USA – MASSACHUSETTS Law and Practice Contributed by: Patricia Annino, Rimon, P.C.
2.6 Transfer of Assets: Vehicle and Planning Mechanisms Because Massachusetts does not have a gift tax or a generation-skipping transfer tax, assets may be gift - ed outright or in trust during an individual’s lifetime and can therefore be removed from the Massachu - setts taxable estate. However, since the Massachu - setts estate tax rates are significantly lower than the combined federal and Massachusetts capital gains rates, both the estate (federal and Massachusetts) and income/capital gains rate calculations should be con - sidered prior to making a gift of appreciated assets. 2.7 Transfer of Assets: Digital Assets Massachusetts has not yet adopted the Revised Uniform Fiduciary to Digital Assets Act (RUFADAA), but a bill has been proposed to establish the Massa - chusetts Fiduciary Access to Digital Assets Act. This bill provides a framework to address how fiduciaries should access and manage a person’s digital assets in the event of incapacity or death. The Massachu - setts Supreme Court, in Ajemian v Yahoo, Inc held that the Secured Communications Act does not prohibit Yahoo from disclosing the contents of a decedent’s email, and that Yahoo is permitted but not required to disclose the email contents to the personal repre - sentative of the estate. Individuals may include digital asset clauses within their estate planning documents that specifically address fiduciary access. 3. Trusts, Foundations and Similar Entities 3.1 Types of Trusts, Foundations or Similar Entities Trusts are commonly used in Massachusetts to mini - mise taxes, avoid probate, manage assets, maintain privacy and confidentiality, control a beneficiary’s access to assets, protect assets and for charitable planning. Types of Trusts and Foundations A variety of trusts are typically used for estate plan - ning in Massachusetts, including revocable trusts, irrevocable trusts, special needs trusts, self-settled trusts (for MassHealth planning), testamentary trusts (used for MassHealth planning), purpose trusts, pet
trusts, trusts for minors, spousal lifetime access trusts, grantor retained annuity trusts, qualified personal resi - dence trusts, private foundations and charitable split interest trusts. Rules Against Perpetuities The Massachusetts common law rule against perpe - tuities provides that an interest in property is not valid unless it must vest no later than 21 years after some life in being at the creation of the interest, or within 90 years after its creation. Massachusetts adopted the Uniform Statutory Rule Against Perpetuities, which applies to property interests and powers created after 30 June 1999. Decanting of Trusts The decanting of trusts is increasingly common in Massachusetts. Decanting may be permitted by stat - ute, by the terms of the original trust, or by court- created law. There is no Massachusetts statute that addresses decanting. The power to decant is based in common law. The Supreme Judicial Court has ruled that it is permissible to transfer assets from one trust to another as long as the new trust serves the same purposes as the original trust, and the trustee can act without court approval. The decanting authority does not have to be granted expressly and may be inferred from the entirety of the powers given to the trustee by the settlor. The settlor’s intent is important. As in other jurisdictions, decanting may be used for many reasons, including to clarify ambiguities or cor - rect errors in the trust, provide protection for changes in beneficiary status, such as special needs, asset protection, merging or separating of trusts, expanding business powers, modifying trustee succession provi - sions, and adapting to changes in law and tax law. In a recent case, Ferri v Powell-Ferri, the Massachusetts Supreme Judicial Court approved a trust decanting which removed vested withdrawal rights for a benefi - ciary in an active divorce action (thereby protecting the asset from being a countable marital asset), relying on two key facts – the independent trustees decanted without notifying the beneficiary, and an affidavit of the settlor’s intent.
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