My wife stands to inherit some money (about 20k) in mid Dec. after settling her brother-in-laws estate. I told her if she can wait a couple of weeks, & settle it after Jan. 1, she should not have to pay an inheritance tax on it until 2010. She claims someone told her there may not be a tax on it, what are the laws for Michigan, state & federal?
Divorce / Separation Lawyer
Note that I am not licensed to practice in your state. This is not intended as legal advice. Please check with an attorney in your state
Since I am not licensed to practice in MI, I can only answer the federal estate tax question. The federal estate tax is imposed on estates that exceeds the exemption amount for the year that the person died. It has nothing to do with when the estate gets settled. it is when the person dies. Also, the deceased person's estate pays the tax, NOT the person inheriting the money. The estate pays the tax first, and then whatever is left over is distributed amongst the beneficiaries.
These are the federal estate tax exemption amounts for the following years:
2008 - $2 Million
2009 - $3.5 Million
2010 - no limit
2011 onwards - $1 Million
Elder Law Attorney
Some states DO have an inheritance tax in addition to estate taxes. You can check the web site for your state's tax agency to see if there is such a tax where you live.
Your brother-in-law's estate may be subject to state and/or federal estate tax. There 's no way of knowing what will happen there without further information about the size of the estate and the state where the will is probated. If there is any estate tax owed, it will be based on the value of the estate either as of the date of death or six months after that date.
michigan's tax kicks in at the federal level. Otherwise, none. Visit www.kliszlaw.com for more information. Tim Klisz