In case you didn’t pay attention to the Minnesota Omnibus Tax Bill passed recently (if you didn’t, you probably weren’t the only one), you may not have noticed that as of July 1, 2013, the State of Minnesota now imposes a gift tax in a similar manner as the federal gift tax. In addition, the State now imposes a three-year look-back on gifts, including the value of such gifts in the estate for tax purposes. What this means for most Minnesotans is that lump-sum and deathbed gifting, common methods to avoid probate and estate taxes, may no longer be available.The new Minnesota gift tax tags along with the federal gift tax. That is, most gifts over the applicable amount (currently $14,000) to an individual in a year are subject to the tax – currently a flat 10%. So, if I give $15,000 to my best friend (hypothetically, of course), I will have to file a state gift tax return for $1,000, subject to my lifetime exemption that can be used to offset the tax.Keep this new law in mind if you’re considering any large gifts. This includes any lifetime gifts of real property to your children (e.g. the cabin), a car, or other non-monetary assets. If you have any questions or concerns about these estate tax or other estate planning issues, please stop in or call us at (320) 763-3141.
