Dad’s estate is 1,400,000 and he died single. A year before his death he gave me $100,000. Do I use 1,400,000 or add the $100,000 for $1,500,000 when completing the MASSACHUSETTS ESTATE TAX RETURN? I am worried about some three year rule I read about> That is, the gift to me of 100,000 occurred within 3 years of his death
ANSWER BY MARGARET CROSS-BELIVEAU:
Since he made a gift above the annual exclusion amount a Form 709 will need to filed. As for federal purposes, the gift within the 3 years of death is not physically returned, but added back to his total gross estate for calculations purposes. Massachusetts does not have a gift tax, unlike the federal, but the gift does has an effect. In layman’s terms, the taxable gift lowered the Massachusetts threshold by the amount of the taxable gift. You should hire an attorney to complete the Form M706 Estate Tax Return. When the federal government under Bush decided to eliminate the estate tax, Massachusetts decoupled its return from the federal and linked its estate tax to the federal return estate tax return from 1999. Also, if your father owned real estate, Massachusetts imposes an automatic lien for any estate taxes due, which must get released.
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Legal Disclaimer: Please note that this answer does not constitute legal advice, and should not be relied on since each situation is fact specific, and it is impossible to evaluate a legal problem without a comprehensive consultation and review of all the facts and documents at issue. This answer does not create an attorney-client relationship. A lawyer experienced in the subject area and licensed to practice in the jurisdiction should be consulted for legal advice.
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The tax attorneys at the Beliveau Law Group provide legal services for taxation. The law firm has offices and attorneys in Naples, Florida; Waltham, Massachusetts; and Salem, New Hampshire.