In Massachusetts, real property of a decedent has an estate tax lien assessed that will exist for ten years. So, to sell real property from an estate within ten years, the Department of Revenue needs to release the lien. Additionally, Massachusetts has an estate tax exemption of $1,000,000.00. This exemption amount plays an important role in determining the release of the tax lien. Accordingly, the executor will have to complete the following tasks:

• Complete an Inventory of Assets to determine the gross value of the entire estate using date-of-death values.
• Determine if the gross value of the estate exceeds the estate tax exemption amount of $1,000,000.00.

Once the executor completes valuing the estate, the executor can move on releasing the estate tax lien.

Releasing the Estate Tax Lien

The executor must complete a valuation of the estate to determine how the DOR will release the estate tax lien. The DOR will release the lien in the following ways:

• If the gross estate is below $1,000,000.00, filing a signed notarized affidavit with the Massachusetts Registry of Deeds is necessary. The notarized affidavit will waive the estate tax lien.
• If the gross estate is above $1,000,000.00, filing a Massachusetts Estate Tax return is mandatory even if no estate tax is due. Additionally, selling the real property has to wait until the DOR sends an Estate Tax Closing Letter and a Certificate Releasing Massachusetts Estate Tax Lien.

Finally, if the executor determines the gross estate is below the estate exemption amount, they can begin the process to sell the house. The notarized affidavit can be signed at the closing or before with an attorney. The sale becomes final once the Registry of Deeds records the new deed and affidavit.

A Final Note

This article relates to Massachusetts estates, but could relate to other states that assess an estate tax. If your state assesses an estate tax, learn how your state handles the sale of real property in an estate.

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Reference

Estate Tax Liens – Worcester – Massachusetts Registry of Deeds – This article provides information on the handling of estate tax liens and exemption amounts in Massachusetts.  

Tax Returns and the Date of Death – The article will provide information on tax returns due based on the date of death. This includes Massachusetts estate tax returns.