01 / THE ESSENTIALS
The short version
- 01The gapMassachusetts has a $2 million estate tax threshold, but no portability of a spouse's unused state exemption. Massachusetts Department of Revenue
- 02The structureAn A/B trust can divide assets at the first death so both spouses' exemptions may be used, depending on the trust terms and estate.
- 03The possible impactUnder the simplified assumptions below, an unplanned $4 million estate has estimated Massachusetts tax of $180,800 at the second death. Under the same assumptions, an A/B trust plan may produce a lower estimate, depending on drafting and funding; actual results vary.
- 04The follow-throughDocuments alone are not enough. The estate planning team needs to review asset titling and beneficiary designations.
THE MA EXEMPTION GAP
Why couples can lose an exemption
At the federal level, a surviving spouse may be able to use the first spouse's unused estate tax exclusion through a portability election. Massachusetts has no equivalent portability election. If everything passes outright to the surviving spouse, the first spouse's Massachusetts exemption may go unused. The survivor then owns the combined estate with only their own state exemption available. See the Massachusetts estate tax guide. For a general explanation of the threshold and credit, read how the Massachusetts estate tax exemption applies to your household and what to review with your attorney and CPA.
02 / THE STRUCTURE
How an A/B trust works
An attorney may design an A/B arrangement within a revocable trust. At the first death, the plan can divide assets between two trusts, subject to the document's funding formula and elections. If you are still sorting out how this structure differs from other trust labels, see the main types of trusts Massachusetts families review, from revocable and irrevocable to credit shelter and QTIP.
Trust B: the credit shelter trust
Also called a bypass or family trust, Trust B can receive assets up to the first spouse's available Massachusetts exemption. Depending on the terms, the surviving spouse may receive income and principal for health, education, maintenance, and support (HEMS). Assets that are not included in the survivor's estate generally pass to the named beneficiaries without a second estate tax on those assets.
Trust A: the QTIP or marital trust
Trust A can hold the remaining assets. If the trust meets the requirements and the appropriate election is made, qualified terminable interest property (QTIP) may receive the marital deduction under IRC §2056(b)(7). The surviving spouse must be entitled to all income at least annually. QTIP property is generally included in the survivor's estate at the second death. The executor and attorney should determine which federal and Massachusetts elections apply. See the Massachusetts Form M-706 guidance, or read what a QTIP trust is and how it may work for a married Massachusetts couple.
At a glance: how the trusts differ
| Feature | Trust B (credit shelter) | Trust A (QTIP) |
|---|---|---|
| Funded with | Up to the first spouse's available state exemption, as the plan directs | Potentially the balance of the estate |
| Surviving spouse's access | As specified in the trust, potentially income and principal for HEMS needs | All income at least annually; other access depends on the terms |
| At the survivor's death | Generally excluded from the survivor's estate if properly structured | Generally included in the survivor's estate |
| Income tax basis | Generally no second basis adjustment solely because the survivor dies | Generally adjusted at the survivor's death if included in the estate |
| Final beneficiaries | Set by the trust's terms | Set by the trust's terms |
The beneficiary terms can matter especially in a blended family. Ask your attorney who can change them and under what circumstances. For basis treatment and exceptions, see IRS Revenue Ruling 2023-2.
03 / THE NUMBERS
How Massachusetts calculates the tax
Estate value and estimated tax
| Taxable estate | Estimated tax |
|---|---|
| $2,000,000 | $0 |
| $2,500,000 | $39,200 |
| $3,000,000 | $82,400 |
| $4,000,000 | $180,800 |
| $5,000,000 | $292,000 |
| $6,000,000 | $411,200 |
| $8,000,000 | $673,600 |
For deaths under current law, Massachusetts uses a graduated schedule, Table B, based on the taxable estate after applicable deductions and adjustments, not simply a flat rate on the dollars over $2 million. It then allows a credit of up to $99,600 under M.G.L. c. 65C, §2A(f). The filing threshold, taxable estate, and resulting liability are different calculations. Read the Department of Revenue's computation and Table B and the statute.
Illustrative calculations using the Massachusetts Department of Revenue Table B as of October 2026: assume all taxable property is subject to Massachusetts estate tax, no deductions and no prior taxable gifts; the Table B adjusted taxable estate is the stated taxable estate less $60,000, followed by the $99,600 state credit. This is not an estimate for a particular family. An estate attorney or CPA should calculate the actual liability.
