COVID-19 Job Losses and the Importance of the Updated Minnesota Exemptions
COVID-19 has caused the greatest loss of jobs since the Great Depression. The unemployment rate recently exceeded more than 15 percent. Economists estimate that 40 million people have lost their jobs. Economists also estimate that more than 40 percent of those job losses will become permanent. The Congressional Budget Office projects that the unemployment rate will remain at or above 10 percent through 2021 and that it will take many years to recover all the jobs lost. Moreover, many others – business owners and those whose jobs have not been lost – have suffered significant reductions in income.
At this time, it is more important than ever for individuals to understand what assets are exempt – protected from claims of creditors. With that understanding, individuals can prioritize what assets they may need to tap to support continuing personal or business expenses – assets that are not exempt. Assets that are exempt should be utilized as a last resort. This understanding is also important for many other reasons as well, including estate planning.
In Minnesota, updated exemption amounts took effect on July 1, 2020. Of note, the Minnesota homestead exemption has increased to $450,000 and farmstead exemption has increased to $1.125 million. The following chart summarizes all the updated exemption amounts now available to individuals under Minnesota law:
|Homestead - § 510.02, subd. 1|
|Real property occupied by debtor||$450,000|
|Land used primarily for agricultural purposes||$1,125,000|
|Motor Vehicle - § 550.37, subd. 12a|
|One motor vehicle||$5,000
|Vehicle modified for physical disability (at a cost not less than $3,750)||$50,000|
|Personal Goods - § 550.37, subd. 4b||$11,250|
|Wedding Ring - § 550.37, subd. 4c||$3,062.50|
|Business Implements (excluding farm equipment) - § 550.37, subd. 6||$12,500|
|Funds Received by or Payable to Surviving Spouse or Child at Death of Spouse or Parent - § 550.37, subd. 10||$50,000 plus $12,500 per dependent|
|Unmatured Life Insurance - § 550.37, subd. 23||$10,000|
|Stock Bonus, Pension, Profit Sharing or Similar Benefits - § 550.37, subd. 24||$75,000|
The table in the following PDF summarizes the updated Minnesota exemption amounts and also compares the federal Bankruptcy Code exemptions, which may be elected by a Minnesota resident in connection with the filing of a bankruptcy case. The statutory language of the applicable exemption has been paraphrased in this chart. The actual statutory language as well as case law must be reviewed when analyzing an individual’s claim for a particular exemption.