Probate & Trust Law Section Conference Manual ... - Minnesota CLE

This “Minnesota adjusted taxable estate” amount is used to determine the total federal
estate tax that would have been imposed under the rules in effect in 2000; but, a credit of
$345,800 is given that makes the tax equal to zero if this amount is $1,000,000 or less.
Because the marginal federal estate tax bracket at this level is 41%, this calculation
results in a 41% tax bracket for Minnesota estate taxes which are between $1,000,000 and
1,093,785. After that threshold, the marginal tax bracket is 5.6% (for $6,215) and then
6.4% based on the credit for state estate taxes calculated under Table B below.
Table B Calculation (lines 19 - 25 of Worksheet to Determine Line 1 of M706):
706 line #
gross estate part 2, line 1 (all assets owned by decedent)
minus deductions part 2, line 2 ($ to spouse, debts, charity, admin expense, etc.)
minus M706Q (MN’s small business/farm deduction post 6-30-11)
minus $60,000
MN adjusted taxable estate (for Table B)
This “Minnesota adjusted taxable estate” amount is used to determine the prior federal
credit for state-level estate tax that would have been allowed under the rules in effect in
2000. The Table B calculation does NOT include the taxable gifts.
The actual tax due is the lesser of the tax calculated under Table A or Table B.
SAMPLE CALCULATIONS:
Example #1: Jack (unmarried) dies in 2012 and leaves these assets to his children:
home 300,000
bank 5,000
investments 200,000
401(k) 500,000
lake cabin 400,000
total federal gross estate (line 1 of worksheet): 1,405,000
allowable MN deductions (administration expenses)
taxable gifts (line 4 of worksheet) -0-
Minnesota adjusted taxable estate (line 7 of worksheet) 1,395,000
Table A calculation (worksheet lines 8-18) 510,650
164,850
Table B calculation (worksheet lines 19-24) 57,680
Minnesota estate tax due (lesser of Table A or Table B result) 57,680
Appendix – 7.
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