Taxes are imposed on almost all types of income, whether that is your paycheck from work or an inheritance from a loved one. When a person is planning their estate, they will naturally want to minimize the amount of taxes they will be liable for, because the more taxes they pay, the less there will be left to go to their beneficiaries.
It is important, therefore, that as an estate planner, you understand what taxes your estate will likely be liable for at the end of your life. This will help you initiate strategies in order to lower taxes and maximize your beneficiaries’ inheritance.
Will my estate be liable for estate tax?
Only estates with a very high value of assets will need to pay estate taxes. Estates that were processed in 2017 with a value of $5.49 million or more were ordered to file a federal estate tax return. This figure is expected to rise gradually, in accordance with inflation, although it is entirely possible that Congress could decide to decrease the tax limit or decide to stop estate tax returns completely.
Even if your estate is higher than the value of $5.49 million, there may be ways in which you can reduce the tax you will be liable for. You might be able to do this through passing a large portion of your assets to your surviving spouse or benefiting from tax exemptions relating to charitable donations.
It is important to be proactive in learning more about how you can reduce taxes on your estate as a person living in Massachusetts.