A common concern during the estate planning process is the payment of estate taxes. Although the state does not collect estate taxes, the federal law still applies, meaning that even if you and your heirs live in the state, it may still be possible that an estate tax may apply.
Talking with a Lansing estate tax protection lawyer might help you to avoid this outcome. A skilled attorney can provide more information about estate taxes and recommend steps to take to limit the impact of this federal law on your heirs and beneficiaries.
Estate tax has long been a way for governments to collect revenue at the end of a person’s life. However, modern political pressures have led to the abolishment of these taxes in many locations.
Michigan did not directly abolish the estate tax, but changes in federal law left the state with no way to collect these payments. This is because of the elimination of a federal tax credit that allowed parties to credit state estate taxes against a federal levy and was designed to prevent double taxation.
Despite these changes, federal estate taxes might still apply. As of 2021, parties may exempt up to $11,700,000 in estate value before the federal government can tax an estate’s assets. Once a party crosses this threshold, the government can seize between 18 and 40 percent of the value in excess of the exemption. An experienced attorney in Lansing can help a party create an estate tax protection plan to avoid this loss of value.
Because determining whether an estate is subject to taxation is based on that estate’s value, the most direct way to limit tax liability is to decrease the value of the estate. Achieving this through a direct sale of assets prior to a testator’s death is possible, but more creative methods of estate planning can still help ensure that beneficiaries receive assets while avoiding many forms of taxation outside of the estate tax.
Limiting estate tax liability by creating a trust allows two parties to transfer assets outside of the probate process. In addition, this transfer can occur at any point in time, unlike wills, which can only move property upon a testator’s death.
Finally, property in a trust is not part of a decedent’s estate for the purposes of calculating value. Deciding how to limit tax liabilities might prove difficult to pursue alone, but a Lansing lawyer skilled in estate tax protection can assist parties in choosing options that best fit their needs.
Many individuals’ main concern when planning out their estate is ensuring that property moves to their heirs at the right time. However, it is just as vital to ensure that an estate retains its maximum value, which requires an evaluation of the vulnerability of an estate.
A Lansing estate tax protection lawyer will help you create an estate plan that minimizes the impact of taxes. Reach out to the firm today to learn more and to schedule a consultation.
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