Asset protection includes tax planning. With proper planning, a family’s estate tax may be reduced or eliminated. Each State has its own estate tax exemption. In Massachusetts, the amount has been set at one million since 2003. It is important to look at options to minimize estate taxes by using trust planning. The use of a trust to receive assets may allow a surviving spouse to receive support without having their spouse’s assets included in their taxable estate.
Although the federal exemption has been maintained at 5 million indexed for inflation, tax planning is still important in large estates. With portability of a spouse’s unused exemption, a surviving spouse may have an even larger federal estate tax exemption. Tax planning post mortem, however, is critical since portability is not automatic. A Federal estate tax return must be filed for this purpose, a necessary step that could be overlooked without expert legal advice.