Minnesotans Setting Up Estate Plans to Reduce Taxes

Published On: 15th August 2015

From the internet

A Minnesota couple came to an estate planner to set up their estate. Their attorney suggested establishing a revocable trust that housed half of their estate so that it would go to a marital trust at the time of the first death.

This step was very important for the couple because their estate was worth millions of dollars. They didn’t want to see the estate to go probate and they also wanted to reduce as much in taxes as they could. The thought is that they could use the first federal exemption of just over $5.3 million to put into the trust. That would allow the amount to grow without their two children being taxed. Neither child owns a farm, so it really comes down to legally avoiding taxes and using the revocable living trust as that vehicle.

Another concern of the couple was whether or not their children would handle the accumulated value the way they wanted them to. They are concerned that their daughters’ husbands would be difficult for the daughters to deal with after inheriting such a large amount of money.

Fortunately, a revocable trust can help with this.

What this meant for the couple is that the revocable trust could help them with two issues: estate taxes and the children need to be able to handle their inheritance

While the revocable trust said nothing about preserving assets, but it did cover the ability to split the estate upon the first death into two parts. It didn’t say anything about the children handling the estate in a responsible matter.

However, there are documents that can be established that state at what age an inheritance can be received. Powers of Attorney and other such documents can determine how an individual wants their estate to be handled. In the meantime, there are tax savings.

It is very important to remember that Minnesota does have an inheritance tax and that is something that needs to be considered when establishing an estate plan.

Minnesota does have a $1.4 million exemption on estates that is slated to increase every year until 2019 when the amount reaches $2 million. It will then stop growing unless the legislation decides to change it. Estates that exceed the exempt amount are taxed at 10 percent on the low end and 16 percent on the high end.

To make sure you have everything in order when it comes to your estate plan and estate taxes, it is important to consult with an experienced attorney to make sure you have everything in place. A revocable trust is a great tool, but it is very important to understand that it may not be enough. The good news is that there are other tools to help you make sure that enough is in place so that you have your affairs completely in order for your family.