Michigan Won’t Tax Your Estate. The Federal Government Might Take 40%.

That beneficiary designation you filled out at your first job? The life insurance form from your starter marriage? They’re still out there. And when you die, they control—not your will, not your trust, not what you actually want. Your carefully crafted estate plan becomes irrelevant the moment a twenty-year-old form names someone you haven’t spoken to in a decade.

At Boroja, Bernier & Associates, we don’t let that happen. We review your beneficiary designations, identify conflicts, and show you exactly how to fix them so your plan actually works as a whole.

STATEWIDE SERVICE — Available to All Michigan Residents

Let’s Start with the Good News—Then the Reality Check

The good news: Michigan doesn’t have a state estate tax or inheritance tax. When you die, Michigan won’t take a percentage of what you leave behind. That’s not true everywhere—some states impose their own estate taxes on top of federal obligations. Michigan isn’t one of them.

The reality check: Federal estate taxes are a different story.

The federal government taxes estates exceeding certain thresholds. For 2026, the federal estate tax exemption is $15 million per individual—or $30 million for married couples who properly use portability. Sounds like a lot. And for most Michigan families, it is. The current exemption means federal estate taxes aren’t an immediate concern for the majority of people.

But “majority” isn’t “everyone.” And here’s where people get surprised.

Your estate isn’t just your bank account. It’s everything: your house, your retirement accounts, your life insurance death benefits (if you own the policies), your business interests, your investment accounts, that rental property, the vacation home. Add it all up—not what you could sell it for tomorrow, but the fair market value at your death—and families who assumed they were “nowhere near” the exemption sometimes discover they’re closer than they thought.

And even if you’re comfortably under today’s exemption, that exemption isn’t guaranteed to stay this high forever. Tax law changes. Exemptions can shrink. Assets appreciate. The family business grows. What’s not a problem today can become a significant problem in ten years.

Quotable Expert Statement: “Most people dramatically underestimate their estate’s value because they’re thinking about liquidity—what they could actually spend. But estate tax calculations include life insurance death benefits, retirement account balances, business valuations, and real estate at appraised values. I’ve sat with families who were certain they had ‘maybe $3 million’ and watched their expressions change when we added everything up and hit $8 million.”

At Boroja, Bernier & Associates, we help Michigan families understand their actual estate tax exposure—not what they assume it is. For families who need tax planning, we implement strategies that work. For families who don’t, we tell you that too. We’d rather give you honest advice than sell you planning you don’t need.

We serve Michigan families statewide with consultations available by phone, video, or in person at our Shelby Township headquarters.

How Federal Estate Taxes Actually Work

The Math Nobody Explained to You

The federal estate tax is straightforward in concept: when you die, the government calculates the total value of everything you owned, subtracts allowable deductions, and taxes what remains above your exemption at rates up to 40%.

What counts as “everything you owned”:

This is where people get surprised. Your gross estate includes:

• Real estate: Your home, vacation property, rental properties, land—all at fair market value, not what you paid for them
• Financial accounts: Bank accounts, brokerage accounts, CDs, money market funds
• Retirement accounts: IRAs, 401(k)s, 403(b)s, pensions—the full balance, even though your beneficiaries will also pay income tax when they withdraw
• Life insurance: If you own the policy, the death benefit counts—even if it pays directly to your beneficiaries. A $2 million policy you own adds $2 million to your taxable estate.
• Business interests: Your ownership stake in any business—LLC membership, corporate stock, partnership interest—often valued higher than owners expect
• Personal property: Vehicles, jewelry, art, collectibles, furniture
• Anything you gave away but retained control over: Certain trust arrangements, retained life estates, and other transfers with strings attached

The 2026 numbers:

• Individual exemption: $15 million
• Married couple with portability: $30 million
• Tax rate on amounts exceeding exemption: 40%

What this means in practice:

Your taxable estate is $18 million. Your exemption is $15 million. You pay estate tax on the $3 million excess. At 40%, that’s $1.2 million to the IRS—before your family receives their inheritance.

That $1.2 million doesn’t come from nowhere. If your estate is mostly illiquid—a business, real estate, retirement accounts—your family may need to sell assets to pay the tax bill. Sometimes at fire-sale prices. Sometimes the family business.

The People Who Actually Face Estate Taxes

An Honest Assessment of Whether This Applies to You

Let’s be direct: at current exemption levels, most Michigan families won’t owe federal estate taxes. The $15 million threshold (or $30 million for couples) excludes the vast majority of estates.

