Key Points:

  • Estate taxes are a core planning issue in Massachusetts: the right plan can reduce or avoid estate tax and preserve more assets for heirs, but it should be reviewed periodically as laws change.
  • Massachusetts exemption increased to $2 million: legislation signed in October 2023, retroactive to January 1, 2023, raised the exemption from $1 million to $2 million and includes a $99,600 tax credit.
  • The “cliff effect” was eliminated: estates over the exemption are no longer taxed on the full value, only the portion above $2 million is taxed.
  • Out-of-state property can reduce the taxable Massachusetts estate: the estate value is reduced proportionally based on property located outside Massachusetts.
  • Common strategies to reduce taxable estate size: annual gifting (noted as $19,000 per person as of 2025), charitable giving, and trusts.
  • Trusts can be especially powerful for tax planning: irrevocable trusts may help remove transferred assets from the taxable estate, while aligning distribution and protection goals.

If you are planning your estate in Massachusetts, you and your family must take taxes into consideration. The right estate plan can minimize or even avoid estate taxes while preserving more of your assets for your family and other beneficiaries. However, tax laws are always subject to revisions, and even a well-drafted plan needs periodic review.

Recent changes in tax laws over the last couple of years will impact Massachusetts estate plans, so consulting skilled legal counsel is imperative. Find out why so many individuals and families count on the estate planning team at Seder & Chandler, LLP.

The Estate Tax and the Massachusetts Exemption

The state of Massachusetts levies a tax on estates based on their value at the time of the decedent’s death. This tax is calculated and paid before any assets can be distributed to beneficiaries. There is an exemption, however, which means that estates valued under a certain dollar amount are not subject to the estate tax.

Legislation signed in October 2023 (applied retroactively to January 1, 2023) raised the Massachusetts estate tax exemption from $1 million to $2 million. There is also a tax credit of $99,600 which will reduce the amount of the estate tax. Additionally, the recent law eliminated something called the cliff effect.

The cliff effect means that if the value of an estate exceeds the exemption amount, the entire estate would be subject to the tax, which could be quite substantial. Now that this has been eliminated, only the portion that exceeds the $2 million exemption will be taxed.

Finally, the law changes how estate assets located outside of Massachusetts are treated. The value of the estate is now decreased by whatever percentage of property is located in another state. So, for instance, if $3 million of property is located in Boston and $1 million in New York ($4 million total), then the decedent’s taxable estate is reduced by 25% since that is the proportion of estate property that is not located in Massachusetts.

Minimizing Taxes and Maximizing Assets

Reducing your estate tax liability is one of the best ways to ensure that more of your assets get passed on to your heirs and beneficiaries. Working with a trusted Massachusetts estate planning attorney, you can adopt such strategies as:

  • Giving annual gifts: The IRS allows an individual to give up to a certain amount of money to their family members each year (known as the annual exclusion) to reduce the size of the taxable estate. As of 2025, the amount is $19,000 per person, which means double for a married couple.
  • Making charitable donations: You can give as much of your property or money away to charity as you want without hitting an exclusion amount, and thereby reduce the size of your taxable estate. Of course, this does remove money from your family but it is an option that many individuals find suitable for their estate planning goals.
  • Establishing trusts: The use of trusts is a long-favored strategy for reducing taxes while preserving assets. Irrevocable trusts in particular (meaning, once established, they cannot be altered or revoked) are useful for this purpose because assets transferred into them are not considered the property of the person who created the trust.

Explore Your Options With Seder Law

Tax changes are always a possibility, but the right legal team can help you anticipate and respond to them with a comprehensive estate planning strategy. To learn more about estate taxes and how they may impact your plan, give Seder Law a call today.