Taxation
When someone passes away, their estate may be subject to taxation. Estate taxes affect beneficiaries and heirs in several ways. However, by taking certain steps during the estate planning process, you can reduce the amount of taxes your estate will need to pay – which will only benefit your beneficiaries and heirs.
The caring and experienced estate planning attorneys at LoPrete, Lyneis & Carnwath, P.C., are ready to help you understand the tax implications of your estate plan. Together, you can explore and implement tools and strategies to minimize the estate plan taxation obligations on your beneficiaries.
What Are Estate Taxes?
An estate tax is a tax that an estate will pay on the net value of the assets before they are distributed to heirs.
Michigan’s Estate and Inheritance Tax Laws
Michigan eliminated its inheritance tax in 1993. However, if the decedent had assets in another state, you may be subject to state tax laws in that state.
You may also need to pay federal estate taxes if you meet the asset threshold. In 2024, the federal estate tax is 40% but will only apply if your assets are worth more than $13.61 million. A married couple can shield double that amount.
Michigan’s Income Tax
An estate or trust is a separate taxing entity that is taxed on its income the same as an individual. Whether the entity or beneficiary pays the tax depends on whether distributions are made during the tax year.
If a beneficiary inherits a Roth IRA, they will not need to pay any income taxes. If they inherit a traditional IRA, they will need to pay income taxes on any amount they withdraw. That’s something to consider when deciding what assets to leave your beneficiaries. Our experienced estate planning attorneys can help you develop a customized estate plan that addresses your unique needs and goals.
How an Estate Attorney Can Assist You
An estate attorney who deals in taxation can help you figure out how to reduce the amount of taxes your beneficiaries and heirs pay. An attorney will be knowledgeable of the tax laws affecting estates and trusts and experienced in the preparation of the appropriate returns, including estate and gift and fiduciary income tax.
If you’re a beneficiary or heir, keep in mind that it’s important to consult a tax advisor on death to be assured that the necessary tax returns are filed in a timely manner. The federal estate tax return is due nine months after death. An experienced estate attorney can also prepare fiduciary & individual income tax returns to make it easier on you during this time. Then, you can focus on honoring your loved one’s life and moving forward. We encourage you to contact our office today to discuss your needs.
Contact Us Now for Your Estate Planning Needs
Do you require assistance with your estate plan? We aim to prepare documents that are appropriate to your custom estate planning needs. Our attorneys will ensure that your estate planning documents effectively reflect your intent and wishes regarding the administration of your assets following your passing in the most expeditious and tax-advantageous manner.
Need help with your taxation on an estate in Bloomfield Hills? Do you have legal questions? Then contact LoPrete, Lyneis & Carnwath, P.C. at (248) 594-5770 to get started.
When someone passes away, their heirs and beneficiaries will need to figure out taxation on an estate. With help from an attorney, they can get that sorted out and ensure everything is correct.
