Minnesota lawmakers have enacted a 10% tax on certain gifts, which will take effect June 30, 2013. Previously, Minnesota did not have a gift tax.
Gifts that you give to your spouse or to charity, and gifts that don’t exceed $14,000 per individual per calendar year, aren’t subject to the tax.
The new Minnesota law grants a $100,000 credit against the gift tax, which has the practical effect of allowing you to give up to $1 million in gifts during your lifetime without triggering a tax. Consequently, many Minnesotans won’t pay a gift tax.
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The new Minnesota legislation states that gifts made by anyone dying after Dec. 31, 2012 will now be counted as part of the deceased’s assets for Minnesota estate tax purposes if the gifts were made within three years of death.
Therefore, the new legislation impacts the ability of a dying person to make large gifts – even deathbed gifts – to reduce their taxable estate to no more than $1 million as of the date of death. A Minnesota estate tax is owed on assets held at death in excess of $1 million. As a result, until the recent enactment of a gift tax in Minnesota, persons expecting to die soon had the possibility of making last minute gifts to reduce their taxable estate to no more than $1 million at death to avoid the Minnesota estate tax. Now gifts made within three years of death will be counted in the deceased’s estate to determine if an estate tax is owed.
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Questions remain about how Minnesota’s new gift tax will work. Details regarding the implementation of Minnesota’s new gift tax will be determined by the Minnesota Department of Revenue.
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Disclaimer: This Blog is for informational purposes only and is not to be construed as legal advice. If you have questions, please seek the advice of an attorney. An attorney-client relationship is not formed by reading this Blog. If you are interested in Wittenburg Law’s representation of you, you must contact Wittenburg Law for a determination of whether your matter is one for which Wittenburg Law is willing and able to accept representation of you.
Bonnie Wittenburg, Wittenburg Law Office, PLLC, 601 Carlson Parkway, Suite 1050, Minnetonka, MN 55305 952-649-9771 bonnie@bwittenburglaw.com www.bwittenburglaw.com
