2023 was a great year for investments. It was so good that some people may be surprised to learn they now have a Minnesota estate tax problem. If you die with more than $3 million in Minnesota, the state will tax anything above that amount at 13%-16%. That’s at least $13k of every $100k you pass on to your relatives above the threshold. What can you do to avoid this?

As far as problems go, a Minnesota estate tax problem is a nice problem to have. It means an individual has over $3 million left over at death. I’m not debating the fairness of the state taxing money that’s already been taxed. I’m just saying it means you’re well off. This is also a nice problem because there are some easy solutions.

  1. Give money to charity in life or at death. Both options carve out dollars the state won’t tax.
  2. Give big gifts to relatives today. Minnesota doesn’t count lifetime gifts towards your estate tax exemption, provided you live three years past the date of the gift.
  3. Use your annual gift tax exclusion. You can give $18k to any individual annually without any estate tax consequences.

If you don’t like those options, we can talk about more complex approaches. Reach out if you’re interested.

Happy New Year!

About the Author:

John has more than ten years experience as an Investment Advisor. He focuses on devising and maintaining portfolios that meet individuals’ needs, investment research, and investment strategy. John has been recognized as a “FIVE STAR wealth manager” by Twin Cities Business Magazine 2016-2022. He is a CFA charterholder and CERTIFIED FINANCIAL PLANNER™ Professional.

Legal Disclaimer: These posts do not constitute an offer or recommendation to buy or sell any securities or instruments or to participate in any particular investment or trading strategy. They are for informational purposes only. CTW gathers its data from sources it considers reliable. However, CTW makes no express or implied warranties regarding the accuracy of this information or any opinions expressed by the author and may update or change them without prior notification.