Estate planning in Massachusetts has become a little easier—but no less important. With the state’s recent increase of the estate tax exemption to $2 million, many families may now avoid or reduce their estate tax burden. However, even with this change, the Massachusetts estate tax still affects more residents than you might expect.
Understanding the Change
In 2023, Massachusetts doubled its estate tax exemption from $1 million to $2 million per person. Estates valued below this threshold are no longer subject to the state’s estate tax. Previously, even modest estates—often consisting of a home, modest savings, and life insurance—could trigger a substantial tax bill.
Importantly, the new law also eliminated the “cliff effect.” Under prior rules, if an estate exceeded the exemption amount, the entire estate—not just the excess—was taxed. Now, only the value above $2 million is taxable.
Why the $2 Million Exemption Still Matters
Although this update provides relief for many, there are several reasons careful planning is still needed notwithstanding the increased exemption. They are:
- Home values add up quickly. With rising property values, especially in Greater Boston, many homeowners with retirement savings may unknowingly exceed the $2 million threshold.
- No portability between spouses. Unlike the federal system, Massachusetts does not allow a surviving spouse to use a deceased spouse’s unused exemption. Without proper planning, one spouse’s exemption could be lost entirely.
- The exemption isn’t automatic. How your assets are titled and how your estate plan is structured will determine whether you can take full advantage of the exemption.
Estate Planning Strategies to Consider
Proactive planning can help preserve wealth and minimize state estate tax exposure. Common techniques include:
- Credit Shelter Trusts (Bypass Trusts): Allow each spouse to utilize their own $2 million exemption, effectively exempting $4,000,000 of assets from estate tax.
- Lifetime Gifting: Reducing the size of your taxable estate by making strategic gifts during your lifetime.
- Charitable Planning: Supporting meaningful causes while lowering your estate’s taxable value.
- Asset Titling Reviews: Ensuring property ownership and beneficiary designations align with your estate planning goals.
Take Action
Even with the higher exemption, many Massachusetts families will still benefit from thoughtful estate tax planning. If your total assets—including real estate, retirement accounts, investments, and life insurance—approach or exceed $2 million, now is a good time to review your estate plan.
Generations Law Group’s experienced estate planning attorneys can help you evaluate your options, take advantage of the new rules, and design a plan that protects your loved ones and preserves your legacy.
Founded by a nurse attorney and with offices in Acton, Andover, and Sudbury, Massachusetts, Generations Law Group helps families navigate the complex areas of estate planning and elder law to inform and protect loved ones of every generation.
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