Reviewing Federal Estate taxes in Minnesota is fun to explore. OK, perhaps this topic can be daunting. Death and taxes, right?

The intent of this article is to identify categories of Federal estate taxes many Minnesotans need help with when trying to create or manage an estate plan.

If you become lost or confused, lets not forget the significance of the self-hep section of the IRS website. Also, seek advice from your Certified Public Accountant or CPA. If you do not have a CPA, consider looking HERE.

Federal Estate Taxes and Gift Taxes

The first significant category of Federal Estate taxes in Minnesota are gift taxes. Gift taxes and generation skipping transfer taxes (GST) go hand in hand.

For the purpose of this section, gift taxes and GST are being reviewed before a person dies.

The annual gift tax exclusion amount in the year 2014, 2015, and 2016 is $14,000.

Yes, the IRS imposes a gift tax for each calendar year on the transfer of property by gift from any person to another person or trust. These types of taxes are reported on an IRS form called Form 709. Instructions for this form can be found HERE.

3 Gifts that are not Taxed

Right now, the gift tax rate is based on the year in which the gift is transferred. Luckily, we still have three types of gifts which are generally excluded from our taxable income:

Gifts to political organizations,
Gifts of tuition made to a qualifying educational institution on behalf of an individual are not taxable, as long as the payment is made directly to the educational institution,
And, medical expenses on behalf of an individual when paid directly to the individual or to the medical institution that provided care.

Federal Estate Taxes and Death Taxes

The second most significant category of Federal Estate taxes in Minnesota are death taxes. For the purpose of this section, death taxes occur after a person dies.

The person most likely stuck or required to manage this element of your estate plan is your Personal Representative. In case your personal rep does not know, death or estate taxes after a person dies are reported to the IRS using a form called Form 706.

At the date of this article, the basic exclusion amount is $5,430,000. Spouses wishing to take advantage of significant tax benefits should consider seeking advisement.