Is My Wife’s Estate Taxable in Massachusetts?
My wife passed away. In simple terms, how does one figure or include items to determine the Massachusetts estate tax? I believe there is a $1 million exemption.
I’m sorry to hear about your wife’s death.
You are right that the threshold for Massachusetts estate taxation is $1 million. To determine what is in your wife’s estate you must include everything she owned or in which she had an ownership interest. This would include your home, jewelry, savings, investments, retirement plans, and life insurance proceeds, as well as any taxable gifts your wife may have given away during her life. Gifts are taxable if they exceed the exemption amount—$15,000 in 2020—to any individual in a calendar year. Everything is includible whether or not it goes through probate. So, accounts with a designated beneficiary or property that is jointly owned is added in. For property or accounts that are jointly owned with you, you would count half in your wife’s estate.
This calculation determines whether you will need to file an estate tax return for your wife’s estate, but not whether there’s an estate tax. Everything that passes to you qualifies for an exemption. So, let’s assume that your wife’s estate totals $1.2 million and that $1 million passes to you and $200,000 to your children. You would have to file an estate tax return, but no tax would be due. The estate would be over $1 million for purposes of determining whether you need to file a return, but only $200,000 for determining whether it’s taxable.
For more information on the byzantine ways of the Massachusetts estate tax, download our legal guide here.