Estate Tax Update
March 1, 2011
Gina M. Barry, Esq.
When a Massachusetts resident passes away, every asset that he or she owns is subject to estate tax. Estate tax is imposed by both the Commonwealth of Massachusetts (state estate tax) and by the United States’ government (federal estate tax). While this may seem to create a fairly large burden, both the state and federal estate tax systems provide a credit that allows the deceased individual to pass a certain amount of assets without paying any estate tax.
In Massachusetts, the estate tax credit allows a decedent to pass $1 million in assets without owing any Massachusetts estate tax. The maximum tax rate is 16%. This tax is a cliff tax, meaning that once your estate exceeds $1 million, tax is paid on the entire estate and not just the amount over the $1 million. There is no ability to pass this credit between spouses. You must use your credit, or your credit will be lost. There has been no change in the state estate tax system for several years, and there is no anticipated change forthcoming.
With respect to the federal estate tax system, on December 17, 2010, President Obama signed into law the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010. Under the Act, individuals who pass away during 2011 and 2012 are allowed to pass $5 million without estate tax. The top tax rate is 35%.
Also, beginning January 1, 2011...
You may read more at the link below.
by: Gina M. Barry
Prime
March 2011
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