Wealthy individuals might maintain an estate that is worth a considerable amount of money, and the tax concerns associated with great wealth do not go away with someone’s passing. Heirs and beneficiaries may be dealing with significant tax burdens when the time comes to settle the estate in Michigan. Effective estate planning could address some tax concerns and do so within legally available options.
Estate tax exemption and tax preparations
Under federal law, there is an estate tax exemption of $11.7 million for 2021. If a single person leaves an estate worth $10 million, the heirs would not have to pay federal estate tax. Estate taxes may apply to the amount above that threshold. Those anticipating estate taxes to come into effect could take steps to make sure the right professionals are in place. Designating a tax attorney, a certified public accountant and others could allow an executor to move swiftly with the proper support in place.
Estate planning could also involve taking advantage of the gift exclusions and exemptions. Discussing such things with a tax professional may prove advisable.
Fortunately, Michigan does not have a state-level estate tax nor an inheritance tax. However, concerns about estate planning could extend to other states where the property is located.
Other concerns regarding estate taxes
Issues with the estate could arise before the testator passes away. What happens when someone is physically or mentally unable to perform essential financial or estate-related duties? If he or she designated power of attorney to an attorney-in-fact, that individual might take over.
Power of attorney does not address medical and health-related decisions. A health care proxy and a living will serve such functions, so discussing these documents with an attorney might be necessary.
Tax issues often arise when dealing with high-net-worth estate planning. Effective planning may alleviate the burden for some heirs and beneficiaries.