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I keep hearing the estate tax won't change for next year. What's going on?

Wed, Dec 8th, 2010
Posted in Ask the Expert

There are two types of estate tax, state and federal. In Minnesota, estate tax is imposed on estates exceeding $1 million. Taxable estates include all property, even property not transferred by a will, including life insurance and retirement benefits.

 The federal estate tax also allows for an exemption, but the amount of that exemption has changed year to year. In the past few years, the exemption increased from $1 million to $3.5 million. Through a quirk in the law, there's no estate tax this year. However, the law that increased the exemption is set to expire this year. Without action by Congress, the exemption will return to $1 million. Congress hasn't acted. Through their inaction, there will be an automatic change in the exemption.

 If your estate is nearing $1 million, you should talk to a licensed attorney about your options so that you can transfer property without unintended tax consequences.

 This column is for informational purposes only and no attorney-client relationship is established. If you require legal assistance you should contact a licensed attorney.

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