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

Preparing Your First Estate and Gift Tax Return
Anne L. Bjerken
Gray Plant Mooty
Minneapolis, Minnesota
Preparing your first estate or gift tax return can be overwhelming and it can be difficult to
determine where to start. The following materials are not meant to be an exhaustive treatise as to
any and all issues relating to estate and gift tax returns, but I do hope that the materials provide
some helpful tips and examples for navigating your first return.
Estate Tax Return – Form 706
The estate tax return is a tax return prepared in conjunction with a decedent’s death. If the
decedent is a Minnesota resident, and owns property in excess of $1,000,000, both a Minnesota
and federal estate tax return should be prepared. This return will be due nine months after the
decedent’s death. It is possible to extend the filing deadline of this return; however, any tax
payment is still generally due nine months following a decedent’s death.
The estate tax return is really meant to be a snapshot of all assets the decedent owned as
of the date of his or her death either alone or in joint tenancy or tenancy-in-common with another
person. Each asset will need to be valued on the date of death and certain assets have different
valuation requirements. The estate tax return contains schedules that will include some detail as
to these assets and the values. The totals from these schedules will then carry forward to the first
page of the return. Please see Appendix 1-3 for an example of the first three pages of a return.
The first three pages summarize all information from the various schedules.
A. Real Estate
Real estate is generally included on Schedule A of the return. Please see Appendix 4 for
an example as to how to describe a piece of real estate. Real estate must be valued as of the date
of death. It is advisable to obtain an appraisal rather than using the current property tax
statement value for the property. Most taxing authorities, notably the Minnesota Department of
Revenue, require that an appraisal be obtained rather than using the current property tax
statement value. If there is a sale of the property after date of death, it is possible to use that
sales price. The real estate generally will be listed on Schedule A, but can be listed on Schedule
F if it is held jointly, and Schedule G if it was part of a decedent’s revocable trust. If the real
estate was owned by a revocable trust or any other trust, it is considered a transfer during the
decedent’s life rather than real estate under Schedule A. Please see Appendix 7 showing a
description of real estate held in joint tenancy.
B. Stocks and Bonds
Stocks and bonds are generally included on Schedule B of the estate tax return. Stocks
and bonds must be valued as of the date of death. The appropriate way to value stocks and bonds
is to use the mean value of each security on the date of death. The mean is the average between
the high and low value of the security on the date of death, including any accrued interest or