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

At his death, he leaves the following assets to his new spouse, Betty:
401(k) 500,000
life insurance 600,000
1,100,000
He also leaves the following asset (at his death) to his children:
Bank 300,000
total federal gross estate (calculator line 1): 1,400,000
marital deduction
plus taxable gifts ($1,000,000 minus $13,000 each for 3 children) 961,000
Minnesota adjusted taxable estate (calculator line 7) 1,261,000
Table A calculation (calculator lines 8 - 16) 453,030
107,230
Table B calculation (calculator line 17) 3,600
Minnesota estate tax due (on the $300,000 given to his children) 3,600
Appendix – 11.
NOTE: Because most all of his gross estate will be given to his surviving spouse, it will
qualify for the marital deduction. His estate tax will be based upon his Table B amount
which does not include the lifetime taxable gifts for the assets owned at death that pass to
his children. If only a small amount of his estate (at death) is given to his children, then
the M706 tax is calculated at the more modest Table B rates.
Example #6 – Add Out-Of-State Asset: Assume the same facts as example #3 (lifetime
gifts reduce M706 tax to zero) except that prior to his death Jack’s brother, Bill,
(unmarried with no children) dies and leaves his South Dakota farm to Jack and his 3
other surviving siblings. Jack had previously made all of the lifetime gifts discussed in
Example #3 above and leaves all of his assets to his children (in this example there is no
surviving spouse).
home 300,000
bank 5,000
investments 190,000
401(k) 500,000
995,000
¼ of South Dakota farm + 250,000
total federal gross estate (calculator line 1 – must file M706): 1,245,000
6