office.”

If we can help you with your Estate Taxes, please do not hesitate to contact us at (617) 716-0300 or info@squillace-law.com.




The premiere law firm of Squillace and Associates serves the gay and lesbian community in the Boston Massachusetts area including Allston, Brighton, Back Bay, Bay Village, Beacon Hill, East Boston, Roxbury, South End, Dorchester, Roslindale, Jamaica Plain, Hyde Park, West Roxbury, Mattapan, and Charlestown and all of the Boston Metro areas including Cambridge, Somerville, Brookline, Chelsea, Medford, Everett, Watertown; South Shore areas like Quincy, Braintree, Milton, Hingham, and Cape Cod: Metrowest areas like Lexington, Concord, Wayland; and North Shore areas like Melrose, Stoneham, Reading, Andover.



© 2017 Squillace & Associates, P.C. | Disclaimer
29 Commonwealth Avenue, Suite 700, Boston, MA 02116
| Phone: 617-716-0300

About | Estate Planning | FAQ | Contact

Zola Creative