Clinton Township, MI asked in Tax Law and Probate for Michigan

Q: I am the PR of my cousin estate, per probate court.

She died with no will, hence probate court. She had no kids and her husband died 4 years before her, she has no siblings.

We are in Michigan. Everything was sold and put into "Estate of" bank account. When this is closed, which is in next couple weeks, do we pay taxes on the money we will receive from this?

I did hire an attorney so that he could take care of the probate court and such. I do not know how the attorney sending the funds. K-1 or capital gains. I have asked but never received an answer from him.

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2 Lawyer Answers
Kenneth V Zichi
Kenneth V Zichi
Answered
  • Estate Planning Lawyer
  • Howell, MI
  • Licensed in Michigan

A: Probably not, but without a FULL understanding of things it is impossible to say FOR SURE.

There may be an estate tax return required, or maybe not,

There may be capital gains taxes due, or maybe not.

It is unlikely that YOU will be charged taxes, but if things 'pass through' without an appropriate final tax return, there could be repercussions on the personal representative. But maybe not.

If you're getting that without full information you're not going to get a real answer, you've got the point.

I fear you may not have hired an attorney (because you think that lack of a will means things MUST go through probate) to help you and probably didn't see an accountant to do the final tax return. Both those are 'foolish economies'. You need to be sure this is done right!

Talk to a local probate attorney to review the whole case and you'll get better answers than in an open forum like this. Don't wait until it is too late! Get that advice now,

-- This answer is offered for informational purposes only and does not constitute legal advice or create an attorney/client relationship.

I am licensed to practice in Michigan only. Please seek competent local legal help if you feel you need legal advice

Steven J. Fromm
Steven J. Fromm
Answered
  • Probate Lawyer
  • Philadelphia, PA

A: Generally, gifts and bequests are not taxable income. However, if the estate generated normal taxable income from interests, dividends and capital gains, then there could be taxable income on these items. The amount of income of the estate would be the net income after the estate takes its allowable deductible expenses. This determination and reporting should be on a Form 1041 with any net income items that must be reported by beneficiaries shown on Form K-1 (1041). Any good estate-tax attorney should be able to prepare this return.

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