Articles & Forms
- Estate Planning Questionaire [PDF] Please complete and bring to first meeting.
- Pre-incorporation Checklist [PDF] Please complete and bring to first meeting.
Minnesota Estate Tax Law Changes May Impact Your Estate Plan
written by Steven Goldetsky
A change in Minnesota's estate tax may create state tax liability under your estate plan.
Many estate plans employ a standardized "marital formula" which uses federal tax law thresholds. This formula provides that nonspouse beneficiaries can receive the maximum amount permissible for exclusion from federal estate tax. In 2007, with a marital formula, nonspouse beneficiaries would receive up to $2,000,000 of assets without subjecting the distribution to federal estate tax.
Minnesota has dramatically changed its estate tax system. In 2007 Minnesota will assess a state estate tax on assets exceeding $1,000,000 in value which pass to nonspouse beneficiaries. The state estate tax rate ranges are from 5% to 16 percent. This change may adversely impact individuals using the standardized marital formula.
Minnesota is therefore assessing a tax on the "Gap Amount". The Gap Amount is the difference in the tax threshold under Minnesota tax law and federal tax law. See chart at bottom of this page.
At this time, a failure to amend your estate plan could subject your estate to Minnesota estate tax at the first death of a married couple.
There are options to prevent Minnesota estate tax from being payable at the first spouse's death. We suggest clients consider using a disclaimer formula. This approach can effectively limit the distribution to nonspouse beneficiaries to the maximum amount permitted under Minnesota law.
If you believe your estate fits the criteria described in this letter, you should consider discussing this issue with an estate planning attorney.
Estate Tax Return Guide
(Gap Amount is different between federal & state exclusion)
Filing Requirements
Year |
MN Exclusion |
MN |
Federal Exclusion |
Federal |
2005 |
$950,000 |
$326,300 |
$1,500,000 |
Deduction |
2006 |
$1,000,000 |
$345,800 |
$2,000,000 |
Deduction |
2007 |
$1,000,000 |
$345,800 |
$2,000,000 |
Deduction |
2008 |
$1,000,000 |
$345,800 |
$2,000,000 |
Deduction |
2009 |
$1,000,000 |
$345,800 |
$3,500,000 |
Deduction |
2010 |
$1,000,000 |
$345,800 |
Repealed |
Repealed |
2011 and later |
$1,000,000 |
$345,800 |
$1,000,000 |
$345,800 |
Individuals Who May Have Responsibilities in Your Estate Plan
written by Steven Goldetsky
THE PERSONAL REPRESENTATIVE - The person designated in a will to administer the testator’s estate. The “P.R.” must locate and probate the will (prove it was the last will of the deceased). The P.R. must then collect the decedent’s property, pay debts, taxes other expenses of the estate, validate estate claims and finally distribute remaining assets to the beneficiaries designated in the will.
Attributes of the Personal Representative
- Sensitivity
- Competence
- An understanding of the needs and circumstances of the beneficiaries
- Knowledge of the nature value and extent of the decedent’s assets
- Prior experience
- Business and investment experience
- Ability and willingness to serve
- Geographic proximity to the beneficiaries and the assets of the estate
- Lack of any conflict of interest
- Integrity
TRUSTEE - The individual and/or entity named in a testamentary trust, irrevocable trust or living trust to carry out the objectives and terms of the trust. A trust is useful if there are minor children, a second spouse, or a beneficiary with some form of disability.
Duties
- Administration of trust at death of settlor
- Control and manage trust assets for designated beneficiaries
Attributes of a Trustee
- Same attributes as listed above for Personal Representative
- No conflict of interest, actual or assumed under state/federal law
- Investment sophistication, recordkeeping ability and ability to hire professionals necessary for proper trust administration
POWER OF ATTORNEY OVER FINANCIAL AFFAIRS – Individual(s) you designate to make financial decisions in the event you are unable or unavailable to make your own financial decision. This power terminates at principal’s death.
GUARDIAN – Individual(s) you designate to raise your minor children