Changing Minnesota estate tax laws may benefit your heirs

It is only natural that you want as much as possible of your estate to go to your heirs after your death. However, Minnesota estate taxes on top of federal taxes can drain the assets considerably if steps are not taken to avoid these consequences. We at Dunlap & Seeger, P.A., often provide advice and assistance to individuals, entrepreneurs and farmers who want an estate plan that maximizes the benefits to their family members.

The Research Department of the Minnesota House of Representatives explains that the legislature has recently increased the amount of the exemption for estate taxes. Effective retroactively to Jan. 1, 2017, the exemption is $2.1 million, and will increase to $2.4 million in 2018. The current plan will result in a $3 million exemption as of 2020. Your estate tax will be calculated using a state tax rate schedule, which currently ranges from 12 to 16 percent for deaths in 2017. 

If your estate includes homestead farmland or a qualifying small business property, your spouse or beneficiaries may be eligible for additional exemptions. This is dependent on them keeping the property and maintaining its current use for three years after your death. The amount of the resulting exemption can be added to the general exemption currently in effect, but must still total less than $5 million. 

Assets that you leave to your spouse are deductible, so that, when combined with exemptions, there may be little or no Minnesota estate tax for him or her to pay. More information about minimizing the impact of taxes on your estate is available on our webpage.

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