04 / A SIDE-BY-SIDE EXAMPLE
Worked example: an $8 million estate
Holding asset values constant and using the same simplified Table B assumptions, the illustration compares what would be included in the survivor's estate at the second death. It does not account for growth, distributions, expenses, gifts, changes in law, or income tax consequences.
| Approach | Result |
|---|---|
| No trust planning: everything to surviving spouse outright | Full $8M in the surviving spouse's estate. Estimated Massachusetts estate tax: about $673,600. |
| A/B trust plan: $2M to credit shelter trust, $6M to QTIP | Credit shelter trust at the first death: estimated $0. QTIP assets in the survivor's $6M estate: estimated about $411,200. |
Illustrative only. Figures use the Massachusetts Department of Revenue credit-table method for 2026, assume all property is in Massachusetts, no deductions, and no change in the QTIP balance. Actual results depend on asset values, deductions, elections, and the law in effect at each death. Your CPA calculates any actual tax, and your estate attorney determines whether any trust structure fits your situation.
DOCUMENT REVIEW
A wrinkle worth asking your attorney about
Some older trusts use a formula tied to the federal estate tax exclusion. That amount is $15 million per person in 2026 according to the IRS, much higher than the Massachusetts $2 million threshold. A formula tied to the federal figure may therefore direct more assets to the credit shelter trust than a Massachusetts plan intended. Whether tax is due at the first death depends on the actual terms, funding, deductions, and elections.
Massachusetts permits a state QTIP election separate from a federal QTIP election on Form M-706. Ask your attorney whether an older trust supports the intended election and how its funding formula works. For the requirements and trade-offs, see the QTIP trust guide for Massachusetts families. See the Massachusetts estate tax forms and instructions. For who files and when the return is due, read who files a Massachusetts estate tax return and what your CPA and attorney may ask for.
05 / TRADE-OFFS
What to weigh before choosing this structure
- Income tax basis. Assets excluded from the survivor's estate generally do not receive another basis adjustment at that death; eligible QTIP assets generally do. That can create an income tax trade-off if heirs later sell appreciated assets. Treatment depends on the assets and trust terms. IRS basis guidance.
- Flexibility. The survivor's access to Trust B principal depends on its terms, which may limit future choices.
- Administration. Two trusts may mean separate accounting and tax filings, adding work and cost.
- Alternatives. Titling changes, a disclaimer-based plan, or lifetime gifts may fit differently. An attorney and CPA can assess the legal and tax trade-offs. For background on gifting, read how the federal lifetime gift tax exemption works alongside Massachusetts estate tax planning.
06 / IMPLEMENTATION
Where these plans can go wrong: funding
A signed trust does not by itself change ownership of assets. The attorney's plan needs to be carried through to titling and beneficiary designations. Funding discussions often cover:
- Which taxable accounts should be retitled in accordance with the trust documents
- How IRA and workplace retirement plan beneficiary designations interact with the trust
- Ownership of the home and life insurance
- Whether each spouse's assets support the intended funding at the first death
For a step-by-step view of who handles each account type, read how a Massachusetts trust may be funded and how the attorney, advisor and CPA coordinate it.
07 / THE PROFESSIONAL TEAM
Who does what
A Massachusetts estate attorney drafts the legal documents. Michael Cammarata, CFP®, does not draft trusts, provide legal or tax advice, or prepare tax returns. His role is to coordinate the financial planning and implementation with the professionals you engage.
If you already have an attorney and CPA, Michael can coordinate with them on the asset picture, titling, and the plan's financial assumptions.
Michael also works with a network of independent Massachusetts estate attorneys and CPAs to help coordinate these plans. If you need an attorney or CPA, he can make an introduction. You choose whom to hire and engage them directly; Michael remains the point of coordination for the financial plan.
- Map the estate. Organize assets, titling, and beneficiary designations for review with the attorney.
- Support the design. Provide financial information and illustrations to help the attorney evaluate the trust structure.
- Coordinate funding. Track the retitling and beneficiary changes specified by the attorney and follow up on implementation.
- Review periodically. Revisit the plan when asset values, tax rules, or family circumstances change.
Managing Partner and Owner, MSA Financial, LLC. Michael coordinates wealth, estate, tax, and retirement planning for Massachusetts families with their chosen attorneys and CPAs.
Michael Cammarata, CFP®, is an Investment Adviser Representative of MSA Financial, LLC (CRD #107768), a Registered Investment Adviser. This educational guide reflects Massachusetts law reviewed in October 2026. It is not legal, tax, or personalized investment advice. The figures above follow the Massachusetts Department of Revenue's Table B computation under M.G.L. c. 65C, §2A; actual results vary. Michael is not an attorney or CPA, does not draft legal documents or prepare tax returns, and coordinates with independent professionals selected and engaged by clients.