Estate & Gift Taxes

A critical part of estate planning is minimizing potential liability for estate and gift taxes. The estate tax, sometimes referred to as the "death tax," is a tax that is imposed by state and federal governments after the death of an individual, if the total value of the assets owned by the individual exceeds a certain amount. In recent years, there have been substantial increases to the federal and Massachusetts estate tax exclusions — this is the amount of assets that can pass to your beneficiaries, free of estate taxes.

Talk to Attorney Schreiber in our North Reading office about estate and gift taxes. Call to schedule your initial consultation or contact us online.

Our office is located in North Reading, Massachusetts. We provide estate and gift tax planning services to clients throughout the areas in Middlesex County, Wilmington, Lynnfield and Wakefield.

Planning to Minimize Estate and Gift Taxes and Filing Gift and
Estate Tax Returns

If you are a Massachusetts resident and a U.S. citizen and the total value of what you own is less than $1,000,000, no estate taxes will be due from your estate. Before you stop reading this page because you think that you don't have an estate worth $1,000,000, please continue reading. Your taxable includes some items that are surprising. In addition to real estate, bank accounts and investments, your taxable estate includes:

  • The death benefits payable under all life insurance policies or accidental death policies, whether the policy is owned by you or provided to you as an employee benefit
  • The funds in all joint bank and investment accounts (unless a surviving owner can prove with convincing written proof that he or she has contributed some, or all, of the funds to the account)
  • The funds in all types of annuities, IRA accounts, 401(k) and 403(b) plans, profit-sharing plans, and other types of tax-deferred retirement plans and accounts
  • Stock options and other employee benefits with cash value
  • The value of your business, even if you are a sole proprietor
  • Your interest in an LLC, partnership, Subchapter-S corporation or other business organization

If your estate exceeds $1,000,000, Massachusetts estate taxes may be due from your estate. In some cases, there are enough deductible expenses (funeral and burial expenses, legal and accounting fees, probate court filing fees and publication fees, and bills and outstanding mortgages) to reduce the estate to $1,000,000 or less. The Massachusetts exemption is a "disappearing exemption." If your estate is valued at $999,999, no estate taxes are due. If the estate is valued at $1,000,001, the estate will owe more than $33,200 in Massachusetts estate taxes. This tax is referred to as the estate tax because the Personal Representative of your estate (formerly referred to as the E xecutor of the estate) is responsible for paying it out of estate funds before distributions are made to the beneficiaries of your estate. The tax is due nine months from the date of death. In some cases, the Personal Representative must sell estate assets, such as real estate or stock, to raise the money to pay the taxes. If you have been appointed as the Personal Representative of an estate, you must take this responsibility very seriously. You cannot make distributions to the beneficiaries of the estate until you have paid the estate taxes. If you distribute estate assets before the estate taxes are paid, and you have not held back sufficient funds to pay the taxes due, you are personally responsible for paying the taxes. You can ask the beneficiaries to give back some of their distribution to pay the estate taxes, but if they refuse to do so, the money to pay the taxes comes out of your pocket. Under current laws, few people have to worry about federal estate taxes. In 2014, the federal estate tax exemption is $5,340,000 per person. A married couple can pass on $10,680,000 to children and other family members and friends, free of federal estate taxes.

The Basic Rules

Most estate taxes are paid after the death of a single, divorced or widowed individual. Under federal estate tax laws and the laws of most States, there is an unlimited marital deduction that exempts all assets passing from one spouse to another from estate taxes, as long as the surviving spouse is a United States citizen. There are different rules that apply to assets passing to a noncitizen spouse. If you are meeting with me for the first time, please let me know if you are not a U.S. citizen. There are planning options that apply to your situation. With proper planning, no estate taxes will be due from the estate of a surviving spouse, no matter how much the surviving spouse inherits from the deceased spouse. In addition to the marital deduction, there is an estate tax exemption. This is the amount of assets that can pass to your beneficiaries free of estate taxes, no matter what their relation is to you.

For more than 30 years, Roberta A. Schreiber has worked with clients to implement estate plans that reduce, or eliminate, liability for gift and estate taxes. If your estate exceeds the applicable estate tax exemptions, she will explain how taxes are calculated and make recommendations to reduce or eliminate liability for estate taxes. As explained on the page titled "Planning to Minimize Estate Tax," a married couple can greatly reduce or eliminate liability for estate taxes by establishing and funding two Trusts. Estate taxes can also be reduced by making yearly tax-exempt gifts. Under current laws, an individual can make tax-exempt gifts of $14,000 per year to an unlimited number of family members and friends. Charitable giving will also reduce your taxable estate. If you would like to start a gifting plan, income tax and capital gains tax consequences must be reviewed, to determine the best way to make gifts to family members. After your documents have been signed, Roberta and her staff will assist you in completing the paperwork to fund your Trusts. If it is not possible to eliminate liability for estate taxes, Roberta will make recommendations for providing the funds to pay for estate taxes, so that a family vacation home or family business will not have to be sold to pay estate taxes.

Contact Us About Your Estate and Gift Tax Questions

If you would like more detailed information about your options for minimizing federal and Massachusetts gift and estate taxes, or if you need assistance in preparing a gift or estate tax return, please contact us to schedule an appointment with Attorney Schreiber.

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Roberta A. Schreiber, P.C.
Suite 108
348 Park Street
North Reading, MA 01864-2153

Phone: (978) 664-2552
Fax: (978) 664-9227
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