The Internal Revenue Service recently announced that the Federal Estate & Gift Tax exemptions will be increasing for 2020. In 2020, individuals will be able to pass up to $11,580,000 free of any estate tax upon their death. The estate tax is unified with the gift tax, so an individual may also choose to give away $11,580,000 during their lifetime rather than wait until death.
Note, for example however, that if you give away $2,000,000 during your life as a “gift”, it would not be taxable during your life, but you would now only be able to leave $9,580,000 free of estate tax at your passing. The increase in estate tax exemption at the federal level marks an increase from the $11,400,000 you were able to pass estate tax free in 2019.
As you might imagine, these numbers impact very few estates. According to the tax policy center, only approximately 4,000 estate tax returns were expected to be filed in 2018 and only 1,900 expected to be taxable returns. Click here for a link to the tax policy center data. You may read more about the 2020 numbers in IRS Rev. Proc. 2019-44 by clicking here.
There is no change to the federal annual exclusion amount. (This is the amount that you can gift to someone without having to report the gift on a gift tax return). In 2020, you will be able to continue gifting up to $15,000 per year under the annual exclusion.
This means that if you give more than $15,000 to someone in a calendar year, you will need to report the amount over $15,000 as a "gift" on a gift tax return.
There is no gift tax in Minnesota. As such, you need only worry about the Federal Gift Tax as mentioned above.
In Minnesota, our estate tax exemption increased to $3,000,000 for 2020. This represents an increase of $300,000 from the $2,700,000 that may be transferred free of Minnesota estate tax in 2019. Minnesota does not currently have a gift tax.
Despite the relatively few estates that these numbers impact, there are frequently other laws changing that affect your current estate planning documents. As such, it is always a good idea to discuss your estate plan with an experienced Minnesota estate planning attorney to determine whether any new laws have affected your plan negatively. One such major law change is the SECURE Act. Click here to read more about that act and its impact on your retirement accounts and estate plan.
Contact our office today for a free consultation to discuss your estate planning needs and review any existing documents you currently have in place.
Zach Wiegand is a Minnesota probate attorney and estate planning attorney and the owner of Gold Leaf Estate Planning, LLC. Gold Leaf Estate Planning is an estate planning law firm that also handles probate and trust administration in Minnesota. We serve the Twin Cities metropolitan area with a focus on estate planning for clients in Burnsville, Eagan, Savage, Prior Lake, Lakeville, Apple Valley, Eden Prairie and the South Metro as well as clients in Woodbury, Lake Elmo, Maplewood, Oakdale, St Paul and the East Metro. Our firm has offices in both Burnsville and Woodbury (Lake Elmo). The firm also handles probate in Dakota County, Washington County, Scott County, Hennepin County, and Ramsey County and most other counties in the Twin Cities Metro area. Zach has been named a Super Lawyer – Rising Star for 2017, 2018, and 2019. In addition, Zach is a member of the Society of Financial Service Professionals, the Twin Cities Estate Planning Council, and WealthCounsel – a national organization of estate planning attorneys dedicated to practice excellence. You can contact Zach via e-mail at email@example.com or by calling (952) 658-6503. Gold Leaf Estate Planning is located in Burnsville at 3000 County Road 42 W., Suite 310, Burnsville, MN 55337 and in Woodbury/Lake Elmo at 8653 Eagle Point Boulevard, Lake Elmo, MN 55042.