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Roulet Law Firm, P.A.

How Minnesota's Estate Tax Works

Minnesota is one of only a handful of states that impose a separate estate tax. That means that even if your estate is not large enough to be subject to the federal estate tax, it may still be subject to Minnesota estate tax.

As of this writing, Minnesota taxes estates that have assets in excess of $1 million. In determining whether or not you have a taxable estate, you should add up the value of all of your assets including benefits of life insurance policies, real estate, retirement assets and investments. Yes, you read that correctly, life insurance proceeds are included in your gross estate to determine whether or not you have a taxable estate. For many people, particularly those with minor children who have life insurance in place to take care of them in the event anything were ever to happen to them, life insurance proceeds alone can exceed the $1 million mark and result in a taxable estate before even taking into account the value of your home, retirement and other assets.

If the total value of your estate is over $1 million, then the following chart will show you how much your estate will pay in MN estate taxes upon your passing. The chart shows the total value of your estate, the amount of your estate over $1 million that would be subject to the tax, the amount of tax due as well as what the tax rate would be.

Total Size of Estate

Amount Subject to Estate Tax

Estate Tax Due

Marginal Tax Rate on Taxable Estate

$1,000,000

$0

$0

0%

$1,000,500

$500

$205

41%

$1,010,00

$10,000

$4,100

41%

$1,100,000

$100,000

$38,800

38.8%

$1,200,000

$200,000

$45,200

22.6%

$1,300,000

 $300,000

$51,600

17.2%

$1,400,000

$400,000

$58,000

14.5%

$1,500,000

$500,000

$64,400

12.88%

$1,600,000

$600,000

$70,800

11.8%

$1,700,000

$700,000

$78,000

11.14%

$1,800,000

$800,000

$85,200

10.65%

$1,900,000

$900,000

$92,400

10.27%

$2,000,000

$1,000,000

$99,600

9.96%

$2,500,000

$1,500,000

$138,800

9.25%

$3,000,000

$2,000,000

$182,000

9.10%

$3,500,000

$2,500,000

$229,200

9.17%

$4,000,000

$3,000,000

$280,400

12.64%

 

 

 

 

 

 

 

 

 

 

 

 

            If you would like to minimize the amount of estate taxes you pay, a properly prepared trust can protect an additional $1 million dollars from state estate taxes if you are married. To help illustrate this, imagine for a moment that your total estate including life insurance proceeds, your home, your retirement and other assets totals $2 million. If you look at the chart above, your estate, absent any planning, would pay $99,600 in state estate taxes. However, by utilizing trust planning, you can double the amount that escapes state estate taxes to $2 million and save your estate $99,600. That means nearly an additional $100,000 can be transferred to your children. If you are single, or if your estate is in excess of $2 million, there are other planning options available that can also save your family money that would otherwise go to estate taxes.

            If you would like to protect your assets from Minnesota estate tax and give more of what you have worked for to your kids, call Maple Grove, MN will, trust, and estate planning attorney Chuck Roulet at (763) 420-5087.