Massachusetts Estate Tax Planning
Last updated: 18 Oct 2025 • Author: Alexander Foelsche CPA (US), WP (DE), RE (CH)
Massachusetts Estate Tax — Planning Guide
Practical strategies to reduce, defer, and fund Massachusetts estate tax under M.G.L. c. 65C. Coordinate the $2,000,000 exclusion and anti-cliff credit, leverage the Massachusetts-only QTIP, manage nonresident situs exposure, support valuations, and stage liquidity for the 9-month payment on Form M-706.
Top planning moves (at a glance)
Design bequests & trusts
- MA-only QTIP: Elect on the Massachusetts return (even without a federal QTIP) to defer MA tax until the survivor’s death; keep a detailed asset schedule.
- Credit shelter trust: Use federal exclusion efficiently; coordinate with the MA anti-cliff credit so marginal tax matches exposure above $2M.
- Charitable design: Outright bequests or CRT/CLT reduce the Massachusetts base and can improve the credit result.
- Disclaimer planning: Preserve flexibility to shape MA outcomes post-mortem.
Manage situs & beneficiaries
- Nonresidents: Limit MA-situs assets; intangibles of nonresidents are generally outside MA unless a business situs is created.
- Asset placement: Align high-tax assets with marital/charitable vehicles; use tax allocation clauses to control burden.
- Entity planning: Maintain out-of-state management/records to reinforce intangible character for interests in closely held entities.
Common structures
| Tool | Primary goal | Practice notes |
|---|---|---|
| MA-only QTIP trust | Defer Massachusetts tax at first death | Elect on a timely M-706; attach an election statement and asset list. Property is included in the survivor’s MA estate via federal inclusion concepts. |
| Credit shelter / bypass trust | Use federal exclusion; shelter appreciation | Model interaction with the MA credit to avoid overfunding or under-utilizing the $2M exclusion. |
| Charitable bequests / CRT / CLT | Reduce MA taxable base | Confirm qualified status; include governing instruments and appraisals with M-706. |
| Lifetime gifts | Shift growth out of the estate | Model federal gift/GST effects; maintain documentation. (MA has no separate gift tax, but gifts affect the overall plan.) |
| Real estate strategy (MA property) | Control exposure & title timing | Consider pre-death transfers/sales or trust design that eases post-death lien discharge and closings. |
| Business liquidity / §6166 alignment | Stage cash; match federal relief | If federal §6166 applies, align MA schedules and payment plan where feasible; keep valuations and ownership tests robust. |
Valuation, deductions & documentation
Valuation playbook
- Use qualified appraisers for MA real property and significant tangibles.
- Sync federal and MA schedules; reconcile any alternate valuation date choices.
- Support discounts on closely held interests with contemporaneous reports.
Deductions & proof
- Obtain probate/court approvals where required for administration expenses.
- Retain invoices and proof of payment; tie deductions to MA-reported property where relevant (nonresident estates).
- Attach wills/trusts, beneficiary designations, debt statements, and appraisals per M-706 instructions.
Liquidity, deadlines & liens
Cash at 9 months
- Form M-706 due in 9 months; payment also due at 9 months.
- Use ILIT/insurance or staged sales to fund payment and limit interest/penalties.
- Consider protective/estimated payments if valuations are pending.
Lien & discharge planning
- MA imposes an estate tax lien on MA real/tangible property at death.
- For pending closings, request the Certificate of Release/Discharge early; coordinate with Registry of Deeds timelines.
- Title companies often require proof of filing/payment or acceptable security.
Suggested planning workflow
- Inventory & map MA-situs vs. non-MA assets; identify beneficiaries and goals.
- Model scenarios with the MA calculator; test MA-only QTIP, charitable, and gifting options under the $2M exclusion + credit.
- Draft documents (wills, trusts, beneficiary designations, disclaimers) reflecting MA computation and lien clearance needs.
- Assemble proof (appraisals, court approvals, invoices) for deductions/elections; prepare QTIP schedules where applicable.
- Execution & review: retitle assets, update designations, and set review triggers for life events and law changes.
FAQs
Does Massachusetts have portability?
No. Massachusetts does not allow DSUE portability. Consider a MA-only QTIP or a credit shelter trust to balance exposure between spouses.
Can I make a state QTIP without a federal QTIP?
Yes. A Massachusetts-only QTIP election can be made on a timely M-706 even if no federal QTIP is made; inclusion then occurs at the survivor’s death.
What’s the simplest way to lower MA exposure?
Combine charitable and marital/QTIP planning, document deductions, and manage situs for nonresidents. Stage liquidity for the 9-month payment.
How do I handle a pending sale of MA real estate?
Coordinate appraisal and closing so funds are available for payment; request the lien release early to avoid title delays.