In last week’s post, we took a look at what an “estate” is here in Michigan.  Guess what?  That’s not the only “estate” you need to consider when working with a Grand Rapids, MI estate planning attorney (or going through the probate process . . . yuck!).  You also need to consider your federal estate tax estate. No, that doesn’t necessarily mean that you will have to pay estate taxes, but you do have to add things up to find out if estate tax is due.  To do that, you need to know what is included when adding up those numbers.  I guarantee you there will be at least a few surprises.

The easiest way is to think about everything you own . . . everything!  Real estate, bank accounts (including some or all of jointly held accounts), retirement accounts, brokerage accounts, automobiles, collectibles, business interests, and life insurance, just to name a few.  Did you catch that last one?  It is a surprise to many people that life insurance they own is included in determining the size of their estate tax “estate.”  I regularly hear, “but I was told life insurance is not taxed!”  Well, yes, it is not income taxed and it may not cause any estate tax (depending on the size of your “estate”), but it is included in determining how big your estate tax “estate” is and whether any estate taxes are due.  You can read my previous post about how to avoid that by clicking here.

We’re not done yet!  Here’s another big surprise to many people . . . your estate tax “estate” even includes some things you gave away!  Yes, you read that right.  A couple of common examples are gifts made within 3 years of death and property that you gave away but in which you retained an “interest.”  The definition of “interest” for these purposes is too in depth for this post, but it is roughly (very roughly) the same as keeping a “benefit” of what you gave away (e.g. the right to say who gets it, the right to receive payments, etc.).

A little bit surprised by all that’s included?  Most people are.  Here’s the thing about probate (your Michigan estate) and estate taxes (your estate tax estate) . . . they are voluntary!  The only people who have deal with them (or whose loved ones have to deal with them) are those who don’t plan to avoid them.

So you can see that we all have an estate and in many cases it is bigger than we thought.  Knowing that, why wouldn’t you call us at 616-827-7596 to have your say in how your “estate” is handled?  We look forward to planning with you.

Michael Lichterman is an estate planning and business planning attorney who helps families and business owners create a lasting legacy by planning for their Whole Family Wealth™.  This goes beyond merely planning for finances – it’s about who your are and what’s important to you.  He focuses on estate and asset protection planning for  the “experienced” generation, the “sandwich generation” (caring for parents and children), doctors/physicians, nurses, lawyers, dentists, professionals with minor children, family owned businesses and pet planning.  He takes the “counselor” part of attorney and counselor at law very seriously, and enjoys creating life long relationships with his clients – many of which have become great friends.