The Michigan Estate Tax
There is only one thing you need to know about the Michigan estate tax. As of December 31, 2004, there is no death or estate tax for decedents (people who died), their heirs or their estates. Zero. Nothing. There are no Estate Tax Forms to be filed with the Michigan Department of Treasury.
If the decedent passed away prior to 2005, the estate tax is equal to the federal death tax credit. In 2004 for example, the federal estate value had to exceed $1,500,000. If the estate was greater than that amount, then anything over that credit would be taxed at 40%. But this was ten years ago and, while some probate estates are opened in Michigan years after a person passes away, it is the exception. For most people, there is no concern about Michigan estate or death taxes.
The Federal Death Tax
After much uncertainty, Congress stabilized the Federal Estate Tax, also known as the death tax. In 2013, the first $5,250,000 of the gross value of the estate is tax free. Anything over that amount is taxed at 40%. The exemption is adjusted annually. In 2014, it is $5,340,000.
Married people get to double the exemption and, if one spouse dies and doesn’t use all of his or her available exemption, the surviving spouse can claim the deceased spouse’s unused portion plus their full exemption. This is known as tax portability. There are still forms to file with the IRS and you should contact an experienced CPA or lawyer to help.
I hope you have so much money that this is a concern otherwise, don’t spend a lot of time worrying about paying estate taxes. For the vast majority of clients for whom I draft estate plans or for the estates I probate in Michigan, death taxes are not an issue.
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Chris McAvoy is a Michigan attorney who helps people with bankruptcy, family law, and estate planning. To find out more or set up an appointment, click here for contact info. Our attorneys help people in Taylor, Allen Park, Southgate, Lincoln Park, Riverview, Taylor, Trenton, Flat Rock, Wyandotte, Brownstown, Belleville, Dearborn, Dearborn Heights, Westland, Garden City, Canton and the Downriver, Michigan area.