Massachusetts Estate Taxes

The Massachusetts estate tax is designed to absorb the federal estate tax credit for state death taxes. However, beginning with decedents dying in 2003, Massachusetts has decoupled its estate tax laws from current federal estate tax laws.

Instead, the Massachusetts estate tax is computed using the Internal Revenue Code in effect at the end of 2000. The Massachusetts filing threshold and exempt amount is $700,000 in 2003 ($850,000 in 2004; $950,000 in 2005).

No additional estate tax is imposed in Massachusetts.

Deductions. The following deductions are generally allowed from a resident decedent's estate when calculating Massachusetts estate tax liability:

• marital deduction based on the federal unlimited marital deduction
• decedent's debts
• funeral expenses
• administration expenses
• attorney's fees
• executor's commissions
• property and income taxes accrued before death
• mortgages (deducted from the value of the real property)

For nonresident estates, pro-rata deductions are allowed only for those things attributable to real estate and tangible personal property located in Massachusetts.

Returns. The estate's executor or administrator is responsible for filing a Massachusetts estate tax return (Form M-706). In addition, a completed U.S. Form 706 with a revision date of July 1999 must be submitted (available at www.mass.gov/dor). If the estate must file a current U.S. Form 706, a copy of that form (with all attachments) must also accompany Form M-706 and the 1999 Form 706.

Any estate taxes due must be paid within nine months of the decedent's death.

Generation-skipping transfer tax. Massachusetts imposes a generation-skipping transfer tax that is equal to the federal credit.