1. AmericanTaxpayer Relief Act:Tax Code Revisions
4
The American Taxpayer Relief Act of 2012
(“Act”) was passed by Congress at the last
moment on January 1, 2013. While the Act
addresses a broad range of tax concerns related
to the automatic sunset of the so-called Bush
tax cuts, it is essentially a stop-gap measure
and its provisions are still subject to additional
changes as Congress deals with the ongoing
sequestration. A number of the provisions
related specifically to estate planning concerns.
Estate and Gift Taxes
Unified Exemption
Many of the existing tax provisions related to
estate and gift taxes were made permanent by
the Act rather than being allowed to sunset
per the provisions of the Bush-era tax cuts.
The $5,000,000 exemption for estate and
gift tax transfers was made permanent and
will continue to be indexed for inflation. The
2013 unified exemption is currently set at
$5,250,000. But, not every provision remains
the same after the passage of the Act. The
maximum tax rate for transfers in excess of the
unified exemption amount was increased from
35 to 40 percent.
Estate Taxes
Portability was extended by the Act, so a
surviving spouse can continue to utilize the
unused exemption of a deceased spouse. The
Act also extended the provision allowing for
deduction of funds used to pay State death
taxes. Another aspect of the Act is the repeal of
the 5 percent surtax on estates valued between
$10,000,000 and $17,184,000.
The Act also extended the availability of the
election for installment payments of estate taxes
for closely held businesses. An estate is eligible
for payment of estate tax in installments if the
value of the decedent’s interest in a closely held
business exceeds 35 percent of the decedent’s
adjusted gross estate. Generally estate taxes are
due within 9 months following the decedent’s
death. But, this provision effectively extends the
time for paying estate tax by 14 years from the
original due date of the estate tax.
Gift Taxes
The annual exclusion for gifts that can be
passed tax-free was increased also. The annual
gift exemption for 2013 is $14,000. This
amount will continue to be indexed for
inflation as well.
Generation Skipping Transfers
The generation skipping transfer tax imposes
a flat tax of 40 percent on gifts and bequests
above the unified exemption amount that
avoid gift or estate taxes by skipping one
or more generations. This tax is assessed in
addition to estate and gift taxes. It generally
equals the amount of transfer tax that would
have been generated had the property made
all the generational steps, not just the skipping
ones. The Act permanently extended many of
the provisions related to generation skipping
transfers that were scheduled to sunset at the
end of 2012. That means that generation
skipping estate plans implemented since 2001
will remain valid. It also means that generation
skipping transfers are still a viable option for
inclusion in estate plans.
Income Taxes on Trusts and Estates
The Act retains all but the highest rate bracket
in regard to trusts and estates. Now the top tax
rate for income from trusts and estates is 39.6
percent. This rate applies to what was the entire
35 percent bracket range and is projected to
apply to taxable income from trusts and estates
in excess of $11,950.
Retirement Accounts
The Act lifted most restrictions relating to the
ability to roll over funds from a 401(k) account
into a Roth IRA. Now participants of a 401(k)
with in-plan Roth conversion features can make
transfers at any time. However, such transfers
will still be considered a taxable event.
By Andrew A. Willaert, Jr.
507-387-1115
awillaert@gislason.com
By Abbie S. Olson
(507) 387-1115
aolson@gislason.com

2. 5
The IRA Charitable Rollover provisions
allowing individuals over 70 ½ to directly
transfer up to $100,000 per year from an IRA
to charities has been extended through 2013.
These transfers will still count toward the
minimum required distribution rule for IRA
accounts.
Coverdell Education Savings
Accounts
Coverdell Education Savings Accounts (ESAs)
are tax-advantaged investment accounts which
allow tax-deferred growth of funds that will
be used for qualified educational expenses.
These are very similar to state-sponsored 529
plans, with the primary differences being that
Coverdell ESA funds can be invested outside of
specified state plans and distributions must be
completed by the time the beneficiary reaches
age 30. Distributions from these accounts
are tax-free so long as the funds are used for
elementary school, secondary school, and/
or post-secondary school expenses. The Act
permanently extended the $2,000 annual
maximum contribution to Coverdell accounts.
Employer Provided Education
Assistance
The Act also extends permanently the exclusion
from income and employment taxes up
to $5,250 in qualified employer-provided
education assistance. The amount of employer-
provided education assistance is still available as
a deduction to the employer.
Student Loan Interest Deduction
The Act permanently suspends the 60-month
limitation on the number of months during
which interest paid on student loans is
deductible. Now student loan interest is
deductible subject only to the phase-out
based on modified adjusted gross income. The
Act also repealed the restriction that made
voluntary payments of interest non-deductible.
The deduction stands at $2,500 above-the-line.
Conclusion
The American Taxpayer Relief Act of 2012
extended many of the tax provisions and credits
that we have become accustomed to, but not
all of them. If you would like assistance in
examining how the American Taxpayer Relief
Act will affect you and your estate plan, please
call any of the estate planning attorneys at
Gislason & Hunter.

