If you have been appointed the personal representative of a family member's estate in Michigan, you have many duties, including filing any required income tax returns and paying any taxes that the estate owes before the assets are distributed to heirs.
Determining if your loved one's estate will owe any taxes and whether you need to file an estate income tax return is complicated, especially if you try to navigate it on your own. Our experienced Clinton Township probate lawyers at the Estate Planning & Elder Care Firm of Michigan are here to help. Our team understands the tax implications when probating an estate and can guide you through the process of determining whether your family member's estate owes any taxes.
Inheritance Taxes in Michigan Probate Estates
Two types of taxes can be owed when someone dies leaving an estate: inheritance and estate taxes. Inheritance taxes are imposed when an heir receives money, real estate, or other assets through the probate of an estate. If these taxes are owed, the heirs pay them, not the estate.
While some states require heirs to pay inheritance taxes, Michigan does not have inheritance taxes. Inheritances are also not considered income for federal income tax purposes. Even so, heirs could owe taxes on the income generated by inherited assets such as stocks and mutual funds and the profit made when the real estate they inherited is sold.
Estate Taxes Owed in Michigan Probate Estates
An estate tax is a tax that the probate or trust estate must pay. In Michigan, there are no estate taxes. However, if the estate's value is high, it could owe federal estate taxes if the estate must be probated.
As of 2025, an estate would only owe estate taxes if its value exceeds $13.61 million. If estate taxes are owed, you would have to file a federal estate tax return and pay the taxes during the probate of your loved one's estate.
Only assets being transferred through the probate would be considered in determining if any estate taxes are owed. These taxes could be owed in both a supervised and unsupervised probate of an estate.
If your deceased loved one utilized asset titling strategies in their estate planning efforts, some of their assets may not be included in their estate. For example, if an heir were a co-owner of a property with your loved one or if they were the beneficiary of a bank or investment account, these assets would not be considered estate assets when determining if the estate's value is exempt from federal estate taxes. In addition, you should deduct any liens, such as mortgage loans, from the estate’s value.
Your Duty to File Final Income Tax Returns for Your Family Member
If you are the personal representative of your loved one's estate, one of your responsibilities in the probate of their estate is to file their last income tax returns and pay any taxes owed before giving the heirs their share of the estate.
You will need to get an Employer Identification Number (EIN) from the Internal Revenue Service (IRS) to file a federal income tax return for your deceased family member. Our probate lawyers can help you obtain this number, as well as assist you in meeting the deadlines for filing any required tax returns. Key deadlines you should understand include:
- State and city income taxes. Michigan state tax returns, as well as any applicable municipal income tax returns, are due on April 15th in the calendar year after a person’s death.
- Federal income taxes. You must file a federal income tax return by the same deadline as for a Michigan income tax return.
- Estate taxes. If the estate owes estate taxes, you must file an estate federal tax return nine months after your family member's death. Getting a nine-month extension to file the return may be possible, but the estate must pay the correct estimated income taxes owed within nine months of the individual’s death.
Our probate lawyers have the knowledge to help you manage your duties as the estate’s personal representative to file your decedent's last tax returns and the estate income tax returns. We can also help you take all the steps necessary to probate your family member's estate, so it is done correctly and goes as quickly and easily as possible.