Death taxes in Massachusetts, who pays...who don't?

[Hansome]

Jurisdiction

Massachusetts

Breifly...Mom passed. Her house - worth 1.5 million - went to my sister, (the admimistrator) along with an adjacent commercial piece of property. My other sister got about a million $. My brother and I got some moneys from a life insurance policy, about 40 grand each, and some money from a bank account that had been set aside years ago for us, payable upon death. In total, my brother and I each got about 100,000 dollars. My sister says I owe her money to pay the death tax. I say the estate pays the death tax and the money left to my brother and I are ours. What is the rule?

 

[flyingron]

It's not a "death tax" it's an "estate tax" based on the value of the estate. The estate pays the estate tax. This should have been settled before the money was distributed to you.

What you were entitled to after all the tax issues were settled depends on how the will reads. You should have a lawyer handling the probate. Just because the will says the sister is administrator doesn't give her any authority to distribute property until probated.

The life insurance payout (unless made payable to the estate) is not part of the estate and not subject to any probate games.

 

[Hansome]

Thanks flying Ron. My sister (the admin) has not provided a copy of the will, but now is demanding "my share" of the taxes that she claims she paid. She claims that I owe 18,000 on my share of 100,000 dollars. Without showing me how she came up with this number, I told her to kick rocks.

 

[Hansome]

The whole thing is......I want to be fair, and if I owe, I will pay.

 

[adjusterjack]

My sister (the admin) has not provided a copy of the will,

You can get a copy from the probate court.

You can get a copy of the entire probate file from the probate court. It will help you figure out what's going on.

My brother and I got some moneys from a life insurance policy, about 40 grand each, and some money from a bank account that had been set aside years ago for us, payable upon death. In total, my brother and I each got about 100,000 dollars.

If you and your brother were listed beneficiaries on life insurance policies that money has nothing to do with the estate.

If you and your brother were listed beneficiaries on bank accounts that money also has nothing to do with the estate.

Any tax, debts, or expense are paid by the estate before any probatable assets are distributed.

I told her to kick rocks.

An appropriate rebuke.

 

[Hansome]

You can get a copy from the probate court.

You can get a copy of the entire probate file from the probate court. It will help you figure out what's going on.



If you and your brother were listed beneficiaries on life insurance policies that money has nothing to do with the estate.

If you and your brother were listed beneficiaries on bank accounts that money also has nothing to do with the estate.

Any tax, debts, or expense are paid by the estate before any probatable assets are distributed.



An appropriate rebuke.

Thank you adjuster jack. I have suggested that our accounts are not part of the estate. But sis says that they were all added up and counted as one lump sum. Its been 3 years and she won't quit. And she wont send copies of anything. SMH.

 

[army judge]

Thank you adjuster jack. I have suggested that our accounts are not part of the estate. But sis says that they were all added up and counted as one lump sum. Its been 3 years and she won't quit. And she wont send copies of anything. SMH.

If I were facing your dilemma, I'd spend money to retain counsel.

I'd rather give a trusted attorney my loot over a scamming, dictatorial sibling.

 

[Tax Counsel]

What is the rule?

It's an estate tax, not an inheritance tax. (Few states impose inheritance taxes today). The tax is imposed on the estate, not the individual beneficiaries, based on the fair market value of the estate property. (An inheritance tax on the other hand, is generally imposed directly on the beneficiaries.)

That and other debts should be deducted from the total pot to be distributed before determining who gets what out of what's left in the pot. You'd need to run the numbers as if that was done correctly to see if you received more than you should have received had the tax been paid prior to the distribution. Your distribution is determined by the will, and how the will is written will have an impact on what you are responsible for. If there is a provision that specifically allocates the tax burden of the beneficiaries' shares, that will be quite important.

The estate's gross value is obviously over $1 million, which means the estate is subject to state estate tax. See the MA guide to estate taxes for details on how that works.

 

[Tax Counsel]

And, by the way, once the will is filed with the court (as the executor is required to do) it is a public record that anyone can see. Moreover, the state probate code requires the executor to provide copies to the known beneficiaries of the estate. It does not appear your sibling is following the law here, and that's something that could cause you all trouble later. I suggest seeing a probate attorney to take whatever action is needed against the sibling and the estate to to correct anything wrong the executor has done.

 

[Red Kayak]

Just out of curiosity, is your sister trying to do things by herself, or has she retained a lawyer?

It kind of sounds like the former, not the latter.

Did your mother have an estate plan? If so, there is nothing wrong with contacting the law office that put together the estate plan.

If your mother didn't have an estate plan, that is a bit of a misstep in MA, given that the estate was greater than $1 million. Consult a lawyer AND an accountant. MA is quirky.

 

[zddoodah]

I'm not saying anything new here, but here's a short summary of the situation:

Life insurance proceeds and money from an account of which you were the pay-on-death beneficiary are not part of the estate. It therefore appears you received nothing from the estate.

The estate taxes are owed by the estate, not by the heirs. If your sister failed to take care of this when the estate was administered, that's her problem. You unquestionably do not owe her any money, and nothing in your post suggests you owe the estate any money. Whether you indulge her is entirely up to you, but doing so without appropriate documentary evidence would, IMO, by very foolish.