But “most” isn’t “all.” Here’s who actually needs to pay attention:

You likely need estate tax planning if:

• Your net worth exceeds $5 million individually (or $10 million as a couple)
• You own life insurance with death benefits over $2-3 million—and you own the policies personally
• You own a business that could be valued in the millions upon your death
• You hold significant real estate beyond your primary residence
• You expect to receive a substantial inheritance that will push you over thresholds
• You own appreciating assets that may exceed exemptions by the time you die

You should understand estate taxes (even without immediate planning) if:

• Your net worth is $3-5 million and growing
• You’re building wealth that may approach exemption thresholds
• You want to understand how legislative changes could affect your family
• You’re interested in wealth transfer strategies for reasons beyond taxes

Estate tax planning probably isn’t your priority if:

• Your net worth is comfortably below $3 million
• You don’t own significant life insurance
• Your primary concerns are probate avoidance, incapacity planning, and making sure assets pass to the right people

Here’s what we won’t do: push sophisticated estate tax strategies on families who don’t need them. If your estate is $2 million and your goals are straightforward, we’ll tell you that. Complex planning has costs—financial and administrative. It only makes sense when the tax savings justify the complexity.

At Boroja, Bernier & Associates, we assess your actual situation and recommend appropriate planning. Not the most expensive planning. Not the most sophisticated planning. The right planning for your circumstances.

Why Today’s Exemption Might Not Be Tomorrow’s

The Legislative Reality That Makes Planning Complicated

The current $15 million exemption is historically high. It wasn’t always this way, and there’s no guarantee it stays this way.

How we got here:

The Tax Cuts and Jobs Act of 2017 significantly increased the estate tax exemption from approximately $5.5 million to over $11 million per person. That increase was originally scheduled to sunset after 2025, which would have reverted exemptions to pre-2017 levels.

In 2025, federal legislation reset the federal estate tax exemption to $15 million per individual starting in 2026, with cost-of-living adjustments going forward. This isn’t simply an extension of the 2017 law—it’s a new provision establishing current exemption levels.

What could change:

Congress can always modify tax law. Future legislation could reduce the exemption—potentially back toward $6-7 million per person or lower. Political priorities shift. Budget pressures mount. What’s law today isn’t necessarily law in five or ten years.

What this means for your planning:

If your estate is worth $8 million today, you’re comfortably under the current $15 million exemption. But if future legislation reduced the exemption to $7 million, you’d suddenly face estate tax on $1 million—potentially $400,000 to the IRS.

This uncertainty cuts both ways. Some families implement aggressive planning now to “lock in” current high exemptions—using strategies that remove appreciating assets from their estates while exemption amounts are favorable. Others wait to see what Congress does, accepting the risk that opportunities may close.

There’s no objectively correct answer. But understanding the uncertainty is essential to making informed decisions.

“The families who get hurt by estate tax changes aren’t the ultra-wealthy—they have teams of advisors tracking every legislative development. It’s the business owner worth $10 million who assumed they’d ‘never have an estate tax problem.’ If exemptions drop significantly, that family is suddenly exposed, and the best planning strategies may require exemption amounts that no longer exist.”

Portability: The Election Most Families Miss

Your Spouse’s Unused Exemption Can Save Your Family Millions—If You File the Right Paperwork

When one spouse dies, their unused estate tax exemption can transfer to the surviving spouse. This is called “portability,” and it’s one of the most valuable tools in estate tax planning.

How it works:

Husband dies in 2026. His estate is worth $5 million, all passing to his wife (tax-free under the unlimited marital deduction). He “used” none of his $15 million exemption.

If the estate properly elects portability, his $15 million unused exemption transfers to his wife. Combined with her own $15 million exemption, she now has $30 million of exemption available when she dies.

Without the election? His unused exemption disappears. She’s limited to her own $15 million.

The catch that trips up families:

Portability isn’t automatic. To elect it, the deceased spouse’s estate must file a federal estate tax return (Form 706)—even if no tax is owed, even if the estate is well below filing thresholds.

Many families skip this because “no tax is due anyway.” Huge mistake. If the surviving spouse’s estate later exceeds their individual exemption—through inheritance, asset appreciation, or reduced future exemptions—they’ll pay tax that could have been avoided entirely.

The deadline:

Form 706 must generally be filed within nine months of death, with a six-month extension available. Miss this window, and portability may be lost permanently. (There are some relief provisions for late elections, but they’re not guaranteed and require additional steps.)

The bottom line:

If your spouse passes and their estate is below the filing threshold, talk to an estate planning attorney about whether to file for portability anyway. The filing costs money. Losing millions in exemption costs far more.

Strategies That Actually Reduce Estate Taxes

What Works—And What’s Worth the Complexity

Estate tax planning isn’t one-size-fits-all. The right strategies depend on your wealth level, asset composition, family situation, and goals. Here’s what’s actually available:

Lifetime Gifting

You can give away assets during your lifetime, removing them (and their future appreciation) from your taxable estate.

• Annual exclusion gifts: In 2026, you can give up to $19,000 per recipient per year without using any of your lifetime exemption. A married couple can give $38,000 per recipient. Gift to your three kids and their spouses annually, and you’re moving $228,000 out of your estate every year—tax-free, no reporting required.
• Larger lifetime gifts: You can make gifts exceeding the annual exclusion, but they reduce your available estate tax exemption dollar-for-dollar. Give $1 million today, and your estate tax exemption drops by $1 million at death. The advantage? Future appreciation on that $1 million happens outside your estate.

