Minnesota Death Taxes

You may know that the federal death tax exemption in 2009 is $3.5 million, but did you know that Minnesota’s exemption is a lot less than that - $1 million.  A term life insurance policy with a face amount of $1 million puts you at this limit, not to mention farm land, business assets, bank accounts, money markets, CDs and other investments. Once you start adding up the numbers, it doesn’t take long to get over $1 million in assets. That’s the good news.

The bad news is the death tax rates imposed by the state: 41% on the first $25,000 over the $1 million exemption; 38.8% on the first 100,000. The lowest death tax rate is 9.96% and that applies to the first $1 million OVER the $1 million exemption. At that point the tax is nearly $100,000.

And if your asset valuation is off and puts you just $25,000 over the $1 million exemption, you will pay $10,250 in tax.  This is much more than good estate planning will cost in most cases.

With the proper use of one or more types of trust instruments, planned gifting, and other proper techniques, we can help even out this bump in the road, while still making sure you can provide for your loved ones.