Michigan Estate Planning Considerations
Michigan is a Common Law State, which means the rules governing the ownership, division, and inheritance of income and property acquired by a husband or wife during their marriage hold that subject to various qualifications, each spouse owns and has complete control over their own her income and property.
Last Will and Testament
The minimum age of a person competent to make a will is 18. The number of witnesses necessary to execute a will is two.
The original custodial gift may be a life insurance policy or annuity contract.
Custodial property may be invested in or used to pay premiums on (1) a policy on the minor’s life if the minor’s estate is the sole beneficiary, or (2) a policy on a third party in whom the child has an insurable interest if the minor or the custodian is the irrevocable beneficiary.
The custodial arrangement terminates when:
- The minor child reaches age 18 (though the donor may override by specifying any termination age up through 21 for custodial transfers made by irrevocable lifetime gift, will, trust, or exercise of a power of appointment).
- The minor child reaches age 18 for other custodial transfers.
- The minor child dies.
Dying without a Last Will, the Michigan laws of Intestacy.
The estate goes to the surviving spouse, as follows:
- If there are no surviving descendants or parents, —100% of the estate
- If there are surviving descendants, all of whom are also descendants of the spouse, and there is no other surviving descendant of the spouse—$150,000 (indexed) plus 50% of the estate’s balance.
- If there are a surviving parent(s) but no surviving descendants—$150,000 (indexed) plus 75% of the balance of the estate
- If all the descendants are also descendants of the surviving spouse and the surviving spouse has one or more surviving descendants who are not descendants of the decedent—$150,000 (indexed) plus 50% of any balance of the estate
- If one or more, but not all, of the decedent’s surviving descendants are not descendants of the spouse—$150,000 (indexed) plus 50% of the balance of the estate
- If none of the descendants are descendants of the surviving spouse—$100,000 (indexed) plus 50% of the balance of the estate
If there is no surviving spouse, or if a portion of the estate does not go to the spouse:
- 100% to surviving descendants, by representation (see MCL §700.2106)
If there is no surviving spouse or descendant:
- 100% to surviving parent or parents equally
If there is no surviving spouse, descendant, or parent:
- 100% to siblings, by representation (see MCL §700.2106)
If none of the above:
- Intestacy laws outline further distribution steps to the level of grandparents and descendants. See MCL §700.2103(d).
- If no legally described recipient can be found, estate assets go to the state of Michigan.
Michigan follows the Fiduciary Access to Digital Assets Act to ensure that testators can retain control of their digital property and plan for its ultimate disposition.
Michigan does not impose an inheritance tax.
Credit Estate Tax
Michigan imposes an estate tax equal to the maximum credit allowed under the federal tax code for paid state estate and inheritance taxes under IRC Sec. 2011. However, the current federal tax code does not permit a credit for paid state estate or inheritance taxes. Therefore, there is no credit estate tax in effect at this time.
Michigan imposes a GST tax equal to the maximum credit allowed under IRC Sec. 2604 for paid state GST tax. However, the current federal tax code does not permit a credit for paid state GST tax. Therefore, there is no current GST tax.
Michigan does not impose a gift tax.