Irrevocable Life Insurance Trusts (ILITs)

Life insurance you own personally counts in your taxable estate. A $3 million policy adds $3 million to your estate—potentially generating $1.2 million in estate taxes.

An ILIT owns the policy instead of you. When you die, the death benefit passes to trust beneficiaries outside your estate. Same insurance protection for your family, no estate tax on the proceeds.

The trade-off: irrevocable means irrevocable. You give up control over the policy. You can’t change beneficiaries, access cash value, or cancel the trust without significant complications. ILITs work best for families with clear, stable intentions.

Charitable Planning

Assets left to qualified charities aren’t subject to estate tax. For charitably inclined families, this creates planning opportunities:

• Charitable remainder trusts: Provide income during your lifetime, with the remainder going to charity. You receive an income tax deduction now and estate tax benefits later.
• Charitable lead trusts: The reverse—charity receives income for a period, then remaining assets pass to your family at reduced transfer tax cost.
• Direct charitable bequests: Simply leave assets to charity in your estate plan. They’re deducted from your taxable estate.

Family Business Planning

Transferring business interests to the next generation while minimizing estate taxes is one of the most complex areas of planning. Tools include:

• Valuation discounts: Minority interests and lack of marketability can justify valuation discounts, reducing the taxable value of transfers.
• Grantor retained annuity trusts (GRATs): Transfer appreciation to heirs while retaining an income stream.
• Installment sales to grantor trusts: Sell assets to a trust in exchange for a promissory note, freezing the value in your estate while future growth passes to beneficiaries.
• Special use valuation: Certain family farms and businesses may qualify for reduced valuations under IRC Section 2032A.

These strategies are powerful but complicated. They require careful implementation, ongoing administration, and professional guidance. They make sense for families with significant estate tax exposure—not for families who are comfortably below exemption thresholds.

The Life Insurance Trap Most Families Don’t See Coming

Your Policy Might Be Creating the Tax Problem It’s Meant to Solve

Here’s an irony that catches families off guard: life insurance purchased to provide for your family can actually create or worsen an estate tax problem.

If you own a life insurance policy on your own life, the death benefit is included in your taxable estate. You buy a $2 million policy to make sure your family is protected. You die. The $2 million is added to your estate’s value for tax purposes—potentially pushing you over exemption thresholds or increasing the amount subject to 40% taxation.

The solution—an irrevocable life insurance trust (ILIT)—removes the policy from your estate. The trust owns the policy, pays the premiums (with money you gift to the trust), and receives the death benefit. Your family benefits from the insurance proceeds without the estate tax hit.

But there’s a catch:

If you transfer an existing policy to an ILIT and die within three years, the policy is pulled back into your estate anyway (the “three-year rule” under IRC Section 2035). The ILIT works best when it purchases a new policy from the start—or when you have time to outlive the three-year lookback.

Who needs to think about this:

• Anyone with life insurance death benefits exceeding $1-2 million
• Anyone whose estate (including insurance) approaches exemption thresholds
• Business owners with key-person or buy-sell insurance

If your total estate is $3 million including $500,000 of life insurance, this probably isn’t your priority. If your total estate is $12 million including $3 million of insurance, it absolutely is.

Common Questions About Estate Taxes in Michigan

When to Talk to an Estate Tax Planning Attorney

Some situations make this conversation more urgent:

• Your net worth exceeds $5 million individually or $10 million as a couple. You may not have immediate exposure, but you should understand your position.
• You own significant life insurance—especially policies over $1-2 million. Ownership structure matters more than most people realize.
• You own a family business you intend to transfer to the next generation. Business succession and estate tax planning are deeply intertwined.
• Your spouse recently passed. The portability election deadline is nine months (plus extension). Don’t miss it.
• You’ve received or expect a substantial inheritance. Your estate tax exposure may be higher than you realize.
• You’re concerned about legislative changes reducing exemption amounts. Planning strategies implemented now may not be available later.
• You want an honest assessment of whether you need tax planning at all. We’ll tell you the truth.

At Boroja, Bernier & Associates, we help Michigan families understand their estate tax exposure and implement strategies that make sense for their situations. We don’t oversell complex planning to families who don’t need it, and we don’t undersell it to families who do.

Accountability builds trust. We give you honest assessments, not sales pitches.

You Didn’t Build This to Fund the Federal Government

The wealth you’ve accumulated represents decades of work, sacrifice, and smart decisions. Estate tax planning is about making sure that wealth transfers to your family—not to the IRS.

For some Michigan families, this means sophisticated strategies: irrevocable trusts, lifetime gifting programs, business succession planning. For others, it means understanding the rules, electing portability when a spouse passes, and monitoring legislative changes.

At Boroja, Bernier & Associates, we assess your actual situation and recommend what actually makes sense. If you need complex planning, we’ll implement it. If you don’t, we’ll tell you that—and focus on the estate planning priorities that do matter for your family.

That’s what results over effort looks like. Planning that fits your situation, not planning designed to impress you.

Call Us: (586) 991-7611
Email: admin@bbalawmi.com

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Estate planning consultations available statewide—by phone, video, or in person at our Shelby Township headquarters.