Questions for Your Michigan Estate Planner About the New Tax Law

There are still many questions about The Tax Cuts and Job Act (TCJA) passed by Congress last year. One of the questions many people have about the new tax law is how the law relates to their estate plan.

Our Brighton estate planning attorneys recommend that you review your estate plan periodically to ensure that any changes in the law or your personal life are reflected in your estate documents. Since we have a new tax law, this might be an appropriate time for you to schedule an appointment to review your plan with one of our probate attorneys.

Below are five questions about the new federal tax law that our lawyers can discuss with you in greater detail during your appointment.

  • Does the new tax law increase my federal estate taxes?

Many estates do not owe federal estate taxes. However, The Tax Cuts and Jobs Act (TCJA) did help individuals with large estates. The basic exclusion for estates as of 2018 is $10 million for individuals and $20 million for married couples. However, when the Internal Revenue Service releases the final adjusted figures for 2018, some experts believe the basic exclusion will increase to $11.2 million for an individual and $20.4 million for married couples.

There is one important note to keep in mind. Under the TCJA, the basic exclusion from federal estate taxes reverts to the 2017 amount on January 1, 2026. This important clause may not impact all estates, but it could seriously affect individuals with large estates who do not engage is estate planning in advance of the rollback.

  • Does the new federal tax bill impact Michigan estate taxes?

Technically, Michigan still has an estate tax statute, but it should not apply to anyone today. The statute applies to estates for individuals who died on or before September 30, 1993. Therefore, your heirs should not need to worry about Michigan estate taxes or inheritance tax.

  • Does the new tax law allow couples to take advantage of portability?

Yes, the new tax law preserves the portability clause of the tax law passed by Congress in 2012. The portability provisions of the tax law permit a spouse to avoid federal estate tax on inheritance from his or her spouse valued at less than the exemption limit.

However, if your estate documents are not drafted in the correct manner to invoke the portability clause, you could lose this important benefit. Therefore, it is important to consult a Brighton estate planning attorney to review your estate documents to ensure they have the correct wording regarding portability.

  • Do my estate documents provide adequate protections to carry out my wishes?

If you consulted an estate planning attorney to draft your estate documents, your estate documents should be tailored and customized to ensure your wishes are carried out after your death or in the event of incapacitation. However, if you downloaded documents and templates online or paid an estate preparation service, the documents you have may not provide adequate protection to ensure your estate is managed and distributed according to your wises.

Many online services use forms that are overly vague or do not adhere to Michigan’s probate laws. It is best to hire a Michigan estate planning attorney to prepare your will and other estate documents.

  • Do I need to review my estate plan after 2026?

Because the federal estate tax exemptions revert to the 2017 figures on January 1, 2026, many people assume they do not need to review their estate documents until we approach that date. However, this is not true.

It is always wise to review your estate documents at least every other year or when you have a major life event, such as a divorce, marriage, death of an heir, or birth of a child. The laws governing estates in Michigan can change and changing circumstances in your life can impact your estate plan. By reviewing your estate plan with your attorney on a regular basis, you ensure that your heirs and your property will be protected after your death.

Do You Have More Questions for our Brighton Estate Planning Lawyer?

If you have additional questions about the new federal tax law or estate planning in general, call 888-390-4360 or use the contact form on our website to contact our office. Our Michigan probate attorneys can help you develop an estate plan that meets all your needs.

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