Eliminating or reducing taxes is an important aspect of estate planning for many clients.
Minnesota, other states and the federal government tax estates with values over certain levels. In December, the Minnesota Tax Court reviewed the constitutionality of Minnesota’s estate tax in a case called Estate of Anderson v. Commissioner of Revenue. The case addressed the validity of taxing assets that a Minnesotan who died held outside the state.
The court found that Minnesota’s estate tax was constitutional, noting that the tax incorporates an “apportionment ratio” for out-of-state property. This ratio means Minnesota applies the estate tax only to the share of assets held in Minnesota. For this reason, the court found, Minnesota’s estate tax does not improperly tax out-of-state assets.
Minnesotans with out-of-state assets should keep this case in mind when doing estate planning. Having an attorney who is aware of the case and tax requirements ensures that clients achieve the best outcomes.