When most Michigan families sit down to discuss an estate plan, the conversation usually centers on legacy: who inherits the family home, how to provide for the kids, and who will make medical decisions if you can't. These are the "heart" elements of a plan, and they are vital.
However, there is another side to estate planning that is often overlooked until it’s too late—the significant tax advantages that can save your family a fortune. In 2026, the tax landscape has shifted once again, and if you haven't reviewed your plan recently, you might be leaving money on the table for the IRS rather than your loved ones.
The Power of the "Stepped-Up Basis"
One of the most valuable tax "secrets" in estate planning is the stepped-up basis. In Michigan, many families hold real estate or stocks that have appreciated significantly over the decades.
If you sell a property today that you bought for $100,000 but is now worth $500,000, you could owe capital gains tax on that $400,000 difference. However, if that property passes through an estate plan at your death, the "basis" for your heirs is "stepped up" to the current fair market value ($500,000). If they sell it immediately, they pay zero capital gains tax. This simple transition can save your heirs tens of thousands of dollars.
Navigating the 2026 Federal Exemption
Recent legislative changes (like the "One Big Beautiful Bill Act") have permanently increased the federal estate tax exemption. For 2026, an individual can shield up to $15 million (and a married couple up to $30 million) from federal estate taxes.
While this means most Michigan families won’t owe federal estate tax, it doesn't mean you should stop planning. Instead, the focus has shifted toward income tax efficiency. By using specific trust structures, you can ensure that your assets continue to grow while minimizing the "tax bite" on the income those assets generate for your beneficiaries.
Michigan-Specific Advantages
Michigan is unique because we do not have a state inheritance tax. This gives Michigan residents a distinct advantage compared to neighbors in other states. However, without a clear plan, your assets could still be subject to the costs and delays of probate, which can feel like a "tax" of its own on your time and resources.
Why a Review is Essential
Tax laws aren't static. A plan written five years ago was designed for a different world. At Inhulsen Law, we don't just look at where your assets go; we look at how they get there most efficiently. Whether it’s maximizing annual gift exclusions or restructuring a trust, we are dedicated to finding every "hidden" benefit available to you.
Your legacy is too important to be diminished by avoidable taxes. Let’s make sure your plan is as efficient as it is meaningful.
To schedule a personalized review of your current estate plan, contact Inhulsen Law today at (616) 345-2810.