Does Michigan Have an Estate Tax?

Ask any estate planning attorney and they will tell you that the state and federal estate tax rules have been in flux for years; however, with the passage of the American Taxpayer Relief Act of 2013, we have seen more stability nationwide. The majority of Americans don't need to worry about the federal estate tax because it applies to large estates valued at $5.25 million (as of 2013) for an individual and twice that amount for a married couple. However, many estates that don't owe a federal estate tax will still owe a separate state estate tax. The good news is that if you live and own property in Michigan, you don't have to worry about state estate tax because Michigan doesn't impose state estate tax.

Since Michigan doesn't impose a state estate tax, it's the federal estate tax that gets more attention. While most Americans won't have to worry about the federal estate tax, there is definitely a group of residents, especially in the more affluent parts of Oakland County who will have to take into consideration the federal estate tax while they are estate planning.

The federal estate tax is a tax on your right to transfer property when you pass away. It consists of an accounting of everything that you own or have certain interests in when you die. The total of these items are considered your "gross estate," and they include cash and securities, insurance, trusts, annuities, business interests etc.

The majority of simple estates or jointly held property will not require the filing of an estate tax return, but a filing is required for estates with combined gross assets and prior taxable gifts that exceed $5,250,000 as of 2013.

What types of assets are excluded from an estate? In general, your gross estate does not include property owned solely by your spouse or others, complete lifetime gifts are not included, and life estates that are given to the decedent by others where the decedent has no control or power at the date of death are not included either. A number of deductions are available to reduce estate tax and these include:

  • Marital deduction
  • Charitable deduction
  • Mortgages and debt
  • Administration costs associated with the estate
  • Losses during estate administration

There are a number of ways that our Oakland County estate planning lawyer can help individuals reduce the size of their taxable estate. With more than 20 years of experience and an LL.M. in taxation, attorney Sherman can help you develop strategies that will preserve your assets while reducing taxes. To learn more about the legally-sound strategies available to you, contact The Law Offices of Stuart Lee Sherman, PC today by calling (248) 919-8029.