When a family member passes away, loved ones may face estate tax questions for the first time. Many families worry that they will miss important deadlines or will not be able to take advantage of new legal developments. Some may not know about certain rules in Massachusetts that could make selling property difficult, such as tax liens placed on real estate immediately upon death. Some people may be confused about estate tax and whether it applies. An experienced probate attorney could help resolve these worries by answering any questions on estate tax in New Bedford probate cases.
Many states do not have estate taxes, so the family of someone with Massachusetts property who passes away may not know they have to file tax returns. Determining which laws apply and what might even be considered part of an estate can be difficult. This can be especially true in areas like New Bedford, where people may live in Massachusetts but work in Rhode Island or even Connecticut.
Both state and federal laws may affect how estate taxes are calculated in New Bedford probate proceedings. Estate tax returns involving Massachusetts property must be filed within nine months after death, though extensions are available. Missing this deadline can result in penalties reaching as high as 25 percent of the tax due.
Also, the state files a lien on inherited property—this makes it hard to sell or transfer until estate tax returns have been filed, taxes have been paid or addressed in probate court, and forms have been filed in the Registry of Deeds (or Land Court) offices. This may be required even if the decedent was not a Massachusetts resident. Attorneys with experience managing estate taxes in probate cases could help ensure all the right forms are completed without missing a deadline.
Knowing what comprises a taxable estate is important to determine if there will be a tax due. According to state law, an estate consists of the following property beneficially owned by the decedent at the time of their death before any distribution to a beneficiary:
Tangible property in Massachusetts must be included in the estate, even if the person lived in another state. This will also include probate property. A lawyer with experience handling estate tax probate proceedings can help families in New Bedford decipher the various state and federal laws that might apply.
State law provides an exemption to the estate tax. Effective January 1, 2023, estates are only required to file a tax return if they are valued at more than $2 million. Some adjustments, like taxable gifts, may be available to offset the total value. This may also be reduced if the property was co-owned with a spouse. If the estate does exceed $2 million, tax is calculated at a gradually increasing rate.
The total estate includes property wherever located, even out of state. However, out-of-state property—like vacation homes in Rhode Island—may help reduce the total value of the estate and allow some estates to meet the exemption. Additionally, federal law indexes the threshold value for estate taxes to inflation and sets the amount much higher than Massachusetts laws.
If you, like many others, have concerns about estate tax in New Bedford probate cases, finding the right firm can go a long way to ease your worries. Attorneys who specialize in handling the administration of a will have experience with all aspects of working through the probate system. Their experience could help you file the right forms, meet deadlines, determine how to calculate values of the estate, and release liens on real property. Our team of lawyers helps families navigate the confusion of estate tax concerns in probate cases. Call one of our trusted probate attorneys today to learn more.
