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The Wealth & Wisdom Blog

Information on Estate Planning, Estate and Trust Administration and Unique Asset Planning

Minnesota Estate Taxes

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Back in 2017, Governor Mark Dayton signed a Minnesota tax bill into law that, among other items, specifies the Minnesota estate tax rate and estate tax exemption amounts.  Minnesota residents with significant assets should be aware of these exemption amounts and why so-called “Credit Shelter Trust” planning (also known as A/B Planning or “Credit Shelter Trust planning”) continues to be important.

Current Law:

For 2020, and all subsequent years, the exemption amounts and marginal tax rates are as follows:

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Minnesota Residency Requirements

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In order to establish and maintain residency for tax purposes outside of Minnesota, a taxpayer must meet both of two tests-a “physical presence” test, and a subjective “intent” test.

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Family Vision Statement

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A Family Vision Statement can be any non-legal written direction made by a “senior generation” (e.g., mom and dad) to the named beneficiaries of the senior generation’s legal estate plan detailing how an inheritance should be used following death.  The Statement is directed towards whomever is receiving the inheritance, whether children, grandchildren, nieces, nephews, siblings or friends. In this non-legal document, the senior generation can articulate how one’s deeply-held spiritual, moral and ethical beliefs impact how they wish the receiving generation to use the inheritance.  In many families, these deeply-held spiritual, moral and ethical beliefs of the “receiving” generation are different from the senior generation.  The purpose of the Family Vision Statement is therefore to give the receiving generation non-legally binding direction as to how the senior generation would like the inheritance used consistent with the beliefs of the senior generation.

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Asset Ownership: Sole Ownership & the Probate Estate

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At your death, any asset owned in your individual name and that does not pass either by (1) joint ownership with rights of survivorship, (2) by beneficiary designation or (3) by a revocable trust becomes owned by your “estate.”  Your estate is an intangible legal entity, like a partnership or a corporation, which becomes the owner of all of your remaining assets and liabilities.   (more…)

Asset Ownership: Contract Property / Beneficiary Designations

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Some types of assets, such as retirement accounts and life insurance policies, pass by beneficiary designation.  (more…)

Asset Ownership: Survivorship Rights on Jointly-Owned Property

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Certain types of jointly-owned (co-owned) assets automatically pass to the surviving co-owner at death as a “right of survivorship.”  For example, most of my married clients purchased their residence as “joint tenants with right of survivorship.”  As a legal attribute of this kind of ownership, the ownership on the property is automatically transferred to the surviving spouse at the first death between a husband and wife. Depending upon the estate planning situation and the financial situation of the clients, this may not be advisable from a tax perspective. (more…)

Estate Planning for a Blended Family

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Many of our married clients have children that are not the children of both the husband and wife.  Knowing many of these families personally, I know the joy that the parents have in treating both their own children, as well as their step-children, as equal members of the household.  While many of our married clients come into a marriage with the idea that all assets are “ours” rather than “mine or yours,” the law does not necessarily view the assets in this manner, and so married couples should be aware of the following legal issues.  Unfortunately, these rules could serve to disrupt an estate plan that both the husband and wife had agreed upon during their joint lifetimes.

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Marital Trust Planning

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You can provide for your spouse through either an “outright” gift of all your assets, or through a plan to allocate your assets to a “marital trust” for his or her benefit.

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Outright vs. Testamentary Gifts

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You can choose to benefit a child or other beneficiary through one of two means: (1) through an “outright” gift, or (2) to an ongoing “testamentary trust” for the benefit of the child or other beneficiary.  We assist our clients understand the pros and cons of each approach, as it is critically important to understand the legal implications to your beneficiary of this decision.

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The Benefits of a Revocable Trust

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To accomplish your estate planning objectives, you could implement a plan through one of two different legal documents.  You could utilize either a traditional Will, or you could utilize a plan focused on the use of a Revocable Trust, also sometimes referred to as a “Living Trust.”  In comparison to using a Will, implementing a plan based upon a Revocable Trust has the following advantages over a Will:

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This blog is intended to provide the reader with assistance in understanding various estate planning and trust estate planning concepts. In an effort to keep things as digestible as possible, I have tried to keep each blog post as short as possible.  As a result, an astute reader would see that I often fail to address various exceptions to rules or principals, or how various principles relate to one another.  There are a number of moving parts associated with various planning structures summarized on this blog.  In order to achieve your estate planning objectives, it is important that you receive the assistance of an experienced estate planning attorney.  Otherwise, your family may be in a worse position for your having attempted these strategies on your own.  Until we form an attorney-client relationship, you should be aware that your visiting this blog has not formed an attorney-client relationship, and none of this information can be taken as legal advice.  To contact my office about scheduling an appointment, contact us at 612-465-0080.