Estate planning in Massachusetts involves many of the same fundamental concerns present in any comprehensive estate plan: deciding who will receive property, selecting people to act if incapacity occurs, planning for minor children or other beneficiaries, coordinating beneficiary designations, and determining how assets should be managed after death.
Massachusetts also has several issues that deserve particular attention, including its separate estate tax, state probate procedures, homestead protections, and Massachusetts-specific health care decision-making documents.
These differences become especially important for clients who have moved into Massachusetts, maintain another home in Florida or elsewhere, or have an older estate plan that was created under the laws of another state.
Building a Massachusetts Estate Plan
An estate plan should address both lifetime planning and what occurs after death.
Depending on the client’s circumstances, the plan may include a revocable living trust, pour-over will, durable power of attorney, health care proxy, and other advance planning documents.
A revocable living trust can be used to manage assets during life and establish how trust property is administered after death. Trust planning can also be useful for probate avoidance when appropriate assets are properly transferred into the trust.
As with any trust-based plan, funding is essential. Creating a trust agreement without reviewing ownership of real estate, financial accounts, business interests, and other property can leave significant assets outside the structure.
A pour-over will is prepared as a companion to the revocable living trust. It provides a mechanism for addressing probate assets remaining outside the trust and can contain other important provisions, including nominations relating to minor children.
Beneficiary designations should be reviewed separately because retirement accounts, life insurance policies, and other beneficiary-designated assets generally do not pass simply because the will or trust provides different instructions.
The Massachusetts Estate Tax
One of the most significant differences between Massachusetts and Florida estate planning is the Massachusetts estate tax.
Massachusetts currently requires an estate-tax return when the gross estate plus adjusted taxable gifts exceeds $2 million for individuals dying on or after January 1, 2023.
The 2023 tax legislation also changed the treatment of estates around that threshold. Estates of decedents dying on or after January 1, 2023 receive a credit of up to $99,600, and an estate with a federal taxable estate of no more than $2 million is not required to pay Massachusetts estate tax under the relevant provisions.
This was an important change from the prior system, which had a much lower $1 million threshold and a significant “cliff” effect.
The $2 million number should still be understood carefully.
Estate-tax analysis is not limited to looking at how much money is sitting in someone’s checking and investment accounts. Real estate, retirement accounts, life insurance, business interests, and other assets may all be relevant to the size of the estate depending upon the applicable rules.
A married couple also should not assume that because they jointly own less than twice the threshold there is no planning issue. How assets are owned, how trusts are structured, what occurs at the first spouse’s death, and whether assets appreciate significantly over time can all matter.
For clients with estates approaching or exceeding the Massachusetts threshold, estate-tax planning can therefore become part of the larger estate plan rather than an issue addressed only after death.
The contrast with Florida is significant because Florida currently imposes no separate Florida estate tax for decedents dying after December 31, 2004.
For clients who divide their time between Massachusetts and Florida, domicile and asset location may therefore become important considerations.
Probate in Massachusetts
Probate is the legal process used to administer certain assets after someone dies.
Massachusetts recognizes several different probate procedures. The Probate and Family Court identifies informal probate, formal probate, late and limited formal probate, and voluntary administration for qualifying small estates.
Informal probate is an administrative proceeding handled through a Massachusetts Uniform Probate Code magistrate rather than a judge and can be a faster process when the estate satisfies the requirements.
Formal probate is generally used when judicial involvement is necessary. This may include circumstances involving objections, questions about the will, uncertainty concerning heirs, the need for supervised administration, or other matters requiring a judge’s order.
Massachusetts also permits voluntary administration for certain small estates. To qualify, the decedent must have been a Massachusetts resident and the probate estate must consist entirely of personal property valued at no more than $25,000, excluding the value of one automobile.
As in Florida, having a will does not itself avoid probate.
The probate question depends primarily on what the deceased person owned and how those assets were titled.
Assets held in a properly funded trust, property with survivorship ownership, and accounts with valid beneficiary designations may pass outside probate, while individually titled assets may require probate administration.
Massachusetts Homestead Protection
Massachusetts homestead law provides protection for a person’s principal residence, but the structure differs significantly from Florida homestead law.
Current Massachusetts law provides an automatic homestead exemption of $125,000. A properly recorded declaration of homestead can provide a declared exemption of $1 million, subject to the statutory rules governing ownership and allocation.
Homestead protection can also apply when a residence is held in trust, provided the statutory requirements are satisfied. Massachusetts law specifically addresses declarations where a home is trust-owned and provides that the trustee executes the declaration.
For estate-planning purposes, this means that transferring a Massachusetts residence into a revocable living trust should be coordinated with homestead planning rather than treating the deed and the homestead declaration as unrelated matters.
The existence of homestead protection also does not mean the residence is immune from every possible obligation or creditor. The statute contains its own rules and exceptions.
The broader planning point is that real estate transfers should be reviewed before deeds are changed, particularly when the property is the client’s principal residence.
Health Care Decision Making in Massachusetts
Lifetime incapacity planning is a fundamental part of a Massachusetts estate plan.
Massachusetts law allows a competent adult to appoint a health care agent through a written health care proxy. The document must meet the statutory execution requirements, including signature in the presence of two adult witnesses, and the named health care agent cannot serve as a witness.
The health care proxy identifies the person who can make health care decisions when the individual is no longer able to make those decisions independently.
A personal directive or living will can supplement that planning by describing a person’s wishes, values, and preferences regarding medical care.
Financial incapacity is addressed separately.
A durable power of attorney can authorize another person to handle financial and legal matters according to the authority granted in the document. Massachusetts law recognizes durable powers of attorney separately from health care proxies.
The distinction matters because naming someone to make medical decisions does not automatically give that person authority to manage bank accounts, sign legal documents, or handle other financial matters.
Together, these documents can reduce the likelihood that a family will have to seek court intervention simply because a person becomes unable to manage affairs independently.
Common Massachusetts Planning Situations
Many Massachusetts estate-planning matters arise not because someone has no plan, but because an existing plan no longer reflects the person’s life.
A common example is a client with estate documents prepared ten or twenty years ago. The beneficiaries may still be correct, but the children are now adults, the selected fiduciaries may no longer be appropriate, the client’s assets may have increased substantially, and Massachusetts estate-tax law may have changed since the documents were signed.
Another common situation involves real estate.
A client may own a Massachusetts residence individually even though the remainder of the estate plan is trust-based. Others own vacation property on Cape Cod, investment property, or a second home in Florida or another state. The ownership of those properties should be reviewed together rather than separately.
Blended families also require particular attention. Second marriages can create competing objectives: providing for a surviving spouse while ensuring that property ultimately passes to children from a prior relationship.
Business owners and professionals may have another layer of planning involving LLC interests, professional entities, investment real estate, or succession concerns.
Finally, many Massachusetts clients eventually become multi-state clients. They may purchase a Florida home, begin spending winters there, or eventually establish Florida domicile while maintaining Massachusetts property.
That transition is an appropriate time for a full estate-plan review.
The purpose is not necessarily to replace every existing document. It is to determine whether the documents, property ownership, beneficiary designations, tax planning, and intended domicile remain consistent with one another.
A Massachusetts estate plan should ultimately provide a clear structure for lifetime decision making, property management, tax considerations, and administration after death. For clients whose lives extend beyond Massachusetts, that structure should also account for the laws and property of the other states that have become part of their lives.