Massachusetts Passes Bill Protecting Farmers from Estate Tax – Summer 2018

Until last month’s enactment of Section 18, Chapter 209 of the Acts of 2018, the Massachusetts estate tax, imposed at death, has caused many farm families to sell family farmland in order to pay the estate tax of a deceased farmer. Why? Because unless the decedent’s farmland has been permanently protected by an agricultural preservation restriction or a conservation restriction, it is valued at its fair market value at the date of death. And the fair market value of the land, based on its “highest and best use,” can easily put a farmer’s estate over the $1 million threshold, after which the estate tax is imposed on the entire estate. Many family farms do not have sufficient cash and need to sell some of the land in order to pay the tax.

Thanks to the Massachusetts Farm Bureau, American Farmland Trust, the Franklin Land Trust, other non-profit organizations and some state legislators, including our local representative Steve Kulik, a new land valuation formula for farms has been put in place that will significantly reduce, and in many cases, eliminate Massachusetts estate taxes for farmers. Starting in 2019, the new legislation allows farmland owned by deceased farmers to be valued at its “current” or agricultural use value (as defined by state Chapter 61, Chapter 61A, or Chapter 61B) rather than at its “highest and best use” value for estate tax purposes. Those who inherit or to whom the land is transferred must continue to farm the land for ten years after the death. If there is a change in use in that period, the taxes on the fair market value, rather than the farmland value, must be paid to the state.

The intent of the law is to help ensure the continuation of our important family farm tradition here in Massachusetts.

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