Category: Trusts and Succession Planning

Yes, MN taxable estate laws are strict.  Unfortunately, Minnesota is 1 of 14 states (including the District of Columbia) that have an estate tax.

In 2024, the state tax exemption amount is a math problem. As you can see under Minnesota Statute 291.016, the exemption amount is $5,000,000 minus an amount based on the date of death.

Luckily, a trust can be a powerful tool in estate planning to mitigate and reduce estate taxes, providing individuals with a strategic way to preserve and transfer their wealth to future generations. Estate taxes, also known as inheritance taxes, can significantly diminish the value of an estate passed on to heirs. Establishing a trust allows individuals to navigate the complexities of tax laws and optimize their estate for tax efficiency.

Credit Shelter Trusts Reduce Tax Liability

One common way to alleviate estate taxes is through a bypass trust or credit shelter trust. This type of trust is structured to leverage the available estate tax exemptions. These trusts allow individuals to make use of their applicable exclusion amount by sheltering a portion of their estate from taxation.

Bypass or credit shelter trusts are particularly beneficial for married couples, as it helps maximize the combined exemption amount, protecting a more significant portion of their wealth from estate taxes.

Irrevocable Trusts and a MN Taxable Estate

Another type of trust used to prevent a MN taxable estate is an irrevocable living trust. Unfortunately, placing assets into an irrevocable trust relinquishes ownership and control of those assets.

That said, it effectively removes them from their taxable estate. This can result in a substantial reduction in the overall value subject to estate taxes.

Other Taxing Reasons for a Trust

In addition to minimizing the taxable estate, trusts offer flexibility in distributing assets to heirs. Specific instructions can be outlined in the trust document, ensuring that the assets are distributed according to the individual’s wishes while taking into consideration potential tax implications for beneficiaries.

It’s crucial to consult with legal and financial professionals when considering the use of trusts in estate planning. They can provide personalized guidance based on the individual’s financial situation and goals, ensuring that the trust is structured in a manner that complies with tax laws and achieves the desired tax savings.

Overall, utilizing a trust as part of an estate plan can be a strategic approach to reduce estate taxes and preserve wealth for future generations.

A Minnesota Gun Trust is a strong move for any person wishing to protect their collection from landing in the wrong hands or subjecting their family to an expensive probate proceeding.

Yes, there are legal issues to consider like trigger points for the government, the age of trustees, and making sure your successor can pass a background check.

Also, a few extra forms to satisfy.  But all in all, a worthwhile process to reduce the risk of probate and heartache.

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Number 1 Issue for a Minnesota Gun Trust

As you know, the US Department of Justice and the Bureau of Alcohol, Tobacco, Firearms, and Explosives (“ATF”) has many rules and standards applicable to gun ownership.  

To nobody’s surprise, these same rules apply to you and your list of trustees who handle the guns.  Sometimes, the ATF refers to this person as the “Responsible Person”.

The number one issue for every person wishing to create a Minnesota gun trust is identifying a “trustee” that is authorized to take possession of the weapon(s) being transferred.   

What type of firearms can you transfer into a Minnesota Gun Trust

As a general rule, if your firearm has a serial number, you can transfer your firearm into a Minnesota Gun Trust.

If the gun does not have a serial number, then I like the idea of preparing as if it had a serial number.

Minnesota Gun Trust for antique guns

Yes, antique guns and unserviceable weapons can be transferred into a Minnesota Gun Trust too.

Forms and documents for a Minnesota Gun Trust

There are many forms and documents needed to transfer a firearm into a Minnesota Gun Trust.  Again though, filling out forms is a lot easier versus family members running to a court house to probate hunting weapons.

Here is a short non exclusive list of the forms generally needed to transfer a firearm into a Minnesota Gun Trust:

• A valid Revocable Trust,
• Certificate of Trust,
• Assignment of Firearm,
• ATF E-Form 5 (for each firearm),
• A formal list identifying all Responsible Persons,
• Finger print card (FD-258) for all Responsible Persons [order  this form versus printing it], and
• ATF Form 5320.23, which is a questionnaire for each Responsible Person (order a form for each Responsible Person).

Who is a Responsible Person?

According to the ATF, a responsible person is any person associated with an entity or an estate or an individual.

For some, this means finding a military veteran in the family. For others, a responsible person is any person who might become a trustee for your Minnesota Gun Trust.

Minnesota Gun Trust Trustee vs Responsible Person

The person in charge of an estate is called a Trustee.  A trustee for a Gun Trust is responsible for the firearms.

Yes, while a gun owner is living they are the trustee.  On the other hand, a gun owner can identify reasons when or why they  want to identify a different person as the trustee of a firearm.

On its face, I know this element seems confusing.  As a result, I find consultations are extremely valuable during this process.

What information does the ATF need from the Responsible Person?

Here is what the ATF needs from the Responsible Person:

• Full legal name,
• Social security number,
• Home address,
• Address for the last five years,
• Country of citizenship,
• Place of birth (City and State),
• Ethnicity,
• Gender, and
• Home telephone number.

Taxes to transfer a firearm into a Minnesota Gun Trust

The following types of transfers are tax exempt or less than $5 per transfer:

• Your firearm is unserviceable,
• Your firearm is being transferred to an heir or operation of law,
• Any reasons under Section 5811.

How to transfer guns into a Revocable Minnesota Gun Trust

If you need help creating a Minnesota Gun Trust, please contact this law office for help.

