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Protecting your assets from estate taxes

The estates of most people will not reach the threshold for the federal estate tax exemption, which is currently $5.45 million for an individual and $10.9 million for married couples. However, here in Massachusetts, the state estate tax exemption is well under that amount at $1 million. Fortunately, your estate plan can help protect your assets.

Under Massachusetts law, if your estate goes even one dollar over the exemption amount, the entire estate becomes taxable. The tax rates vary between 15 and 25 percent. However, the transfer of assets under your estate plan also need to be accomplished in a way to help eliminate — or at least minimize — any tax ramifications.

Estate planning documents such as family limited partnerships, various trusts and other tools can be designed to remove your assets from your taxable estate. If your taxable estate is currently over the Massachusetts estate tax exemption, it would be in your best interest to consult with an attorney. Every family’s situation is unique, and boilerplate documents will most likely not be the most effective way to achieve your goals.

An estate-planning attorney can review your assets, your family circumstances and your goals in order to come up with a viable plan in order to comply with your wishes and reduce or eliminate any potential estate taxes on your estate. Once the appropriate documents are executed, the next step will be to transfer the appropriate assets in accordance with the plan. Thereafter, it will be necessary to review your estate plan periodically to ensure that it continues to meet your goals.


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