Major Changes Have Come to Massachusetts Estate Tax Limit in 2023

Changes in Massachusetts estate tax laws are noteworthy for anyone in the state who has an existing estate plan or is working with a qualified estate planning attorney to create one. For those who are personal representatives or beneficiaries of individuals who died after October 4, 2023, these changes demand more immediate attention. 

Though beneficial to many, changes in state estate tax laws require the assistance of a lawyer who has comprehensive knowledge of the statutes as well as logistical estate planning skills. Contact one of our experienced estate tax planning attorneys now. We will help you make estate planning and asset protection decisions that are in your best interests. 

What changes have been made to the Massachusetts estate tax?

Substantial changes to the Massachusetts estate tax, capital gains tax, and the Massachusetts Millionaires Tax recently became law under legislation titled: An Act to Improve the Commonwealth’s Competitiveness, Affordability, and Equity Act — which was signed by Gov. Maura Healey this past October. 

Previously, Massachusetts had the lowest threshold for estate tax in the country (tied with Oregon). Estates valued above $1 million were subject to the tax. Now, the threshold has been raised to $2 million, a raise that, as of October 4, 2023, will be retroactively applied to those who passed away on or after January 1, 2023. This is a significant change, not only doubling the estate tax threshold in the state but moving Massachusetts into third to the lowest estate tax threshold slot.

What are the implications of the new estate tax limit on your estate plan?

The impact of a higher estate tax limit is considerable, especially for those with estates that hover around the current threshold. For example, estates previously subject to taxation may now find themselves exempt, leading to a lessened tax burden for their heirs.

For estates well above the $1 million mark, the changes could result in a reduced marginal estate tax rate, again potentially lowering the overall tax bill. Now is the time for you to consult with your estate tax planning attorney to re-evaluate your assets, including real estate, retirement accounts, life insurance policies, and trusts, to understand how the new tax limits may affect your estate’s valuation and subsequent taxation.

It’s also important to consider how these changes might interact with lifetime gift exclusions and other tax planning strategies. With the threshold raised, there may well be new opportunities to make gifts that reduce the taxable estate without incurring additional taxes.

How Our Estate Planning Attorneys Can Help

Our capable, well-informed lawyers can help update your estate plan through:

  • Analysis and valuation of your estate because of the tax limit changes.
  • Strategic planning to minimize your estate’s tax liability under the new laws, 

possibly by restructuring your assets, gifting, or establishing trusts.

  • Ensuring that all your documentation adheres to the latest estate 

tax laws by reviewing and updating your will, trusts, and other estate planning documents to reflect any changes in the law.

The Takeaway:

Keeping up with changes in tax law as well as alterations in your finances and your family can be complicated. Keeping up with those changes as they affect your estate plan requires the assistance of a knowledgeable professional. Get in touch with our astute estate tax planning attorneys now to keep your estate plan current and your assets and loved ones continuously well-protected.