If you plan to leave an inheritance for your survivors, you may benefit from careful Tax Planning in Brainerd, MN. In Minnesota, estates valued at $1,000,000 or more are require to file estate tax form M706 with the Minnesota Department of Revenue. Once you determine that you must file an estate tax return, you must file you may file your return up to 9 months after the death of the decedent.
The Minnesota Department of Revenue includes the following assets when valuing an estate, personal property, real property, car, boats, planes, life insurance, retirement, stock and bond, bank accounts, investments, gifts made to you within the last three years, and trust assets. Although you may meet the requirement to file an estate tax return, there are ways to avoid estate taxes.
The first option to bypass estate taxes is to set up a credit shelter trust. Up to $1,000,000 in assets are placed in the trust and the remaining assets are transferred to the surviving spouse and any other beneficiaries. However, each year the surviving spouse receives income from the trust as well as being able to use the principal for certain qualified expenses. The credit shelter trust is most beneficial because when the surviving spouse dies the estate also received the same tax benefits.
Another option is to set up a QTIP Trust which means Qualified Terminal Interest Property. This type of trust should be used when the decedent was married more than once. The decedent is able to control the transfer of assets by transferring assets to their surviving spouse but when that spouse dies, transferring those assets to children from a previous marriage or relationship.
Tax Planning in Brainerd, MN can be very complex and tax laws can be very difficult to understand. Borden, Steinbauer, Kruger & Knudson, P.A. may be able to assist you by providing efficient tax planning strategies for you and your beneficiaries. Additionally, with the help of an experienced attorney you could avoid having to pay estate taxes by helping you set up trust accounts for you beneficiaries. Contact a lawyer today to protect your future.