Estate Tax Planning

Most Massachusetts residents are in the Massachusetts estate tax bracket without knowing it. While the federal estate tax threshold is currently $15 million for individuals and $30 million for couples, the Massachusetts estate tax threshold is only $2 million (as of 2026). In calculating a person’s “taxable estate”, the government counts all of your savings, home equity, personal property, and even the death proceeds of your life insurance policies (despite your having no access to any of this money while you are alive!). Even those of us who do not consider ourselves “wealthy” will often exceed the Massachusetts estate tax threshold through life insurance alone. If a person dies with under $2 million in his or her taxable estate, then there is no Massachusetts estate tax. If a person dies with more than $2 million, then absent any available deductions, Massachusetts will tax the amount over $2m at a minimum of 10% and up to 16%. The Rhode Island estate tax threshold is $1.84m as of 2026 and is indexed for inflation. Notably, the Massachusetts estate tax threshold is not indexed for inflation.

There are multiple estate planning techniques which can reduce, and often eliminate, the Estate Taxes.  The primary technique includes creation of Trusts.  By creating and funding Trusts, one can permanently shelter certain assets from any Estate Taxes.  However, not all assets are appropriate for Trust ownership.  Asset transfers, including into Trusts, can have serious income tax, capital gains tax, and gift tax implications which will outweigh any death tax savings.  Thus, Estate Tax planning must be done with tremendous care.  When creating a tax savings plan for my clients, I consider all taxes so that we minimize overall tax exposure to the extent possible.