The Wealth & Wisdom Blog

The 2025 Word of the Year, according to Dictionary.com, was  “6-7.”  My three teenage children have tried unsuccessfully to explain the meaning of “6-7” to me.  The phrase appears to mean, “so-so” or else, “maybe this or maybe that.” Perhaps an inside, self-deprecating joke among Generation Alpha, the term is used as “non-sensical and playfully absurd.”

In this month’s advisory update, I provide specifics for 2026 that are far more concrete then the 2025 Word of the Year; specifically, 2026 tax rules that impact Minnesota estate planning.

Tax Rules

Beginning on January 1, 2026, the estate and gift tax rules impacting Minnesota residents are as follows:

• Annual Exclusion Amount. In 2026, a single individual can give up to $19,000 per beneficiary per year as an annual exclusion amount gift. If the value of annual gifts to any one individual is less than the annual exclusion amount, then (1) the value of the gift is not taken in to account for Minnesota estate tax calculations if a Minnesotan died within three years of the gift, and (2) no gift tax return needs to be filed in the year(s) of the gifts.
• Federal Unified Credit Amount.  If the total value of gifts to a family member exceeds the annual exclusion amount, a gift tax return must be filed.  On the gift tax return, a client’s gifts in excess of the annual exclusion amount would be deemed to utilize some of the client’s lifetime federal unified credit amount. The federal unified credit will be $15,000,000 per person in 2026.¹
• Minnesota Estate Taxes.  The Minnesota estate tax exemption will remain at $3.0 million per person into 2026.  As I have noted on numerous previous occasions, married Minnesota residents with at least $3.0 million in assets should continue to make use of a family trust structure to minimize Minnesota estate taxes.²
• Minnesota Gift Taxes.  Minnesota has no gift tax.  As I noted in last month’s update, Minnesota residents should continue to consider lifetime gifts to minimize the likelihood of a Minnesota estate taxes at death.

Estate Planning in Uncertainty

Clients often share about the uncertainties that surround making estate planning decisions.  Clients need to be encouraged that they are not alone; most clients will see a change in their family or financial situations after an estate plan is implemented.  Since no one can fully anticipate future changes, we advise our clients to make difficult decisions based on the information available to them at the time of the planning, and then revise the plan in the future as life changes. In an effort to assist our clients implement a plan in a timely manner, our firm will begin to encourage our new clients to complete estate planning documents within 120 days of engaging our firm.  Our goal is to help clients create certainty for those who succeed to the plan following death, not to default to a “6-7” estate plan.