A spousal lifetime access trust (SLAT) is an irrevocable trust benefiting the donor’s spouse and children. Through a SLAT, a donor may reduce a spouse's exposure to estate taxes at death by taking advantage of the gift tax exemption. In 2015 the applicable federal exclusion amount for gifts is $5,530,000. (IRS, What’s New-Estate and Gift
Minnesota Estate Tax (Death Tax) Attorney
An estate tax, also known as a death tax, is a tax on the transfer of your property after you die. If you want to protect as much of your assets as possible after your death, it is recommended you contact a professional so that they can help you. An experienced estate tax attorney can help find exemptions and deductions, helping you pass on more wealth to your successors.
Gift Tax Exclusion
The first exception to take into account is the annual gift tax exclusion. This exclusion gives a business owner the ability to give an annual gift up to a certain amount adjusted every year for inflation. This is shielded from federal gift taxes and also removes assets that will be taxed in your estate after your death.
Family Owned Business Deduction
Second, the family-owned business deduction is much more complicated. If a business is owned partially by a family: 50% by one, 70% by two, or 90% by three, then up to $1.3 million in property will be shielded from estate tax.
Unified & Gift Tax Exemption
Thirdly, the unified exemption and gift exemption permit people to give large amounts of assets without them being taxed as gifts or as part of your estate after you die.
Lastly, the unlimited marital deduction permits a person to give any amount to their spouse during their life or when they die. However, this may not be as beneficial because it is not an end in itself but rather only prolongs the future estate tax after the surviving spouse dies.
After your death an accounting of everything you own takes place to determine what tax rate will be applied. Estate tax ranges from 0.8% to 16% depending on the size of your estate where higher estates are taxed more. Therefore, after your death, a significant tax may applied to your estate by the state you live in or where your property is located. However, there are a number of ways to avoid estate tax or at least reduce its effect on your estate. These exemptions can be complex but are often worthwhile. The best way to make sure that you have maximized your ability to protect your assets from estate tax is to consult an attorney who specializes in estate planning that can help you determine what the best course of action is.
2013 Minnesota Estate & Gift Tax Legislative Changes
Tax Type Statute Brief Description Effective Date Estate Tax 289A.10 Sub 1 Estate Tax: Modifies the filing requirements for the estate tax to provide that federal adjusted taxable gifts made within 3 years of decedent’s death must be added to the value of the federal gross estate to determine if the estate exceeds the $1