Changes to the federal tax law effectively excludes 99.9 percent of all Americans from federal taxes by providing a $11.18 million estate exemption to single persons and $22 million to married couples. However, well-reasoned estate planning can help people in Michigan ensure that their inheritance will pass on as intended, lower the possibility of family disputes and reduce costly lawsuits.
The probate process is often lengthy, costly and complicated and should be avoided. When a person owns assets only in their name, a probate court must assure access to these assets after the person dies. An effective estate plan can avoid this by, among other things, creating a revocable trust that grants access to its beneficiaries.
Estate planning can also address issues that families face. Heirs may have problems such as creditors, mental illness, substance abuse or the inability to deal with their finances. Some heirs may also be very young or have special needs. A trust, as one example, can insulate assets if an intended beneficiary is sued or divorced.
The rise of blended families is becoming more common and needs to be addressed. Traditional estate planning where assets are left to a sole survivor is inadequate where there are step-parents, half-siblings, step-siblings and having children in families that are not adopted. A trust can help eliminate the situation where a spouse inherits property from their spouse and rewrites their will to exclude their step-children.
Nonetheless, settling an estate may still generate resentment and disputes among traditional nuclear families. Resentments can re-surface and surviving family members may not cooperate with dividing up real estate and personal property which can hold up settling the estate.
An estate plan may help reduce these problems. These plans provide guidance on who will oversee distribution of assets, identify which assets should be sold and specify who receives specific property from the estate.
Even with this general federal tax exclusion, there may be general tax consequences depending on where the heirs and beneficiaries live. An attorney can help people with these legal and tax issues and assure that property is inherited and passed on as intended.
Source: Kiplinger “Is estate planning now dead?” By Tracy Craig, Esquire, May 1, 2018