Inheritance Tax Vs. Estate Tax

• Although most people think that an inheritance tax and an estate tax have the same meaning, there is a difference between the two. An inheritance tax is a tax on the proceeds that an individual receives from an estate, with each recipient paying a different rate based on their own tax situation. An estate tax is a tax on the value of a person’s estate upon death, with the estate paying the taxes at a single rate.
  
  

Filing Requirements

• Estates in Minnesota are required to file a Minnesota estate tax return (Form M706) if the size of the estate exceeds the minimum level established in Minnesota. The current minimum estate size for individuals who die in 2010 or 2011 is $ 1 million. Also, estates that are required to file a federal estate tax return must also file a Minnesota return even if the value is below $1 million.
  
  

Role Of Executor

• The executor or personal representative of an estate in Minnesota plays an important role in settling an estate. The executor is responsible for filing the decedents final federal and state income tax returns, and if necessary, the federal and state estate tax returns. The executor must also pay all taxes due and settle all liabilities of the estate prior to distributing assets to the heirs.