ipdiddly wrote: ↑Mon Jan 18, 2021 2:26 pm
MA has a punitive estate tax that kicks in on any estate over $1MM. If the deceased has an estate valued at $5MM, the MA estate tax is about $400K. That's a hefty levy against someone who paid taxes to the state his/her whole life.
I am looking for advice from those who have seriously considered the topic about the best way to avoid or minimize the MA estate tax bite.
To simplify matters, let's assume the deceased is single with one adult child (married with children) and has an estate of $5MM on death. Assets comprise a home, a modest bank account, a taxable brokerage account and an IRA, with most of the assets in the brokerage and IRA accounts (e.g. 50/50). I am doubtful that the breakdown of assets is relevant, but I specify it in case someone thinks it matters. Obviously, the Fed estate tax is exempted at this point and should not enter the equation - again, let's keep it simple.
Question to be answered. Be specific.
What constructs should the above individual have in place to avoid/minimize MA estate tax.
Are there particular types of trusts that will get there? How do the funds flow? Title assets a certain way? You name it, I want to hear it. Again, be specific. (For example, should I buy a llama farm? Ok, just being funny there.)
The following matters should NOT be included in your advice:
1) Consult a good estate tax attorney. Duh!!! That's the plan. I plan to meet with our attorney to update our current estate plan. I want to be sure I have a variety of ideas to explore with him. In other words, maybe he doesn't know everything.
2) Give everything to charity or a donor advised fund (DAF). Again, duh! Obvious and not helpful.
3) Move to a state with no estate tax. Again, duh! Obvious and not helpful.
As a matter of courtesy:
If in your response you wish to quote me or some other responder, PLEASE kindly limit the quote to the precise sentence relevant to your response. There is nothing more annoying than seeing a response that quotes a long thread chain, only to provide a one sentence response. When you hit the quote button, you can actually delete portions of the quote and save only the small portion you are responding to.