Federal 1041 is income tax for an estate or trust and it may be needed. Mass has a comparable form.

The Mass 706 is probably not available in the software. Intuit doesn't provide many states Estate Tax. Haven't done a Mass one in a while, but most of the time you have to also fill out the federal 706 first, even if there is no requirement to actually file the 706. But you might want to for portability if there is a surviving spouse.

EDIT: I reread and see you are dealing with a 2nd to die so portability is not an issue.

Mass wants the 1999 version of the 706? That will be fun.

For Maryland estates, we have to attach the federal 706 even if it is not being filed. But at least we can use the current version.

The 1999 Form 706 is readily available online at the IRS website.  They must know that it's still popular in Massachusetts. 

What do you mean by "Irrevocable Remainder share trust"?  Google suggests "An 'irrevocable remainder share trust' is most likely referring to a charitable remainder trust (CRT)."  That's a different animal with its own filing requirements.  

The Family Living Trust assets were moved into a Irrevocable trust which holds the assets until they are distributed to the beneficiaries.

I have the 706 (1999 VERSION) that is not a problem.

So of the federal return,is there a need to file a current form 706 ?

Or do I just file a 1041?

For Massachusetts I believe I file a Form M-706, based on the 1999 version of Form 706 ?

And just to make it interesting. The Trust also holds property in OREGON.

It is under the estate tax threshold. But I may need to file to get a release of any lien put in place by the State.

How do I handle the valuation of the properties in the Trust since they were mostly rental properties ?

Thank you

Trustee should get the real estate appraised as of the date of death.

You're going to have 2 state income tax returns - Mass and OR.

There may be more than two state income tax returns involved, depending on the residence of the trustee and the beneficiaries.  

Does the Massachusetts return go on an Estate return form M-706

Or will it go on Massachusetts Form 2 FIDUCIARY INCOME TAX form?

How is the depreciated rental real estate valued?

I'm guessing at the appraised value at date of death

Luckily I only have to deal with two states. But Massachusetts makes it confusing because the put a lien on the Real Estate which may need an Estate filing . But the Real estate is not in any Estate it's in the new Irrevocable Trust

Anyone from Massachusetts had to deal with this?

Thanks

The lien is not on any specific piece of property, it is on all (well, OK, most, see below) of the decedent's assets that would be reported on a federal (and therefore state) estate tax return.  Nothing is recorded, the lien is created automatically the moment of death.  If the beneficiaries want to sell something, a buyer wanting good title is going to need an estate tax waiver.  For estates over $2 million, the tax return must be filed.  For smaller estates, they have an affidavit procedure.  Apparently the lien expires after ten years, unless the state figures out some money might be owed and tries to extend it.  (I've only been to Massachusetts once and I got lost in Boston traffic, so all I know is what Google tells me.)

Does the lien attach to the Oregon property?  No, because Massachusetts law was changed in 2023 to exclude the value of out-of-state real estate from the taxable estate of a Massachusetts resident. Therefore, Massachusetts cannot place a lien on property outside of its jurisdiction for a resident's estate tax liability.