Here’s a number that catches a lot of Massachusetts families off guard: as of 2026, the federal estate tax exemption is $15 million per person. Massachusetts’ exemption? Just $2 million.
That’s not a rounding difference. That’s a $13 million gap — and it means a huge number of families who assume they’re “nowhere close” to owing estate tax are actually well within range of owing it to the Commonwealth, even if the IRS would never blink.
How This Sneaks Up on People
$2 million sounds like a lot of money until you actually add up what it includes. Massachusetts estate tax isn’t just counting cash in the bank — it counts your home, retirement accounts, life insurance payouts, investment accounts, business interests, even property you own out of state (if you’re a MA resident). For a lot of families in Greater Fall River, the South Coast, and across Massachusetts, a paid-off house plus a retirement account plus a life insurance policy adds up faster than people expect.
And here’s the part that trips people up even more: unlike the federal exemption, the Massachusetts exemption is not portable between spouses. At the federal level, a married couple can effectively combine their exemptions. In Massachusetts, without the right planning in place, that automatic combination doesn’t happen — which means the second spouse to pass away could face a state tax bill that proper planning could have avoided entirely.
What Happens If You Cross the Line
Massachusetts doesn’t just tax the amount over $2 million — once an estate crosses that threshold, the tax is calculated on a graduated scale that climbs as high as 16%. On a $5 million estate, for example, that can mean a tax bill in the neighborhood of $290,000. That’s real money coming out of what your children or grandchildren actually inherit, at the exact moment your family is also dealing with the emotional weight of a loss.
The Good News: Massachusetts Doesn’t Have a Gift Tax
Here’s the silver lining most people don’t know about. While the Commonwealth taxes what’s left in your estate when you die, it doesn’t tax what you give away while you’re alive. The federal government allows individuals to gift up to $19,000 per recipient per year without any reporting or tax consequences — and larger lifetime gifts are possible too, without triggering Massachusetts tax.
That means thoughtful, lifetime gifting can be one of the most effective tools for bringing your taxable estate back under that $2 million line, all while getting to watch your gift make a difference in your family’s life today instead of after you’re gone.
Tools Worth Talking to an Attorney About
- Credit shelter trusts — a classic tool for married couples that allows both spouses’ exemptions to be used, rather than losing one at the first death.
- Irrevocable life insurance trusts (ILITs) — can keep a life insurance payout from being counted as part of your taxable estate.
- Lifetime gifting strategies — systematically reducing your estate’s value over time, on your terms.
- Trust structuring for real estate — how you title a home or investment property can significantly change your family’s tax exposure.
None of these are exotic loopholes. They’re standard, well-established parts of a properly built Massachusetts estate plan — but they only work if they’re put in place before they’re needed.
Estate Planning Isn’t Just for the Wealthy — It’s for the Prepared
The whole idea of estate planning is to make sure decisions get made by you, on your timeline, instead of by a tax code and a probate court after the fact. Whether that means a will, a trust, healthcare directives, or a full asset protection strategy, the goal is the same: protect what you’ve built and make things easier for the people you love.
At Botelho Law Group, we help Massachusetts families take a clear-eyed look at where they actually stand — not where they assume they stand — and build a plan that fits their goals, their family, and current Massachusetts law.
Not sure if you’re closer to that $2 million line than you think? Reach out to Botelho Law Group for a consultation. It’s a lot easier to plan for this now than to explain it to your family later.
