Don’t Confuse Probate Assets With Assets Subject to Estate Taxes

The value of the assets that you hold at your death is viewed two different ways: one way by the Probate Court and another way by taxing authorities. It’s easy to confuse the two versions.

One examination of your assets determines whether the assets that you hold at death trigger a Probate Court action. Not all of your assets are counted for this purpose.

A second examination of your assets determines whether estate taxes are owed at your death. All of your assets are included in this calculation – even the value of the life insurance benefits paid out to others from policies that you owned.

Probate Assets: In Minnesota, probate is required if you own real estate in your name alone  or hold assets in your name alone valued at more than $50,000.

Jointly held assets, trust assets, assets held in a Transfer on Death Account (securities) or Payable on Death Account (bank account) are not counted. Also not counted are life insurance proceeds paid out to your beneficiaries (unless you’ve named your “Estate” as the beneficiary of your life insurance).

Real estate transferred with a Transfer on Death Deed (TODD) also is not counted in Minnesota.

Estate Tax Assets: Generally speaking, all of your assets are counted for estate tax purposes. And a jointly held asset owned with another person, would be counted at half the value of that asset. Life insurance proceeds on policies owned by you are counted regardless of who is the beneficiary.

After the assets are tallied, a determination is made whether estate taxes are owed. The exemption from federal estate taxes is currently $5.25 million. The exemption from Minnesota estate taxes is currently $1 million.

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 Disclaimer: This Blog is for informational purposes only and is not to be construed as legal advice. If you have questions, please seek the advice of an attorney licensed to practice law in the state where you live. Wittenburg Law does not expressly or implicitly warrant the accuracy or reliability of any of the Blog’s contents. An attorney-client relationship is not formed by reading this Blog. If you are interested in Wittenburg Law’s representation of you, you must contact Wittenburg Law for a determination of whether your matter is one for which Wittenburg Law is willing and able to accept representation of you.

Bonnie Wittenburg, Wittenburg Law Office, PLLC, 601 Carlson Parkway, Suite 1050, Minnetonka, MN 55305      952-649-9771