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Savings - iStockThe Qualified Small Business Deduction (“QSBD”) under Minn. Stat. § 291.03, provides an additional deduction for Minnesota estate tax purposes for the value of qualified small business property passing to a qualified heir. The statute was originally enacted in 2011 (and has subsequently been updated). [click to continue…]

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Mortgage contract - iStockIn Minnesota, many homeowners can qualify their primary residences for homestead status. By classifying a piece of property as a homestead, the property may qualify for a reduced classification rate, a reduced taxable market value, a property tax refund, and/or other special program eligibility.

To qualify for homestead status, the following criteria must be met:

  • The applicant must be an owner of the property;
  • The applicant must occupy the property as their primary residence; and
  • The applicant must be a Minnesota resident.

A homestead classification can be sought as soon as a person takes ownership of a piece of property and meets the criteria above. An application for homestead is made to and approved by the County Assessor in the county where the property is located. For most counties, an application can be found on the County’s website.

This classification can be applied for any time during the year; however, if the application is made by December 15th and then approved, property taxes payable in the following year will reflect the classification rate.

Homestead classification often comes up in the estate planning context when a revocable trust is used and a grantor’s home is titled into the trust. When this happens, homestead classification needs to be re-applied for on the piece of property since the property now has a new owner, the trust.

For more details on whether your Minnesota piece of property qualifies for homestead status, contact your County Assessor.

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Family at a pinic - iStock

A married couple, of which each spouse has children from previous relationships, faces certain issues with regard to distribution of their estates. The most basic of these issues involves what happens if a spouse dies without a will. When any individual dies without a will, the statutory rules for the intestate succession dictate the distribution of the deceased person’s probate property [1] upon death. This is a basic primer for how the Minnesota Intestacy Statute is applied when a spouse who has children from a previous relationship dies without a will.

First, the surviving spouse receives a life estate in the homestead [2] with the remainder interest passing to the deceased spouse’s descendants by right of representation. If the homestead is titled jointly, then it passes to the surviving joint owner. The surviving spouse is also entitled to (1) a family allowance (described by Jen Santini here), (2) $10,000 of personal property (see exempt property also in Jen’s article), and (3) one car regardless of value.

In addition to the above distributions, the surviving spouse receives $150,000 plus one half of the remaining assets in the probate estate. The other half passes to the deceased spouse’s descendants by right of representation.  Read more about

Blended families face numerous additional estate planning issues involving incapacity planning and the distribution of assets upon death.  I encourage any married couple with children from a previous relationship to seek the advice of an attorney.

 

[1] Probate property is comprised of assets titled in the deceased person’s name as sole owner and without (1) a beneficiary designation or (2) other non-probate transfer on death designation for such assets. For example, an account with a beneficiary designation will not be subject to the intestacy statute described above and will pass to the designated beneficiary on file with the account.  Joint property passes to the surviving joint owner.  Read more about titling real estate here.

[2] If both spouses own the homestead in joint tenancy, then it is not a probate asset and it passes directly to the surviving spouse.

If you wish to read the actual statutes, see MN Statutes 524.2-101, 524.2-402, 524.2-403, and 524.2-404

 

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Is Your Estate Plan Too Specific?

by Jennifer Santini November 12, 2014 Estate Planning 101

Estate planners do encourage clients to be specific with their various bequests within their estate plan. When describing gifts of both real and tangible personal property or defining beneficiaries, we want the assets and individuals […]

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Small Business Succession Planning – Things to Consider

by Phillip Christenson November 6, 2014 Business

What is Succession Planning? Simply put, succession planning is the process of transitioning key people within a business so that the business can continue to operate after the owner or key executives leave. Think of […]

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Conservatorship Basics: Part II

by Jayne Sykora November 4, 2014 Incapacity Planning

Last week, in Conservatorship Basics Part I, I discussed what a conservatorship is, who can be a conservator and the process for getting a conservatorship in place. In today’s post, I will cover a conservator’s […]

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Conservatorship Basics: Part 1

by Jayne Sykora October 29, 2014 Incapacity Planning

Oftentimes, most have heard of and have a basic understanding of a guardianship (whether for a minor child or for an incapacitated adult). A guardianship allows for another to be appointed as guardian over the […]

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In the News – Planning for Digital Assets

by Jennifer Santini October 26, 2014 Estate Planning 101

“Protecting Your Afterlife in the Digital Realm” Once again the discussion about planning for your digital assets received national attention on CBS Sunday Morning.  The segment features various companies* that are helping individuals protect their […]

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Are you a Minnesota Resident?

by Jennifer Santini October 23, 2014 Estate Planning 101

We’ve said before that Minnesota is not a favorable state in which to die because of the state’s estate tax laws. Some believe that the same is true for other tax reasons as well. While […]

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Death with Dignity

by Kim Prchal October 15, 2014 Guest Articles

Brittany Maynard, an Oregon resident, selected the date November 1, 2014 as the day she will end her life. Brittany is 29 years old, and was recently diagnosed with terminal brain cancer. She is plagued […]

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5 Lessons from Kindergarten to Ease Estate Administrations

by Jennifer Santini October 7, 2014 Probate

Unfortunately no matter how close a family might seem, it always has the potential to endure disputes between members either during everyone’s lifetimes or after someone has passed away. The fights can get ugly and […]

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