Q1: What is estate tax planning?
A: Estate tax planning is the process of arranging your assets and affairs to minimize or eliminate federal and state estate taxes upon your death. Proper planning can preserve more of your wealth for your family and charitable causes. At Boyd & Boyd, P.C., we design customized strategies that align with your financial goals and family legacy.
Q2: What is the current estate tax exemption?
A: As of 2025, the federal estate tax exemption is approximately $13.99 million per individual, allowing many estates to pass without incurring federal estate taxes. However, the exemption is subject to periodic adjustments and could change based on future legislation. In Massachusetts, the state estate tax exemption is $2 million, and estates exceeding this amount may owe state estate taxes. Given the potential for legislative changes, it’s important to review your estate plan regularly to ensure it maximizes available exemptions and remains up to date.
Q3: How does Massachusetts estate tax differ from federal estate tax?
A: Massachusetts imposes its own estate tax on estates exceeding $2 million, even if no federal estate tax is due. Importantly, Massachusetts taxes the entire estate once it crosses the $2 million threshold — not just the amount above it. At Boyd & Boyd, P.C., we help clients design strategies to minimize or eliminate Massachusetts estate tax liability.
Q4: What strategies can reduce or eliminate estate taxes?
A: Effective estate tax planning may include:
- Credit Shelter Trusts (Bypass Trusts)
- Lifetime Gifting Strategies
- Irrevocable Life Insurance Trusts (ILITs)
- Family Limited Partnerships (FLPs) and LLCs
- Charitable Planning (Charitable Remainder Trusts, Donor-Advised Funds)
At Boyd & Boyd, P.C., we customize these strategies to fit your unique financial and family goals.
Q5: When should I start estate tax planning?
A: The earlier you start, the more options you have. Beginning estate tax planning well before retirement or major asset transfers allows you to take advantage of gifting strategies, trust structures, and valuation discounts. Waiting until later can limit your options and expose your estate to higher taxes. We recommend reviewing your estate plan annually, especially as tax laws and asset values change.
Should Ask Questions (SAQs)
Q1: Will my retirement accounts (IRAs, 401(k)s) be taxed as part of my estate?
A: Yes. Retirement accounts are included in your taxable estate for both federal and Massachusetts estate tax purposes. Without planning, your heirs could face a double tax: income tax when they withdraw the funds, plus estate tax at your death. Boyd & Boyd, P.C. helps clients structure retirement asset planning to minimize these taxes and maximize legacy preservation.
Q2: How can life insurance affect my estate taxes?
A: If you personally own your life insurance policy, the death benefit will be included in your taxable estate. To avoid this, we often recommend using an Irrevocable Life Insurance Trust (ILIT) to own the policy, excluding the proceeds from your taxable estate and providing liquidity for taxes or distributions.
Q3: What is portability, and does it help in Massachusetts?
A: Portability allows a surviving spouse to use a deceased spouse’s unused federal estate tax exemption. However, Massachusetts does not recognize portability. Without proper planning — such as a Credit Shelter Trust — the first spouse’s Massachusetts estate tax exemption could be lost. Boyd & Boyd, P.C. ensures your plan captures all available exemptions effectively.
Q4: Can charitable giving reduce estate taxes?
A: Absolutely. Charitable gifts can reduce your estate’s taxable value while supporting causes important to you. Advanced strategies like Charitable Remainder Trusts, Charitable Lead Trusts, and Donor-Advised Funds can provide both lifetime income tax benefits and significant estate tax reductions. Boyd & Boyd, P.C. designs plans to integrate charitable giving with your broader legacy goals.
Q5: How do valuation discounts help with estate tax planning?
A: Structuring interests in family businesses, LLCs, or partnerships can qualify for valuation discounts for lack of marketability and lack of control. These discounts lower the appraised value of transferred assets for tax purposes, reducing potential estate or gift taxes. Our team carefully structures ownership to maximize legitimate valuation discounts while preserving family control.
Estate taxes can take a major toll on your family’s legacy — unless you plan ahead.
Schedule a confidential consultation with Boyd & Boyd, P.C. to develop a customized estate tax planning strategy designed to preserve more of what you’ve built.
Book Your Estate Tax Planning Consultation or Request Our Free Estate Tax Planning Guide.
