Is Out-of-State Property Included in Your MA Estate?
The answer to this question just changed.
Background:
- Legislative updates in 2023 to Massachusetts estate tax said that Massachusetts residents that own real estate in another state, such as a vacation home in Florida, must include the out-of-state property in the value of their estate.
- An earlier court case, Dassori v. Commissioner of Revenue, challenged whether MA could impose estate taxes this way based on a Constitutional argument of procedural due process under the 14th amendment.
- Because of this case, some estate planners concluded that out-of-state property should be excluded from the MA gross estate when filing an estate tax return, as taxing such property was likely unconstitutional.
- The legislature decided to act to resolve this ambiguity.
What Recently Changed?
- On September 16th, Massachusetts Governer Maura Healey signed Bill H.4799 (malegislature.gov) amending the general laws. The new law, retroactive to 2023, reads as follows:
“If the federal gross estate of a person includes real or tangible personal property located outside of the commonwealth at the time of death, the credit shall be determined based on the value of the federal taxable estate after such estate is reduced by the value of such real or tangible personal property located outside of the commonwealth.”
What does this tax law change mean for MA residents?
Non-Massachusetts real estate is now excluded from the Massachusetts decedent’s estate for purposes of calculating the MA estate tax!
Because this legislation is so new and buried within a long list of budget and expenditures, it may still be under the radar for some tax and legal professionals. As of this article’s publish date, the state’s own estate tax guide website does not even reflect the change. Massachusetts Estate Tax Guide | Mass.gov
Any MA decedent from 2023 or 2024 YTD with an estate tax return (and tax due) that included out-of-state property could be entitled to a refund and should speak to an attorney.
Heritage Financial’s Financial Planning Team includes an experienced Estate Planning Specialist who monitors trust and estate law, educating colleagues and clients on relevant changes, like this one. If you are interested in hearing our Financial Planning Team’s thoughts on your current financial plan, contact us to discuss our signature Three Meeting Process where you can test drive working with us before formally becoming a client.
