As a Grand Rapids, Michigan estate planning attorney, I field all sorts of calls and conversations about estate planning and probate. I also receive calls and questions about areas of law outside my practice area and I am happy to refer those folks to colleagues I trust explicitly to handle the matter well. I had just such a call this past week. Why, you may ask, would I use that story to start a post about having a Michigan estate? Well, as we were wrapping up the call the nice lady said “I really like you and you can be sure that I will call you for estate planning if I ever have an estate.”
I have news for her and everyone else . . . we ALL have estates. Sure, some are bigger and some are smaller . . . it is not necessarily the vision we may conjure up of rolling green hills with a stately colonial mansion set atop a hill with horses grazing in a field nearby. Although that sounds nice! So that begs the question – what is an “estate” for probate and estate planning purposes?
There are actually two “estates” that matter in this context – (1) your Michigan probate estate, and (2) your federal estate tax estate. In this post I will tackle the first one.
First, make sure you understand what probate is and the context(s) in which you may find yourself (or your loved ones) dealing with it. If you are unsure, you can read my post on it by clicking here.
So, what makes up a probate estate? I would start by considering the value of everything you own. Oh yeah, do not deduct any debt owed on what you own. That’s right – no deduction. Why is that? Because according to Michigan law, the value of assets that must be reported to the probate court is the “fair market value.” Yes, you can list any “encumbrance” (close to “debt,” but technically not the same), but as far as the inventory fee with the probate court, such “encumbrance” will not be deducted.
Ok, so you’ve added everything up. Is it a bigger number than you thought? For most people it is. Now, you will be happy to know that several common ways of owning assets will keep them out of your probate estate. If you have any of the following, it will not be part of your probate estate:
- Jointly owned property (bank accounts and marital homes are the most common in this category). Note: this only works as long as there is more than 1 joint owner . . . because if there isn’t, it is no longer jointly owned.
- Beneficiary designated assets – IF the person designated is still alive and is at least 18 years old (retirement accounts and life insurance are the most common in this category)
- Assets owned by a trust. Note: just having a trust is not enough . . . it must own the property (you can read more about that in my previous posts by clicking here and here)
So there you have it. The basics of a Michigan probate estate. Keep in mind, this is just a basic overview. It is more complex when you “dig down into it,” which is why I recommend meeting with an attorney who really focuses on estate planning so you can fully understand your specific situation.
Stay tuned as next time I will share what makes up your federal estate tax estate. That one is not one you want to miss . . . I guarantee you will discover some BIG surprises in that one. And if you’re ready to make sure that your “estate” is taken care of and that it is done in a way that is unique to who you are, then call us at 616-827-7596 to schedule your Peace of Mind Planning Session.
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.