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Different estate planning concerns affect each family

Every St. Paul family is different. Families come in all different shapes and sizes, and they each have different characteristics and personalities. Accordingly, when it comes to estate planning, there is no one-size-fits-all strategy that works best for each and every family. Rather, each family needs to take an individualized look at their circumstances to determine what strategies may work best.

A good example of this is with a topic that is often discussed in estate administration, the inheritance tax. As discussed previously in this blog, there are both federal and state estate taxes that apply, given that Minnesota is one of a minority of states that has its own estate tax in place. Not all families are affected by the estate tax, however, as it only kicks in at certain levels.

The Minnesota estate tax applies to those values with property valued above $1.2 million dollars. This amount is periodically adjusted, as it will increase to $2 million by the year 2018.

In addition, farms and small businesses are exempted from the estate tax up to a level of $5 million. There are also special provisions that allow a spouse or children to avoid paying the tax if they keep farming the property for 3 years.

Ultimately, the Minnesota Department of Revenue estimates that about 800 families will pay the estate tax this year. These families can take certain estate planning steps in order to minimize the tax liability they will face.

For others who are not affected by the estate tax, however, there may still be tax and other financial considerations that apply. For example, families need to consider whether a particular child may be able to sustain and operate a family farm, and what steps need to be taken in order to facilitate the transition. Accordingly, while the concerns vary from family to family, the bottom line is that planning is needed in order to make sure a person's wishes are respected and the family is best situated to handle the distribution of assets.

Source: CBS Local, "Reality check: who pays estate taxes?," Pat Kessler, May 8, 2015

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