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

total federal gross estate (line 1): 1,245,000
allowable deductions - administration expenses
plus taxable gifts ($410,000 minus $13,000 for each of 3 children) 371,000
Minnesota adjusted taxable estate (calculator line 7) 1,606,000
Table A calculation (calculator lines 8 - 16) 603,500
257,700
Table B calculation (calculator line 17) 47,440
REDUCTION FOR OUT-OF-STATE ASSETS (M706 lines 1 – 6):
Real estate located in South Dakota -0-
Federal Total Gross Estate ÷ 1,245,000
Reduction percentage 0%
Tentative Minnesota Estate Tax (line 1 of M706) 47,440
Subtraction for Out-Of-State real estate
Minnesota estate tax due (his estate is above the filing requirement) 47,440
Tax cost of following his brother –in-law’s advice (47,440 – 37,914) 9,526
Appendix – 13.
NOTE: At the time this outline was being drafted, the Minnesota legislature was
considering amending the law to change how the Minnesota estate tax laws treat real
estate held in an LLC or S corporation.
Example #8 – Funding a Credit Shelter Trust: Jack (married) dies in 2012. He had
previously made the following gift to his children:
Lake cabin – lifetime gift 400,000
At the death, his only assets are held in a revocable trust with credit shelter trust
provisions (income to spouse for life and principal to his children after his spouse’s
death) that is drafted to fund the credit shelter trust to the maximum amount that will
result in no federal or state estate tax. The trust holds the following assets:
investments 600,000
life insurance 500,000
total federal gross estate (calculator line 1): 1,100,000
Without the taxable gifts, Jack’s trust would allocate $1,000,000 in his credit shelter trust
with the excess ($100,000) being allocated and paid to his surviving spouse. Because of
the effect of the taxable lifetime gifts (the lake cabin) for the Table A calculation, if
$1,000,000 is allocated to the credit shelter trust, the M706 will show a Minnesota estate
8