Estate Tax Avoidance and Estate Tax Returns

Now that the federal estate tax exemption is $5.25 million dollars, there is little need to do estate tax returns any more. The exception, however, is the Massachusetts Estate Tax. If someone dies with assets worth over $1 million in Massachusetts, his or her estate may be subject to tax.

If a tax is due, the return must be filed within nine months of death. Preparation of the estate tax return is complex. In essence, all of the assets need to be valued as of the date of death. If there is real estate, it needs to be appraised. All supporting documentation needs to be submitted with the return. Each return is thoroughly looked at by a tax examiner, and the process is not complete until the state is satisfied with the documentation and the appraisals. Doing an estate tax return is sophisticated, and it is very different from doing your annual income tax return. Our firm has been doing Massachusetts estate tax returns for many years.

If a married couple in Massachusetts has assets that exceed $1 million in value, then they can minimize, and sometimes entirely avoid the tax for their heirs. Essentially, each spouse puts together a revocable trust, so that a married couple has two trusts. These trusts are then broken down into sub-trusts known as the Marital Trust and Family Trust. As you can imagine, trusts of this nature are far more technical and advanced than trusts for people with under $1 million in assets. Our firm has vast experience in preparing trusts for estate tax avoidance.