Every December, my clients ask whether or not it makes sense to make gifts to their loved ones. In addition to getting to hear “thank you,” there are several advantages to giving assets away before you die, with few disadvantages.
- Despite common misconception, Massachusetts has no gift tax. There is also a myth that a federal gift tax applies if you give someone more than $15,000 in a year; but federal gift tax only applies when you have exceeded your lifetime giving limit, which is now over $11M.
- The amounts you give away will be subtracted from your taxable estate for Massachusetts estate tax purposes, thereby reducing the estate tax that would otherwise be owed.
- Gifting can also be a handy way to avoid probate.
- If your health deteriorates, and you need to qualify for MassHealth within the next five years, the MassHealth caseworker may require that the gift be given back before you can qualify.
It is important that you consult your accountant and lawyer before you make any large gifts. I will be discussing gifting in more depth during this month’s elder law virtual seminar, which can be watched on Frank and Mary’s YouTube channel, www.youtube.com/elderlawfrankandmary, and your local cable station, along with Frank and Mary’s weekly local cable TV shows, where my co-hosts and I address many common issues facing seniors, and the resources available during the pandemic. As always, if you have any questions or would like additional information, please contact me at 508-860-1470, or firstname.lastname@example.org.
Arthur P. Bergeron is an elder law attorney in the trusts and estates group at Mirick O’Connell.