Minnesota Enacted a New Health Savings Account Exemption and Increased Exemptions Including for the Homestead

July 26, 2018

By Ryan T. Murphy

Umbrella protecting moneyMinnesota law provides that certain types of assets are exempt from creditor collection. These exemptions impact individual clients in a wide-range of matters ranging from estate planning to judgment executions to bankruptcy filings. The Minnesota legislature recently enacted a new exemption protecting up to $25,000 held in a health savings account. In addition, the Minnesota Commerce Department recently announced that certain exemptions have been increased, including the homestead to $420,000 and the farmstead to $1,050,000.

In a number of cases, individuals had argued that funds in a health savings account were exempt. Courts, however, consistently ruled that no exemption existed for health savings account. See In re Leitch, 494 B.R. 918 (B.A.P. 8th Cir. 2013). The Minnesota legislature recently amended the primary exemption statute—Minn. Stat. § 550.37—to include an exemption for up to $25,000 of funds in a health savings account, as defined by the Internal Revenue Code of 1986, section 223(d), and of funds in a medical savings account, as defined by the Internal Revenue Code of 1986, section 220(d)(1). The legislative amendment is effective on August 1, 2018.

Many of the Minnesota exemptions provide that the dollar amounts of the exemptions are to be adjusted in even number years based on the percentage change in the Implicit Price Deflator for the Gross Domestic Product. The Minnesota Commerce Department recently announced updated exemption amounts effective July 1, 2018. Beginning in July, a debtor will be able exempt up to $420,000 of value of real property owned and occupied by the debtor—the “homestead” exemption. The amount of the exemption increases to $1,050,000 for land used primarily for agricultural purposes—the “farmstead” exemption. These amounts were increased from the original amounts in 2011 of $300,000 and $750,000 respectively and increased from the most recent adjust in 2016 of $390,000 and $975,000 respectively. The complete updated exemption amounts are as follows:

EXEMPTION

UPDATED AMOUNT

Homestead Exemption: Minnesota Statute §510.2, subd.1

$420,000

Farmstead Exemption: §510.2 subd.1

$1,050,000

Credit Extended: §325G.22 subd.1

$7,200

Wedding Ring: §550.37 subd.4

$2,940

Household Goods: §550.37 subd. 4

$10,800

Tools of the Trade: §550.37, subd.6

$12,000

Insurance Benefits §550.37, subd.10

$48,000

Insurance Benefits/Additional Dependent

$12,000

Motor Vehicle §550.37, subd.12a

$4,800

Modified for Disability

$48,000

Minimum Cost of Modification 

$3,600

Accrued Interest/Life Insurance: §550.37, subd.23

$9,600

Employee Benefits/Retirement: §550.37, subd.24

$72,000

View All Blog Posts