February 14th, 2012
President Obama’s Estate Tax Proposal
The U.S Treasury just released its Fiscal Year 2013 Greenbook, which provides an explanation of President Obama’s revenue proposals for Fiscal Year 2013. As estate planners, we are all anxious to see what is going to happen with the current Federal Estate Tax (Click here to read a previous post discussing the current law).
The Administration’s proposal would revert back to the 2009 law, where the exclusion would be $3.5 Million for estate and generation-skipping transfer taxes, the top tax rate would be 45%, and the lifetime gift tax exclusion would be $1Million. One notable change the Administration would make is to retain “portability” of the unused estate and gift tax exclusion between spouses.
To view the proposed changes to the Estate & Gift Tax Exemption and the full copy of the FY2013 Greenbook, click here. (Note the estate tax proposals are on pages 75-76)
January 24th, 2012
“Possible” Relief From Minnesota Estate Tax for Small Businesses and Family Farms?
During the 2011 Minnesota special legislative session, the Governor signed legislation that has the potential to eliminate the Minnesota estate tax for many Minnesota small businesses and farms. The new law excludes from the Minnesota taxable estate $4,000,000 or the value of such qualified business or farm, whichever is less. This new exemption is in addition to the $1,000,000 exclusion from Minnesota estate tax allowed to all individuals.
The concept may seem simple. However, there are many qualifications to meet. And until the Minnesota Department of Revenue formally promulgates regulations or the statute is vetted in the courts uncertainty surrounds the new law. For example, the statues provide no guidelines to qualification requirements for interests and farms inherited by family members in a trust.
As for the basics of the qualifications …
A “Qualified Small Business” must meet the following requirements:
- be a closely held business
- have less than $10 Million in gross annual sales
- the decedent or his or her spouse owned and “materially participated” in the operation of the property for three (3) years before his or her death
- the business must pass to a “qualified heir” (see below)
- the “qualified heir” must continuously “materially participate” in the operation of the operation of the business for three years after the decedent’s death (or pay a big penalty)
A “Qualified Family Farm” must meet the following requirements:
- the farm must meet the “material participation” and “qualified heir” rules for a qualified small business
- the farm must be classified as the decedent’s agricultural homestead
- the farm must also satisfy the requirements of Minnesota Statute §500.24 (the so-called “Corporate Farm Law” which places restrictions on the types of entities that may own a farm)
A “qualified heir” is a spouse, an ancestor, a descendant, or a spouse of lineal descendant.
Careful review of your situation is an absolute must before attempting to rely on this new law. If you have any questions or would like to discuss your situation with one of our estate planning attorneys, please feel free to contact us at 507-288-5440.
November 5th, 2011
Is the Gifting Window Closing Sooner than Expected?
We have previously reported to you about a window of opportunity for significant gifting and estate tax planning as part of the 2010 Tax Act (Click Here to Read). That opportunity is scheduled to expire at the end of 2012. But wait, it may be sooner than that.
As you probably already know, Congress recently formed a “Super Committee” (12 members of Congress evenly split between Democrats and Republicans). That Committee is charged with the task of finding $1.2 to $1.5 trillion in debt savings over a ten-year period. If reductions cannot be agreed upon by November 23, $1.2 trillion in spending cuts automatically kick in.
Word spread this week that some members of the Committee are suggesting changes to the estate and gift tax portions of the 2010 Tax Act effective January 1, 2012, including the following:
- Reducing the gift tax exemption from$5 Million to $1 Million.
- Reducing the estate and GST tax exemption from$5 Million to $3.5 Million.
- Increasing the maximum gift, GST and estate tax rates from 35% to 45%.
- Eliminating the use of several estate planning strategies, such as GRATs (Grantor Retained Annuity Trusts) and discounts for family transfers.
There are even rumors that some members of the Committee would like to make these changes effective November 23, 2011.
While it remains to be seen what actions the Committee will recommend and Congress will ultimately take, if you are intent on taking advantage of the previously reported “window of opportunity”, you may not want to wait until next year. Our attorneys continue to monitor these developments. Should you have questions about your planning needs or recommendations for year-end planning, please contact one of our estate planning attorneys: Craig W. Wendland, Mark E. Utz, David M. Pederson, or Christopher C. Wendland.
November 1st, 2011
Governor Announces $100 Million in New Funding for Small Businesses
http://mn.gov/governor/newsroom/pressreleasedetail.jsp?id=102-33396
October 10th, 2011
New NLRB Posting Requirement Delayed
The National Labor Relations Board has postponed the effective date of a new regulation requiring most employers to post a notice informing employees of their right to unionize. The previous effective date of November 14, 2011 has been extended to January 31, 2012. Much controversy has surrounded the regulation, including pending lawsuits seeking to bar implementation. The NLRB claims the reason for the delay is “to allow for enhanced education and outreach to employers, particularly those who operate small and medium sized businesses.”
Here’s the link: