Passing On a Massachusetts Home: Probate, Trusts and the Estate Tax

How you hold title to a Massachusetts home determines what happens to it when you die, and the decision is usually made at closing by someone who did not explain the options. It is worth revisiting.

Nothing here is legal or tax advice. Estate planning is genuinely individual, and this is intended to tell you what questions to bring to an attorney.

The Massachusetts estate tax

Massachusetts levies its own estate tax, separate from and with a much lower threshold than the federal one. That is the fact that surprises people: an estate far too small to owe federal estate tax can still owe Massachusetts estate tax, and in Greater Boston a single house can carry an estate a long way toward the threshold on its own.

The threshold and the credit mechanism were changed by legislation in 2023, and figures change. Confirm the current threshold with the Massachusetts Department of Revenue or an estate attorney rather than relying on any summary, including this one.

The practical point stands regardless of the number: in this housing market, the family home is frequently the reason an estate becomes taxable.

How title is held

This is the mechanism that decides probate, and most people do not know which form they have. Check your deed.

Joint tenants with right of survivorship. On the death of one owner, the survivor takes the whole interest automatically, outside probate. Common between spouses.

Tenancy by the entirety. Available only to married couples in Massachusetts, and it carries an additional benefit: it provides protection against the creditors of one spouse individually.

Tenants in common. Each owner holds a distinct share, and that share passes under their will — through probate. This is the standard form for unmarried co-owners and for siblings who inherit together, and it is frequently used without anyone realising probate is the consequence.

Sole ownership. Passes under the will, through probate.

Held in trust. The trust owns the property; on death it passes under the trust terms, outside probate.

What probate actually costs

Probate in Massachusetts is a court process to validate the will, appoint a personal representative, settle debts and distribute assets. It is public, it takes months, and it costs money in fees.

For a straightforward estate it is manageable. It becomes painful when the estate holds real property that beneficiaries disagree about, when heirs are in different states, or when the will is contested. It is also public — anyone can read what the estate held and who received it.

Does a trust help?

A revocable living trust is the common tool. You transfer the home into the trust, remain trustee and keep full control during your life, and on death the property passes under the trust terms without probate.

What it does: avoids probate for assets actually titled in it, keeps the disposition private, and provides for management if you become incapacitated.

What it does not do: a revocable trust does not by itself reduce Massachusetts estate tax, and it does not protect assets from your own creditors. Those are different tools with different trade-offs.

The most common failure is simple: the trust is drafted and the deed is never transferred into it. An unfunded trust accomplishes nothing. If you have one, confirm the registry actually shows the trust as the record owner.

The homestead point

Massachusetts homestead protection shields a portion of the equity in a principal residence from certain creditors. There is an automatic homestead, and a larger protection available by recording a declaration — with an enhanced amount for owners who are elderly or disabled.

It is inexpensive to record and widely overlooked. Note that holding a home in trust affects how homestead applies, which is one more reason to have both looked at together. How the homestead declaration works.

Inheriting a house

The step-up in basis is the single most valuable thing for heirs to understand. Inherited property generally takes a new cost basis equal to its fair market value at the date of death. A house bought for $150,000 in 1985 and worth $1.2 million at death passes with a basis of $1.2 million — and decades of appreciation escape capital gains tax entirely if the heirs sell near that value.

This is why selling an appreciated home shortly before death and selling it shortly after can produce very different tax outcomes, and why "just put the kids on the deed now" is often the wrong move: a lifetime gift generally carries your basis to the recipient, forfeiting the step-up.

Get a date-of-death appraisal. Without documentation of value at that date, establishing basis later is difficult.

When several heirs inherit together as tenants in common, decide early and in writing whether the property will be sold, held, or bought out by one of them. Co-ownership among siblings with different finances and different attachments to the house is the most common source of conflict in this area.

What to actually do

Read your deed and find out how you hold title.
Record a homestead declaration if you have not.
Have a will, and keep beneficiary designations current — they override the will.
Discuss whether a trust fits your situation and, if you have one, whether the deed is in it.
Review after every marriage, divorce, birth, death and significant change in property value.
Talk to a Massachusetts estate attorney. The Massachusetts estate tax threshold is low enough relative to local home values that this is not a wealthy-person concern here.