Important Update on Changes in the Massachusetts Estate Tax
[September 28, 2005]
Susan H. Levin

In late 2002, Massachusetts enacted “An Act Enhancing State Revenues.” The Act made an important change in the Massachusetts estate tax laws that may affect your estate plan, and yet, now three years after passage, is not widely recognized. More recently, the State clarified certain aspects of the new law, with important implications for drafting. The new Massachusetts estate tax laws apply to persons dying on or after January 1, 2003.

Under the new law, the amounts that will be exempt from Massachusetts estate tax, as well as future increases in those amounts, will be less than the amounts and increases that apply under federal law. Under Massachusetts law, the Massachusetts exemption amount is $950,000 for the estates of persons dying in 2005 and to $1.0 million in 2006. In contrast, the current federal exemption amount, $1 million, is increasing to $1.5 million in 2004, to $2 million in 2006 and to $3.5 million in 2009.

This change may be particularly important for married couples. Unless a couples’ estate plan takes this change into account, some estate taxes may be due on the first spouse’s death, a result most couples in most circumstances seek to avoid. Also, whether married or single, some may consider making lifetime gifts or taking this change into account in deciding on state of domicile, if the estate tax is a particular concern.


PLEASE NOTE: This Update contains general information. It is not intended to provide legal advice addressed to a particular situation.

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