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Estate Tax Planning in Massachusetts: Minimizing Your Tax Liability


Estate tax planning is a crucial aspect of financial management that can significantly impact the wealth you pass on to your heirs. In Massachusetts, estate tax laws can be complex, and understanding them is essential for minimizing tax liability. At Percy Law Group, PC, we are committed to helping you navigate the intricacies of estate tax planning in the Bay State. In this blog post, we will provide valuable insights and strategies to reduce your estate tax liability in Massachusetts.

Understanding Massachusetts Estate Tax

Before delving into tax-saving strategies, it's essential to understand Massachusetts' estate tax laws. Massachusetts has its own estate tax, separate from the federal one. The state imposes an estate tax on estates valued at or above a certain threshold. Massachusetts has an estate tax exemption of $2 million, meaning that estates valued at or above this amount would be subject to state estate tax.

Lifetime Gifting

One effective strategy to reduce your estate tax liability is through lifetime gifting. By transferring assets to your heirs during your lifetime, you can decrease the overall value of your taxable estate. Gifts up to $17,000 per person annually were exempt from the federal gift tax, and more significant gifts could be used to reduce your federal estate tax liability. It's essential to consult with our experienced estate planning attorneys to structure your gifting plan efficiently and maximize its benefits under Massachusetts law.

Irrevocable Life Insurance Trusts (ILITs)

Irrevocable Life Insurance Trusts (ILITs) can be a powerful tool for estate tax planning. By placing your life insurance policy in an ILIT, the death benefit can be kept out of your taxable estate, potentially reducing your estate tax liability. ILITs offer flexibility and control over how the insurance proceeds are distributed to beneficiaries, allowing you to ensure your wishes are met.

Revocable Living Trusts

Creating a Revocable Living Trust (RLT) is another strategy to consider. RLTs can help you avoid the probate process and may offer some estate tax benefits in Massachusetts. While the assets in the trust are still considered part of your taxable estate, the ease of transferring assets through a trust can help streamline the estate settlement process.

Charitable Giving

Making charitable donations can also reduce your estate tax liability. In Massachusetts, charitable gifts are deductible from the value of your estate when calculating estate taxes. Establishing a charitable remainder trust or leaving assets to a qualified charity in your will can help you support a cause you're passionate about while lowering your estate tax burden.

Asset Valuation and Discounts

Properly valuing your assets can make a significant difference in your estate tax liability. For certain assets, such as family businesses or real estate, you may be able to apply valuation discounts, which can lower the overall value of your estate for tax purposes. Engaging an experienced appraiser can help you navigate these valuation challenges effectively.

Family Limited Partnerships (FLPs) and Limited Liability Companies (LLCs)

Creating FLPs or LLCs can be a valuable strategy for estate tax planning. These entities can facilitate the transfer of assets to family members while allowing you to maintain some control over those assets. Using FLPs or LLCs may result in valuation discounts, further reducing your estate tax liability.

Estate tax planning in Massachusetts requires careful consideration and thoughtful strategies. Reducing your estate tax liability can help ensure that your hard-earned assets are passed on to your loved ones as intended. The experienced attorneys at Percy Law Group, PC, are here to help you navigate the complexities of Massachusetts estate tax laws and develop a personalized estate plan that meets your goals.

Remember that estate tax laws can change, so it's essential to stay updated with the most recent developments and consult with our team to ensure that your estate plan remains effective in minimizing your estate tax liability. Our firm is committed to providing you with the knowledge and guidance to protect your wealth and secure your family's financial future.

Contact Percy Law Group, PC today to schedule a consultation and take the first step towards securing your financial future! 

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