Your belongings become your estate after your death. Your estate plan, along with Minnesota probate laws, determines who receives what from your estate. You likely hope to pass your biggest assets to your closest family members, but they may not receive what you intend to give them.
When you have valuable property to leave for your loved ones when you die, your estates may incur estate taxes. The representative of your estate has an obligation to pay your taxes before they distribute your assets to your family members.
Careful advance planning can help you reduce how much of your property goes to the government after your death.
When do estate taxes apply?
Estates in Minnesota are potentially subject to two different estate taxes. Both the state and federal governments expect a portion of the estate assets. However, estate taxes only applied to multimillion-dollar estates. An estate will need to be worth more than $12 million to be subject to federal estate taxes.
In Minnesota, estates worth more than $3 million may be subject to state estate taxes. The tax rate ranges between 13% and 16%. Not only do the assets in your estate count for the purpose of taxation but so do any gifts to your loved ones in the three years leading up to your death. The state does offer exclusions for small business owners and family farms.
Learning about your financial obligations after your death can help you reduce the value of your estate and keep some of your property out of probate court. Careful estate planning can help you reduce what you pay in taxes and therefore maximize what your loved ones receive after your death.