The $390,000 Mistake Minnesota Couples Make by "Keeping It Simple"

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By Scott Borhauer, Founder, Smart Life Financial

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There's a sentence I hear from Minnesota couples all the time, and it sounds completely reasonable:

"We're keeping it simple — everything just goes to my spouse."

It sounds loving. It sounds efficient. And for a lot of Minnesota families, it quietly sets up a six-figure tax bill their kids will pay. Let me show you the math, plain English, no jargon — and then show you why fixing it is far easier than you think.

Two tax systems, one trap

Most people know about the federal estate tax, and most people are right not to worry about it. For 2026, the federal exemption is $15 million per person — about $30 million for a married couple with proper planning. Very few families ever touch it.

Here's what far fewer people know: Minnesota runs its own estate tax, and its exemption is $3 million per person. It hasn't moved since 2020. Estates above it pay Minnesota between 13% and 16% — even when they owe the IRS absolutely nothing.

So a Lake Elmo family with a $6 million estate — a home, a lake place, retirement accounts, a business, some life insurance — can be completely safe federally and still be squarely in Minnesota's sights. "You're fine, you're under the federal number" is the most dangerous half-true sentence in Minnesota estate planning.

The math on "keeping it simple"

Here's the trap, step by step.

Minnesota's $3 million exemption has one critical difference from the federal version: it is not portable between spouses. Federally, when one spouse dies, the survivor can inherit the unused exemption. In Minnesota, an unused exemption simply evaporates.

Now watch what "everything to my spouse" does to a $6 million couple:

1. The first spouse dies and leaves everything to the survivor. No tax due — spouses can transfer unlimited amounts to each other. Feels simple. Feels safe.
2. But the first spouse's $3 million Minnesota exemption just vanished. It wasn't used, and it can't be transferred.
3. The surviving spouse now holds the full $6 million with only one $3 million exemption.
4. When the survivor passes, roughly $3 million is exposed to Minnesota's estate tax — a bill in the neighborhood of $390,000, paid by your kids, at the worst possible time.

Same family. Same assets. Same wishes. The only difference is paperwork that was never structured — and that difference is about $390,000.

The fix is well-established: trust planning that preserves both spouses' exemptions, sheltering up to $6 million from Minnesota entirely. The couple who "kept it simple" and the couple who planned end up in the same place emotionally — everything protected, spouse cared for — but roughly $390,000 apart financially.

"Okay, but estate planning is a nightmare, right?"

This is the part where most people quietly close the tab, because they believe three things: it takes months, it costs a fortune, and they wouldn't know where to start.

None of the three survives contact with how we actually do it.

Step 1 — Talk. One conversation. We ask the questions — about your family, your wishes, what you want protected. You just answer. No homework, no legal jargon.

Step 2 — Design. We design it — with licensed estate attorneys. The right trust for your situation, beneficiary coordination, asset titling, a pour-over will so nothing slips through the cracks. You review everything in plain English.

Step 3 — Execute. We finish it together. We don't hand you documents and disappear — we make sure the trust is funded, the accounts are titled, and the plan actually works. Because a trust without funded assets is a $2,500 piece of paper. We make sure it's a working machine.

And the cost question answers itself in the math above: a plan costs a fraction of what no plan costs.

The one-sentence takeaway

If you're a Minnesota couple with more than $3 million between you — count the house, the lake place, the retirement accounts, the life insurance, the business — "everything to my spouse" is not a plan. It's a $390,000 assumption.

One conversation changes everything. No obligation, no pitch — just a conversation about your family and what you want protected. We'll tell you exactly what your plan needs, and what it doesn't.

Start with one conversation → smartlifefinancial.com/discovery — or call us at (952) 592-3900.

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Smart Life Financial is an independent financial services firm, not a law firm. Estate planning documents are designed and drafted with licensed estate attorneys. Figures reflect 2026 federal law and current Minnesota estate tax law; the illustration above is a simplified example — your numbers depend on your specific situation.

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