3. 6
Minnesota recently passed the Governor’s
controversial Ommibus Tax Bill aimed at
combating the state budget deficit. This
bill contains a wide variety of changes
to the existing tax laws of Minnesota.
It increases taxes on virtually every
Minnesotan in one way or another
through increases in income taxes, sales
taxes, property taxes, and a variety of
other taxes.
Tucked into Section 7 of the bill are
provisions, which will be codified as
Minnesota Statutes §§ 292.16 to 292.21,
relating to the imposition of a stand-
alone gift tax. The stand-alone gift tax
will become effective June 30, 2013. The
imposition of a stand-alone gift tax is
causing a great deal of confusion as well as
some strong adverse reactions.
Minnesota Statute § 292.17 imposes a
tax “on the transfer of property by gift by
any individual resident or nonresident in
an amount equal to ten percent [10%]
of the amount of the taxable gift.” This
is a stand-alone tax and is not based on
the timing of the death of the donor. The
only other state that imposes such a stand-
alone gift tax is Connecticut.
Upon first blush it appears that the
new gift tax provides good reason to
immediately begin gifting. However,
upon closer inspection of the language of
the new law, there may not be need for
immediate action after all.
Minnesota’s New Stand-Alone GiftTax
By Andrew A. Willaert, Jr.
507-387-1115
awillaert@gislason.com
By Abbie S. Olson
(507) 387-1115
aolson@gislason.com

4. 7
Section 292.17 includes a lifetime credit against the
gift tax equal to $100,000. The “credit applies to the
cumulative amount of taxable gifts made by the donor
during the donor’s lifetime.” While the statute itself is not
clear on this point, the House Conference Committee
Report indicates that this lifetime credit is intended to be
the equivalent of the $1,000,000 exemption amount used
in the estate tax provisions. This means that no gift taxes
will be payable until the total gifts exceed $1,000,000.
Another important aspect of the new gift tax is contained
in Section 292.16. This section defines taxable gifts as
“transfers by gift which are included in taxable gifts
for federal gift tax purposes…” The House Conference
Committee Report clarifies that because taxable gifts are
defined by reference to the federal gift tax
provisions, gifts below the annual
exemption amount are excluded
from taxation. This amount is
currently set at $14,000 per
recipient for 2013. Gifts to
spouses and to charities
also remain exempt from
this gift tax.
An additional aspect
of the new statute to
consider is that gifts of
real property located
outside of the state,
tangible personal property
that was normally kept
outside of the state, and
intangible personal property
gifted by a non-resident are
specifically excluded from the
imposition of the gift tax.
If the stand-alone gift tax is payable, Section 292.18
requires the filing of a gift tax return to report each gift,
its fair market value, any deductions claimed, and the
donee’s personal information. These gift tax returns will
be due on April 15 for the prior year’s gifts during the
donor’s life or on the due date of the federal estate tax
return following the donor’s death.
While a closer reading of the new statutes may indicate
that the reach of the stand-alone gift tax is limited, it may
still be prudent for some to effectuate large gift transfers
prior to the statute’s enactment. If you need help deciding
whether or not it is advisable for you to gift prior to
June 30, please contact any one of the estate planning
attorneys at Gislason & Hunter.
Planning ConsiderationsIf you plan to gift over the annual
exemption of $14,000 or the lifetime
exemption of $1,000,000, it would be
good planning to effectuate the
gift by June 30 to avoid the newly
imposed gift tax.

5. Minneapolis Office
Golden Hills Office Center
701 Xenia Avenue S, Suite 500
Minneapolis, MN 55416
763–225–6000
Des Moines Office
Bank of America Building
317 Sixth Avenue, Suite 1400
Des Moines, IA 50309
515–244–6199
Mankato Office
Landkamer Building
124 E Walnut Street, Suite 200
Mankato, MN 56001
507–387–1115
New Ulm Office
2700 South Broadway
New Ulm, MN 56073
507–354–3111
Hutchinson Office
16 Washington Avenue, Suite 104
Hutchinson, MN 55350
320–234–0757
www.gislason.com
LOCATIONS
Common Questions in Regard to
Estate Planning
Question: When should I update my Will?
Answer: You should consider updating your Will whenever you
experience a major life change. You should consider changing your
Will if you marry or divorce, if there is a birth or death in the
family, if a named guardian for your children dies or is no longer
available, if the value or type of your property changes significantly,
or if you move to another state.
We recommend, however, that you periodically review your Will
to ensure that it provides for your family as you originally planned,
or to take into account new or changed circumstances, including
changes in the law.
Gislason & Hunter Wills, Trusts, Estate
Planning & Probate Practice Group:
Daniel A. Beckman dbeckman@gislason.com
Reed H. Glawe rglawe@gislason.com
Marlin R. Kunard mkunard@gislason.com
Kaitlin M. Pals kpals@gislason.com
Wade R. Wacholz wwacholz@gislason.com
Andrew A. Willaert awillaert@gislason.com
C. Thomas Wilson twilson@gislason.com
Sara N. Wilson swilson@gislason.com
This publication is not intended to be responsive to any individual situation or concerns as
the content of this newsletter is intended for general informational purposes only. Readers are
urged not to act upon the information contained in this publication without first consulting
competent legal advice regarding implications of a particular factual situation. Questions and
additional information can be submitted to your Gislason & Hunter Attorney.