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Inheritance Tax Spouse
Milton Said:Does a surviving spouse have to pay inheritance tax on a home the 2 spouses lived in for 37 years?
We Answered:should not have to.
joint owners in life it is not an inheritance.
Million dollar estates, talk to a tax lawyer
Sandra Said:Is it possible to gift your inheritance to your spouse to avoid paying taxes on it?
We Answered:Are you talking about an inheritance you have received or are you planning for your ultimate demise?
If you have received an inheritance, it will have been taxed already. You do not even have to report its receipt. It would be a good idea to keep documentation to show that it was an inheritance though, in case the IRS ever audits you for anything else.
if you are thinking about your ultimate demise then anything willed to your widow (as opposed, say, to your best friend) is not taxed at that time. However, on her death, it will have to be considered for estate tax purposes. so all you are doing is deferring it. If you have a substantial estate you might want to have a comprehensive review of your wills and put some sensible planning in place. Standard will-writing programs work when all you want to do is secure your spouse's financial future and provide a bit of order. Nothing beats customized advice if you have assets which may end up being taxed.
The limits mentioned previously are accurate, for the most part, but they can change rapidly especially if we get a change of political party in the White House. Keep your eye on things like that. irs.gov is a good place to start.
Bonnie Said:Estate & Inheritance Tax?
We Answered:Since there is no will the estate will be probated according to state law. Without knowing what MI law is it's not possible to say. Whatever the decedent may have wanted to do is now officially irrelevant since he or she did not execute a will prior to their death.
Normally estates passed to a spouse qualify for an unlimited estate tax exclusion as well as an inheritance tax exclusion for the few states that still have an inheritance tax. The portion that goes to the spouse (typically 50% under most state intestacy laws, but each state has its own laws on this) will be excluded from the estate valuation. The portion that goes to any other heirs won't be but it should be below the estate tax exclusion amount for 2009 so odds are that no estate tax will be due.
The spouse, child(ren) and any other potential heirs need legal representation in this matter since there was no will.
Jacqueline Said:Estate & Inheritance Tax in Michigan?
We Answered:Michigan does not have an inheritance tax. They do have a limited estate tax that works in conjunction with the Federal estate tax.
Estate tax is payable by the estate of the decedant BEFORE distribution to the beneficiaries. The heirs receive the distribution tax-free.
The MI probate court appoints a "Personal Representative" i.e. executor for the estate who will file the final tax return and the estate tax returns.
The Personal Representative has the authority to sell any estate assets to raise cash for estate taxes, which will be somewhere around $556,000 on $5M. (The first $3.5M is excluded in 2009--any amount over $5M is taxed at 45%).
Under MI Probate law, the amount distributed to heirs is prescribed very specifically. This is the disadvantage of there being no will. For example, the surviving spouse is entitled to the first $183,000 (in 2006-- the number changes annually), plus half of the remaining assets. The remainder is divided between all descendents.