The US does not have an “inheritance tax.” Taxes are not levied on the property received from a decedent, but rather on what an individual decedent owns at their death.
The Estate Tax rules are a complex set of rules in the tax code, which taxes the “taxable estate” of a decedent. The “taxable estate” is defined throughout the US Tax Code. An individual may pass a certain amount of money free from tax ($5.34 million in 2014). Due to portability rules, a married couple may transfer $10.68 million free from tax. If your estate is in excess of these amounts, you should consult with your lawyer as to a comprehensive estate plan, which may involve trusts, gifts, and other transfers to minimize your tax liability (40% for estates in excess of the exemption).
A conservator or guardian are appointed by the Probate Court, and act to protect an individual. A conservator is a person appointed to handle an individual’s property and financial affairs. A guardian is a person and given power and responsibility to make certain decisions about the care of another individual.
A Durable Power of Attorney for Finances is a document that allows a person (the principal) to choose someone to act in their place (the agent). The actions taken by agent are deemed to be that of principal. This document is not deemed ineffective upon the incapacity of the Principal.
A Durable Power of Attorney is document where one appoints someone to be their health care agent (to make any necessary health care decisions when you are unable). A discussion should occur with your agent about the type and extent of care you would like or not like. This document is also known as a “Designation of Patient Advocate.”
There are different kinds of trusts that can be created. A Trust is a very important tool in Estate Planning. Trusts are established to provide written guidelines on how to protect, utilize and/or distribute someone’s assets based upon predetermined wishes. It directs how an individual’s property will be distributed upon their death, and also works to consolidate management of assets during life. Assets held in trust avoid the expense and headaches of probate upon death. Trusts also have the advantage of being private- the terms of a trust are not made public as would the terms of a will. The Settlor (creator), Trustee (manager), and beneficiaries of a trust are the only ones who ever need to know the terms of the document.
There are Revocable Trusts & Irrevocable Trusts. Revocable Trusts allow the owner of the trust to be a trustee. The trustee can make changes whenever they choose, however they choose.
Irrevocable Trusts are trusts established where the owner and the trustee cannot be the same person. The person setting up the trust chooses someone they trust to be the trustee (such as an adult child).
Visit our Wills and Trusts page for more information on this subject.
The term can actually mean two things: 1) the court that has jurisdiction over wills, trusts, and protected individuals; or 2) the process of changing titled (ownership) of property from the decedent to someone else. Probate is often a time-consuming process. It can take several months from the time a will is submitted to the court before assets can actually be distributed. It can also be expensive (court costs and legal fees).
Visit our Probate page for more information on this subject.
A Lady Bird Deed is a special type of deed. To show how it works, we’ll use your home as an example. You own your home (whether you have a mortgage or not). When you sign a Lady Bird Deed, you convey your home to yourself, but you reserve the power to sell, mortgage, gift (or otherwise transfer) your home during your lifetime. If you don’t convey your home during your lifetime, the Lady Bird Deed identifies who receives your home after you die. This can be one or more individuals, or it can be a trust. Having a lady bird deed can provide the following benefits currently under Michigan law:
• Lady Bird Deeds avoid probate. The property goes directly where you want it to go, without getting the Michigan probate court involved.
• Lady Bird Deeds are Medicaid friendly. If your home is in a trust, it is “countable” for Medicaid purposes. A Lady Bird Deed avoids this problem, and is not considered a “divestment” for Medicaid purposes.
• Lady Bird Deeds are tax friendly. Since there is no “gift” during your lifetime (the transfer only occurs at death), the person receiving the property gets what is known as a “step up in basis”. In short, there should be no income tax on the sale of your property after you die.
• At this time, a Lady Bird Deed Avoids Michigan Estate Recovery. After you die, Michigan’s recent estate recovery law allows the government to take your home under certain circumstances if you received Medicaid benefits during your lifetime. A Lady Bird Deed is a great way to avoid estate recovery.
• You don’t give up any control. You can still do whatever you want with your property during your lifetime. And you can change it or take it back at any time.
A Lady Bird Deed can be a great estate planning strategy when combined with your other estate planning tools.
A will is a document in which a person directs how his or her estate will be distributed upon death. Any assets owned by an individual at death will need to go to probate.
Visit our Wills and Trusts page for more information on this subject.
An Advance Directive, also referred to as a Living Will, is a document that provides written health care instructions to your agent (person acting on your behalf) and health care providers. A living will is often integrated into a Power of Attorney for Healthcare.
You appoint yourself as the trustee when you are well and a successor trustee to make decisions if you become incapacitated.
Any War veteran with 90 days of active duty with at least one day served during war time. A surviving spouse of a war time veteran may be eligible if married to the veteran at the time of his/her death. For more information, visit our page on Veterans Benefits.
• Been discharged from service under other than dishonorable conditions
• Served 90 days or more of active duty with at last one day during a war
• Have disabilities that keep him/her from working a regular, full-time job, or must be 65 years of age or older, or must be currently in receipt of SSD benefits
• Have countable family income below a limit set by law (the limit changes annually)
• Meet objective and subjective resource limitations
Please keep in mind that this benefit is asset and income based. It is recommended that you seek professional advice before applying. Simasko Law can determine if you could qualify for this benefit based on your income, assets and medical expenses.
Visit our Veterans Benefits page for more information on this subject.
• Veteran with One Dependent: $2,019.00/mo.
• Veteran Alone: $1,703.00/mo.
• Surviving Spouse: $1,094.00/mo.
Please keep in mind that this benefit is asset and income based. It is recommended that you seek professional advice before applying. Simasko Law can determine if you could qualify for this benefit based on your income, assets and medical expenses.
Visit our Veterans Benefits page for more information on this subject.
• WWI: April 6, 1917 to November 11, 1918
• WWII: December 7, 1941 to December 31, 1946
• Korean Conflict: June 27, 1950 to January 31, 1955
• Vietnam Era: August 5, 1964 to May 7, 1975
(Feb. 28, 1961 to Aug. 4, 1964 for veterans who serviced “in country”)
• Gulf War: August 2, 1990—TBA
Visit our Veterans Benefits page for more information on this subject.