Traverse City is home to many families who have worked hard to develop intergenerational wealth. Whether you have real estate holdings, a successful business or just substantial investments, passing those assets along to your children and loved ones will likely be a key aspect of your estate plan and intended legacy.
Sadly, some people will fail to take necessary actions to protect themselves and loved ones from estate taxes, an oversight which could drastically diminish what they leave behind for the people that they love.
Michigan does not assess an estate tax, but the feds do
The good news for Traverse City residents with substantial personal assets looking to plan their estate is that there is no state estate tax in Michigan. Instead, you will only have to worry about federal estate taxes.
Those with multimillion-dollar estates will need to carefully review how they hold assets and the overall value of their possessions because there could be tax implications. In 2020, estates worth more than $11,580,000 are likely subject to federal estate taxes. The greater the amount by which your estate exceeds that limit, the higher the tax rate that you will have to pay. The maximum tax rate is a staggering 40%, which could significantly diminish what you leave behind for loved ones or charity.
Creating a trust or making strategic gifts to loved ones while you are still alive are common ways for people to avoid or at least minimize their estate tax risks. Getting help with this process can ensure that you leave a legacy of generosity, not debt and taxes.