As the saying goes, nothing is certain in life except death and taxes. And there’s no avoiding taxes, even after death, at least when it comes to real estate—depending on the value of the estate.
When someone dies who owns or has any legal interest in Massachusetts real estate, an estate tax lien (a legal claim for any unpaid estate taxes) is automatically applied against the property. This happens regardless of the estate’s value and clouds the sale or transfer of the real estate for ten years, unless the lien is released.
The good news is that in most case, no estate tax is actually owed. Massachusetts law provides a simple solution for releasing the estate tax lien. Here’s how it works:
No Estate Taxes Owed Below $2 Million Threshold
In Massachusetts, for individuals who died on or after January 1, 2023, no estate tax is owed when the gross estate value is less than $2,000,000. However, the automatic estate tax lien still clouds a title transfer until a release is recorded in the Registry of Deeds where the property is located.
To release the lien, the estate executor must record an affidavit indicating that “the gross estate of the decedent does not necessitate a Massachusetts estate tax filing.” This is sometimes referred to as a “65C Affidavit,” per the chapter of Massachusetts General Laws that addresses this issue.
In addition to the above language, other general information must be included in the affidavit, such as the decedent’s name and date of death, identity of the person signing the affidavit, and title reference of the property at issue. The affidavit must be signed under pains and penalties of perjury and be notarized. A certified copy of the decedent’s death certificate should also be recorded simultaneously, if this has not already been done. Once the affidavit is recorded, the cloud on title is lifted, and the lien is released.
Estates Above the Threshold Require an Estate Tax Return
Even for estates valued above the threshold, the lien can still be released once an estate tax return is filed and the taxes are paid, or an estimated amount is paid along with a timely extension of the deadline to file the actual return, with the Massachusetts Department of Revenue. Then a Release of Tax Lien certificate can be obtained and filed with the Registry of Deeds, which will then cancel the lien and clear the title.
Each case requires careful analysis to determine whether the gross estate value is below the threshold. Factors may include whether the decedent was a Massachusetts resident, whether they owned property in different states, any trust assets, and how the property was owned. Our real estate attorneys at Mountain Dearborn can help you to determine if a 65C Affidavit will be sufficient to release an estate tax lien. Please contact us for a consultation.
Image: Kostiantyn Li
