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

2. If one spouse has greater financial resources than the other, the more monied
spouse can transfer up to $10,500,000, provided the other spouse consents to split
the gifts on the gift tax return. IRC § 2513.
3. Given the disparity between the Federal exemption and the Minnesota exemption,
if the taxpayer’s estate is under $5,250,000, and assuming the taxpayer is so
inclined, making sizable gifts during life to reduce the amount remaining at death
can be a simple and effective way to reduce the amount of Minnesota estate tax
that will be due upon death.
C. Death-Bed Gifts or Gifts During Incapacity
1. If the taxpayer is competent, and willing to make gifts, he or she can continue to
make gifts until the time of death.
2. If gifts are made near the date of death, it is critical that the gifts be completed
before the death of the taxpayer. This means that cash must be withdrawn and
actually given to the recipient, checks must be cashed and cleared by the donor’s
bank (which may take several days), etc.
3. Gifts of insurance policies should be avoided to prevent the policy coming back
into the estate, if the policy is gifted within three years of the decedent’s death
under I.R.C. Sec. 2035.
4. If the taxpayer is incapacitated, the ability of another person to make the gifts on
behalf of the donor depends upon the document authorizing the gifts.
5. Minnesota Statutory Short Form Power of Attorney: The form provided in
Minnesota Statutes Section 523.24 specifically authorizes the attorney-in-fact to
make gifts for the purpose of minimizing income, estate, inheritance or gift taxes,
provided that the gifts to the attorney-in fact do not exceed $10,000.
6. For clients with a history of gifting and who would like gifts to continue in the
event the client becomes incapacitated in the future, consider authorizing gifts in
the client’s Revocable Trust or executing a general, durable power of attorney
which authorizes large gifts.
7. Caveat: The bill proposed before the Minnesota legislature would include gifts
made within 3 years of death as part of the Minnesota taxable estate.
III. Planning with Disclaimers
A. Disclaimers, generally
1. A disclaimer is an irrevocable and unqualified refusal by a person to accept an
interest in property.
2. In order for the disclaimer to be effective, it must meet certain requirement under
the Internal Revenue Code and Minnesota law.
B. Qualified Disclaimers under IRC §2518 and Reg. 25.2518-2 must meet all of the
following criteria:
1. Irrevocable and unqualified.
2. In a writing identifying the interest disclaimed and signed by the disclaimant or
the legal representative of the disclaimant.
3. Delivered to the person holding the property, or the legal representative of that
person, in a timely fashion.
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