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The term fund revocable trust can be scary for some and annoying for others.  Unfortunately, funding laws in Minnesota keep changing.

In Minnesota, the process to transfer your assets into a revocable living trust depends on the asset. In general though, this can be outlined in a few straightforward steps.

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Fund Revocable Trust: Step 1

The first step to fund revocable trust is to make a list of your tangible assets versus intangible assets.

This law office recommends making a list of your stuff using the following categories:

• Bank Accounts
• Savings Accounts
• List of Firearms you own
• Retirement Accounts
• Real Estate
• Motor Vehicles
• Your Prized Possessions
• Business Ownership
• Debts
• Stock Options
• Intangible Assets

Of course, some categories may or may not apply to you and your situation.  

None the less, your process to fund revocable trust will be smoother if you take time to think through the property you own or have rights to.

Fund Revocable Trust: Step 2

The next step a person in Minnesota should consider when trying to fund revocable trust is to acquire copies of the following documents:

• Your “Certificate of Trust”
• Divorce records
• Life Insurance Policies
• Statements for your Retirement Accounts (IRA’s, 401(k), 403(b), etc.)
• Title(s) for your automobiles
• Copies of Deed for any property you own
• Bank Statements (checking, savings, etc.)
• Military Records (DD 214, Notice of Discharge, Disabilities)
• Social Security Statements
• Articles of Incorporation attached to any business you ave ownership in
• Records attached to your firearms
• Other documents you believe are significant.

Whether you like the idea of thinking through this like a cardboard box or otherwise, this is important to beneficiaries.

In other words, a critical step for any person having a trust is to “re-title” your assets and property such that they match the title and wishes expressed within your trust.

Fund Revocable Trust: Step 3

The third and final step for a person in Minnesota looking to fund a revocable trust is to determine who will complete the funding process.

Some seek out professional advisement to avoid pitfalls, while others prefer other methods.

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.  

Estate Planning and Federal Estate Taxes

If you need help with your estate planning and are concerned with Federal Estate Taxes, contact this law office for help.

A revocable trust in Minnesota is not a document solely for the rich or wealthy.

Yes, a revocable trust is a fantastic way to reduce stress in your family and reduce the possibility of having your affairs managed by a probate court.

Minnesota has very specific rules governing trusts.  If you need help or have questions about a revocable trust in Minnesota, contact this law office for help.

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What is a Revocable Trust in Minnesota?

But wait, what is it?  Keeping it simple, a revocable trust in Minnesota is a document that acts much like a cardboard box.  A revocable trust allows you to put your “stuff” in a box and hand deliver or distribute it among your friends and family when you are no longer able to think on your own behalf or when you die.

Sticking to my box example, a revocable trust is an opportunity to move your stuff without needing a moving company like a probate court.

Still confused?  Revocable trusts in Minnesota are documents used to transfer assets to friends, family, and entities without requiring your assets to be reviewed or managed by a Court.  The use of a revocable trust keeps your distribute private and is implemented at your command.

Is a revocable trust in Minnesota complicated?

Your revocable trust can be as simple or as complicated as you desire.  For example, some people want their stuff or assets divided equally among their children or grandchildren.  Other people, like Coach Dean Smith, prefer to add details like paying for a dinner in their honor.

Yes, a person can have a revocable trust in Minnesota.  However, a “trust” can mean many different things because they are documents used to describe a specific goal or process.

Yes, the most common type of trust is a Revocable Trust in Minnesota.  However, people sometimes inquire about an irrevocable trust and or a special needs trust.  If you have questions about the differences, please contact this law office for help.

What is the hardest part about a revocable trust?

The hardest part about a revocable trust in Minnesota is funding the trust.

Continuing with the analogy above, funding a revocable trust is the actual process of placing your stuff inside the box.  Generally, a person seeks help building the box.  The person in charge of placing your stuff inside the box can be you, your accountant, an attorney, etc.

How do you fund a revocable trust in Minnesota?

I may have simplified the funding process in 3 simple steps. That said, the process depends on the asset.  

For example, adding your car to a revocable trust is different than adding a bank account to a revocable trust.

Also, a person will not necessarily put all of their assets into a Minnesota revocable trust because of tax consequences or to prevent their stuff from being distributed among other assets.

How long does it take to write a Revocable Trust in Minnesota?

The time required to draft, edit, and for a Client to formalize a revocable trust largely depends on a person’s organization.  Some people are able to identify their assets very easily while others have not visited their bank for many years.

On the other hand, if a person is experiencing a medical issue, the process to draft, edit, and formalize a revocable trust in Minnesota should be expedited.  Yes, it is very common for this law office to expedite the drafting process to accommodate the health of a Client.

How many beneficiaries can you list in a revocable trust?

Here is another wonderful benefit to a revocable trust versus not having a revocable trust – you can pick as many people (young and old) and entities (your Church, a park, scholarship fund, charitable organization, etc.) as you wish.  Also, a revocable trust helps keep your wishes private.

However, if you do not have a revocable trust, your affairs may become public upon being distributed by a probate court.

Do you need an attorney to create a revocable trust?

This law office is biased.  Yes, it is my opinion you should contact a lawyer to draft your revocable trust in Minnesota.

Given the legal rules and laws applicable to revocable trusts, keep it simple and don’t create more headaches for your family and friends.