Michigan does not have an inheritance or estate tax, but your estate will be subject to the Wolverine State’s inheritance laws. In this detailed guide of Michigan inheritance laws, we break down state laws concerning intestate succession, probate, taxes, what makes a will valid and more. Remember, though, that estate planning is complicated, and many going through the process choose to work with a professional to guide them. If you’re looking for hands-on help with estate planning or financial planning, SmartAsset’s free matching tool can pair you with up to three financial advisors who serve your area.
Does Michigan Have an Inheritance Tax or Estate Tax?
Michigan does not have an inheritance tax. Its inheritance and estate taxes were created in 1899, but the state repealed them in 2019.
Its estate tax technically remains on the books, but since 2005 there has been no mechanism for it to collect it. That’s because Michigan’s estate tax depended on a provision in the Internal Revenue Tax Code allowing a state estate tax credit against the federal estate tax. When congress eliminated that credit in 2005, it effectively killed Michigan’s estate tax.
Note that estate and inheritance taxes are different things. Estate taxes, where they exist, are taken out of the deceased’s estate immediately after their passing, while inheritance taxes are imposed upon the deceased’s heirs after they have received their inheritance.
Michigan also does not have a gift tax. Remember, the federal gift tax is applied once you give any individual more than $16,000 (as of 2022) in a single calendar year. Give any less than that, and there is no federal gift tax whatsoever.
Other Necessary Tax Filings for Estates
- Inheritance taxes: Michigan does not have an inheritance tax, with one notable exception. It’s only applied to an estate’s beneficiaries if the decedent passed away on or before Sept. 30, 1993.
- Both federal and state income tax returns: The estate of the deceased must file individual state and income tax returns one final time, due by the tax deadline in the year immediately following their death.
- Federal estate tax: The decedent’s estate may be responsible for paying the federal estate tax if the estate is valued at more than $12.06 million for 2022 ($24.12 million for married couples). If so, the estate will be taxed on the overage, not the entire value. Federal estate taxes are due nine months after the date of death.
Dying With a Will in Michigan
It’s always a better move to die with a will and last testament in place, also called testacy, compared to dying without a will in place, known as dying intestate.
If you die in Michigan with a valid will and last testament, then your property and other assets will be distributed according to that will. However, if you die without one in place, your estate will be subject to Michigan’s inheritance laws.
In order for a will to be valid in Michigan, the testator, or someone who has created his or her will, must be at least 18 years old and of sound mind, the will must be signed by the testator and at least two witnesses, it must be written (with a few exceptions), and must name a beneficiary.
An estate can skip probate if it’s less than $25,000. Any more than that, though, and it must go through probate to be settled.
There are several different paths probate can take in Michigan. If an estate is less than $25,000, the estate moves through simple probate, which means the last will and testament of an estate is basically carried out via a signed affidavit form.
If an estate is larger, then formal probate is necessary, which takes seven months to a year. Michigan adheres to the Uniform Probate Code, a standardized set of probate procedures.
Dying Without a Will in Michigan
If you die without a valid will and testament in Michigan, your estate is subject to the state’s inheritance laws or intestate succession laws. However, there are some exceptions to assets that won’t be subject to intestate succession laws. These include assets in a living trust, life insurance policies, retirement accounts, and property owned jointly or via tenancy by entirety.
However, the rest of your assets will be subject to Michigan inheritance laws and must go through probate. It’s best to avoid probate altogether, as it can be an expensive and lengthy process.
Generally speaking, an intestate estate will go to the surviving spouse first, then children or descendants, then parents, then siblings, then more distant relatives, such as nieces, nephews, aunts or uncles, and finally, grandparents.
Spouses in Michigan Inheritance Law
Unlike some states, spouses are not automatically entitled to your entire estate should you die intestate in Michigan. However, if you die with a spouse and no living parents or descendants, your spouse gets 100% of your estate.
But if you have living parents, your spouse gets the first $150,000 of your estate, then three-quarters of the balance. Your parents would inherit the rest. If you die with children or descendants (with your surviving spouse), your spouse gets the first $150,000, plus half of the balance.
If you die with children or descendants with your surviving spouse and with another partner, your spouse gets the first $150,000 of your estate, plus half of the rest. And if you die with one surviving spouse, plus children from another relationship, your spouse gets the first $100,000 of your estate, plus half of the balance.
Children in Michigan Inheritance Law
Children are entitled to part of your estate should you die without a will or last testament in Michigan, but how much they receive depends on if you have a surviving spouse, other children, and children from other relationships.
For example, if you die with children or descendants with your surviving spouse, your spouse gets the first $150,000, plus half of the balance and your children split the remaining half.
If you die with children or descendants with your surviving spouse and with another partner, your spouse gets the first $150,000 of your estate, plus half of the balance, and your children split the remainder. Die with a surviving spouse plus children from another relationship, your spouse gets the first $100,000 of your estate, plus half of the balance, and your children split the remaining half.
However, it’s important to note that in order to inherit part of your estate in the event of an intestate death, your children must be legally recognized by the state. That means they’ll need to be legally adopted, children conceived inside of marriage or outside of marriage with proof of paternity, or children born after your death, as long as they live at least 120 hours after birth.
|Intestate Succession: Spouses and Children|
|Inheritance Situation||Who Inherits Your Property|
|Spouse, but no children, siblings or parents||– Entire estate to spouse|
|Children, but no spouse||– Children inherit everything|
|Spouse and children with that spouse and children from other relationship||– Spouse gets first $150,000 of intestate estate value, plus 50% of the balance |
– Descendants inherit everything else
|Spouse and children from you and partner other than that spouse||– Spouse gets first 100% of estate, plus 50% of intestate property |
– Stepchildren inherit everything else
|Spouse and parents||– Spouse inherits first $150,000 of estate, plus 3/4 of the balance |
– Parents inherit everything else
Unmarried Individuals Without Children in Michigan Inheritance Law
While spouses, then children, generally take precedence in Michigan inheritance law, there are some laws of succession should you die intestate without either of those heirs. For example, if you are unmarried without children and die intestate, your parents inherit your entire estate. If your parents are deceased, then your siblings would be next in line.
If the state is unable to find any living heirs, your estate escheats back to the state, meaning it goes back into the state’s own funds. However, this is not a common occurrence, as your estate will go to even distant relatives, i.e. nieces and nephews before going back to the state.
It’s also worth noting that all of the above-mentioned scenarios are only enacted in the case of an intestate estate. If the deceased has a valid will, it will take precedence over a state’s succession law
|Intestate Succession: Extended Family|
|Inheritance Situation||Who Inherits Your Property|
|Parents, but no spouse, children, or siblings||– Entire estate to parents|
|Parents are deceased, but no spouse or children||– Estate split among siblings in equal shares|
Non-Probate Michigan Inheritances
Assets that are exempt from going through probate, i.e. being subjected to Michigan inheritance laws, include life insurance policies with a beneficiary, retirement accounts, jointly owned property, property in a living trust, and payable-upon-death bank accounts.
Other Situations in Michigan Inheritance Law
As with any state, there are some unique situations in Michigan inheritance law. For example, half-relatives inherit the same share as whole relatives, an heir’s immigration status doesn’t matter in terms of their inheritance, and in order to inherit property under the state’s inheritance laws, an heir must outlive you for at least 120 hours. The latter is also called a survivorship period.
Resources for Estate Planning
- Managing your own estate, or handling money you’ve inherited from a loved one, can get very complicated. A financial advisor can help with this. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- Want to invest your inheritance yourself? A good first stop is our asset allocation calculator, which considers your risk tolerance to recommend an asset allocation for your investments.
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