Although Federal Estate Taxes, which for 2020 begin at $11.58M, are seldomly a problem for most individuals, it is easy for a family to be snared by Massachusetts Estate taxes. Massachusetts estate taxes begin at $1M, one of the lowest thresholds in the country. Furthermore, because Massachusetts includes retirement accounts, private life insurance, employer sponsored life insurance, real estate equity, and all other assets as part of its estate valuation, even middle class families need to be careful.
For example, a couple who lives pay check to pay check, but has $250k in home equity, $300k each in their retirement accounts, and $250k each in employer provided life insurance, would have a net worth for Estate tax purposes of $1.35M and would be subject to Massachusetts estate taxes.
Through careful planning some or all of these estate taxes can often be avoided. The key is to be proactive and to create an estate plan that works for you and your family.