FAQs About Estate Tax Planning

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Frequently Asked Questions

The team from Rutkowski Law Firm: Asset Protection & Estate Planning provides answers to some of our most popular questions.

1. Should I consider funding any motorized vehicles in my Trust?

a. Make a list of all personal (not business) vehicles to determine if the current $60,000 (2022) threshold for vehicles set by the Secretary of State is met. Include the type of vehicle, owner(s) and current total $ value. Types might include car, SUV, ORV, RV, trailer, etc. Do this same exercise in a separate list for your watercraft. That threshold is separate and set at $100,000 (2022). If the total $ value is over either threshold, then you might want to consider placing the asset into trust.

2. If married, does it matter which name the vehicle is in?

a. It does not necessarily matter whose name the vehicle title is in if the total $ value of all vehicles for that person are under the threshold mentioned above. If both spouses are listed on the title, the threshold only becomes a problem at the passing of the second spouse.

3. Does it matter what kind of Trust I have?

a. To avoid transfer issues and probate at the time of your death, it does not matter what kind of Trust that you have. However, if you are concerned about asset protection for your vehicles, you should speak to your attorney regarding your estate plan.

4. How do I fund the vehicles?

a. You will need to set up an appointment at your local Secretary of State branch. You should bring with you the current title to the vehicle and the Certificate of Trust for the trust that you want to retitle the vehicle to.

5. Do I need to notify my Auto Insurance agent of these funding changes?

a. Yes, just as we do for Homeowner’s policies during funding. Once the vehicle has been retitled, and new title is in hand, you will need to contact your auto insurance company to have the trust added as an additional insured.

6. Does Rutkowski Law Firm need to know, or can I do this myself?

a. RLF does not need to know about the retitling of your vehicle. However, it would be very beneficial to keep your new title either with your Estate Plan or where your Successor Trustee knows where to find it. They will need it should something happen to you.

Estate Planning Law Firm Serving Bloomfield Hills, Kalamazoo, Rochester, Sterling Heights & Macomb, MI

FAQs About Estate Tax Planning

The government imposes estate taxes for the privilege of transferring assets to your heirs. However, you can reduce your tax burden with the help of an estate tax planning lawyer.

Here are some of the most frequently asked questions about estate tax planning:

What does estate tax planning entail?
Estate tax planning involves a range of strategies aimed at reducing the amount of your estate tax. Typically, estate taxes are quite high if you leave behind a considerable amount of assets. Wouldn’t it be a waste if a significant portion went toward paying taxes?
How do I calculate estate taxes?
To calculate estate tax, you must first calculate the gross estate—all assets used to calculate whether an estate is subject to federal and estate taxes and in what amounts. Fortunately, Michigan doesn’t impose estate taxes nor collect gift and inheritance taxes. However, you must pay federal estate taxes.

You can be exempt from paying federal estate taxes if your estate is valued at $12.06 million or less. If your estate’s value is higher, you must pay estate taxes on the excess amount. Keep in mind that the exempted limit changes every year.

The larger the estate, the higher the tax. It’s best to consult an estate tax planning lawyer who can demonstrate how to calculate gross estate. Even though you can determine the value of your assets and estimate the total worth on your own, an estate tax planning lawyer can identify expenses and liabilities you could deduct from your gross estate, such as mortgages and the cost of doing business.
What if estate taxes remain unpaid?

Your heirs cannot legally enjoy their inheritance if estate taxes remain unpaid. They cannot transfer the properties to their name or sell and dispose of them in any way an actual owner could. Before your heirs can transfer inherited properties to their name, they must prove that estate taxes were settled.

How can I reduce estate taxes?

You will pay a substantial federal estate tax if you have a large estate. Fortunately, estate tax planning attorneys can help you devise strategies to minimize liability.

  • Trusts: In estate planning, trusts are popularly used as an instrument for asset protection. Setting up the correct type of trust and transferring your properties therein will make your assets more difficult to reach by creditors. Once your assets are transferred into the trust, this effectively reduces the overall value of your estate.
  • Selling, Donating, or Gifting Properties: The more properties you have, the higher your estate taxes. Thus, it’s a good idea to reduce the value of your estate while you’re still alive by selling, donating, or gift-giving. For example, you might consider donating to your favorite charity.
  • Taking A Life Insurance Policy: For people with a large estate, it may be impossible to reduce the overall value to the allowable exemptions. To address this concern, your estate tax planning lawyer may recommend establishing a life insurance policy with your estate as the beneficiary. The policy’s proceeds will be used to pay your estate tax. Although it may not be enough to cover everything, it could pay a considerable portion of the amount owed.

Remember that these strategies might not always apply to everyone. Your solutions may differ based on your personal circumstances and the type of assets you have.

Single individuals, for example, might only need to sell or donate some properties to lower the value of their estate. Married couples, on the other hand, would more likely worry about their children. In such cases, setting up a trust could be more beneficial. Talking to an estate tax planner can help give you a clear picture.

Are these strategies legal?

Yes. Consulting an estate tax planning lawyer is vital because they can help you assess the advantages and disadvantages of each strategy while keeping your interests in mind.

Furthermore, estate tax planning is just one aspect of estate planning. Your lawyer must also consider your plans regarding the distribution of your estate. And if you have minor children, your estate plan should include provisions for their care and support.

If you want to know more about estate taxes and your legal options, call the Rutkowski Law Firm at (248) 970-1947 to schedule a free virtual consultation.

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Ask A Question,
Describe Your Situation,
Request A Consultation

Call (248) 792-9193 or fill out the short form below. We will usually respond within 1 business day but often do so the same day. Don’t hesitate, your questions are welcome.
* Required Fields
Your Information Is Safe With Us

We respect your privacy. The information you provide will be used to answer your questions or to schedule an appointment if requested.

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The information you obtain at this site is not, nor is it intended to be, legal advice. You should consult an attorney for advice regarding your individual situation. Contacting us does not create an attorney-client relationship.

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