Minnesota Estate Taxes

The Minnesota estate tax is designed to absorb the federal estate tax credit for state death taxes paid under the federal estate tax law, as amended through December 31, 2000. This means that the phase out of the state death tax credit under federal law and its replacement by a deduction in 2005 does not apply to the Minnesota tax.

No additional estate tax is imposed.

Deductions. The following deductions are allowed from a decedent's estate when calculating Minnesota estate tax liability:

• marital deduction based on the federal unlimited marital deduction
• expenses of last illness unpaid at death
• funeral expenses

Returns. A Minnesota estate tax return (Form M706) must be filed if the federal gross estate exceeds $700,000 for estates of decedents dying in 2002 or 2003 ($850,000 in 2004; $950,000 in 2005; $1 million after 2005). The estate's personal representative must file a Minnesota estate tax return and a copy of the federal return within nine months of the decedent's death. Any Minnesota estate taxes due must be paid within the nine-month period for filing the return.

Generation-skipping transfer tax. Minnesota does not impose this type of tax.