USA – MASSACHUSETTS Law and Practice Contributed by: Patricia M. Annino, Rimon, P.C.
their respective estates and the contribution of each as a homemaker to the family unit. It is important to note that in Massachusetts, as an equitable division state, gifts and inheritances (even those in irrevocable trusts) may be considered when dividing assets. Status of a surviving spouse From an estate planning point of view, a surviving spouse may not be totally disinherited (MGL c 191, Section 15). Even if a spouse is omitted, that spouse has an elective share, which is a right to waive the provisions of the will and take a statutory share. To do so, the surviving spouse must file a waiver in the probate court within six months of the filing of the will. Under the current law (MGLA c 191, Section 15), if the decedent left issue (children and grandchildren), the surviving spouse is entitled to USD25,000 and a life interest in a third of the remaining estate. If the decedent did not have issue, but has other relatives, the surviving spouse receives USD25,000 and a life interest in one half of the remaining estate. If the dece - dent does not have children or relatives, the surviving spouse is entitled to USD25,000 and one half of the remaining estate outright. Life estate The current law addressing the issue of life estate is not well drafted. For investments, the spouse will receive interest and dividends. If real estate is rented the income is easy to determine. If real estate is not rented, determining a life interest in it is not straight - forward, especially if the spouse and relatives co-own it. The court has ruled that a petition to partition court action can commence to bifurcate the interests, and the spouse can receive the cash value of the life estate interest. Elective share Currently, although the elective share statute is framed in terms of the decedent’s estate, Massachusetts case law may bring certain assets held in a revocable trust within the property against which the surviving spouse’s rights are determined. Massachusetts does not yet have an augmented estate that includes other assets against which the election can be made.
There are frequent bills proposed to increase the elec - tive share. None have currently been passed. Prenuptial and Postnuptial Agreements Prenuptial and postnuptial agreements are valid in Massachusetts. There is no statute setting forth the rules concerning the validity of a prenuptial or post - nuptial agreement. Case law has shown that to be valid, the agreement should be in writing and execut - ed voluntarily between the parties. There is no require - ment that both parties retain counsel, but it is wise to do so. Massachusetts has adopted the “second look doctrine”. The agreement must be fair and reasonable at the time it is executed, and fair and reasonable at the time of the divorce. Each party must provide full and fair disclosure of all financial assets (including assets the person is reasonably expected to receive through gifts and inheritances whether outright or in trust). Any provision addressing child support or cus - tody is not valid. In the absence of a prenuptial agreement or postnup - tial agreement, the equitable division rules apply in a divorce and the spousal rights highlighted above Massachusetts follows 26 USC Section 1014 and affords a stepped-up basis for assets included in the gross estate (with the same two exceptions of assets that are “income in respect of decedent” and assets that are received by the decedent within a year of death) if that property is acquired from the decedent by the donor or by the spouse of the donor. As with federal law, when a lifetime gift is made, the donee takes the donor’s income tax basis. 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 pertain in the event of death. 2.5 Transfer of Property
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