Michigan Laws 205.202 – Tax on certain transfers of property; exemptions; tax rate on excess; exemption applicable to beneficiary’s interest; allowance granted by court order to widow or family of decedent; tax rate in cases
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(1) Where the persons entitled to a beneficial interest in the property are the grandfather, grandmother, father, mother, husband, wife, child, legally adopted child, stepchild, brother, sister, wife or widow of a son, or the husband or widower of a daughter of the decedent grantor, donor, or vendor, or for the use of a person to whom the decedent grantor, donor, or vendor stood in the mutually acknowledged relation of a parent, if the relationship began at or before the child’s seventeenth birthday and continued until the death of the decedent grantor, donor, or vendor, or to or for the use of a lineal descendant of or a lineal descendant of a stepchild of the decedent grantor, donor, or vendor, the transfer of property of the clear market value of $10,000.00 or for a decedent who dies after December 31, 1992 but before January 1, 1994, $15,000.00, for a decedent who dies after December 31, 1993 but before January 1, 1995, $25,000.00, or, for a decedent who dies after December 31, 1994, $50,000.00 is exempt from all taxation under this act.
(2) Where the transfer is to a husband or wife the transfer of property of the clear market value of $65,000.00 shall be exempt from all taxation under this act. If property is not transferred to a minor child or children, the widow shall be entitled to an additional exemption of $5,000.00 for each child to whom property is not transferred.
Terms Used In Michigan Laws 205.202
- Beneficiary: A person who is entitled to receive the benefits or proceeds of a will, trust, insurance policy, retirement plan, annuity, or other contract. Source: OCC
- Decedent: means a deceased person and includes, but is not limited to, a testator, grantor, bargainor, vendor, donor, or person who dies intestate. See Michigan Laws 205.256
- Decedent: A deceased person.
- Donor: The person who makes a gift.
- Family-owned: means participation by the decedent or a qualified heir in the operation of the business for not less than 500 hours in 5 out of the 8 years immediately preceding the decedent's death and either of the following:
(i) The business is 100% owned by the decedent and qualified heirs, or for a corporation, 100% of the stock is owned by the decedent and qualified heirs. See Michigan Laws 205.221Grantor: The person who establishes a trust and places property into it. grantor: may be construed as including every person from or by whom any estate in lands passes in or by any deed. See Michigan Laws 8.3e Lineal descendant: Direct descendant of the same ancestors. Person: means an individual, firm, partnership, joint venture, association, corporation, limited liability company, company, estate, or any other group or combination acting as a unit. See Michigan Laws 205.256 property: means the property or interest in property of the testator, intestate, grantor, bargainor, or vendor, passing or transferred to those not specifically exempted from this act, and not as the property or interest in property passing or transferred to the individual legatees, devisees, heirs, next of kin, grantees, donees, or vendees, and includes all property or interest in property whether situated within or without this state and including all property represented or evidenced by note, certificate, stock, land, contract, mortgage or other kind or character of evidence thereof, and regardless of whether that evidence of property is owned, kept or possessed within or without this state. See Michigan Laws 205.221 Qualified heir: means an individual entitled to any beneficial interest in property who is the grandfather, grandmother, father, mother, husband, wife, child, legally adopted child, stepchild, brother, sister, wife or widow of a son, or husband or widower of a daughter of the decedent grantor, donor, or vendor, or for the use of a person to whom the decedent grantor, donor, or vendor stood in the mutually acknowledged relation of a parent, if the relationship began at or before the child's seventeenth birthday and continued until the death of the decedent grantor, donor, or vendor, or to or for the use of a lineal descendant of or a lineal descendant of a stepchild of the decedent grantor, donor, or vendor, or farm business partner, or to or for the use of any person to whom the decedent grantor, donor, or vendor stood in the mutually acknowledged relation of a farm business partner. See Michigan Laws 205.221 Transfer: includes the passing of property or an interest in property in possession or enjoyment, present or future, by inheritance, descent, devise, bequest, grant, deed, bargain, sale, or gift in the manner prescribed in this act. See Michigan Laws 205.221
(3) If the clear market value of the property transferred to each of the persons included in the classes specified in subsection (1) exceeds the exemptions specified, the exemptions shall first be deducted from the value of the property. When the clear market value of the property does not exceed $50,000.00 before deducting the exemptions, the transfer of the property in excess of the exemptions and up to $50,000.00 shall be taxed at the rate of 2% of the clear market value of the property. When the clear market value of the property exceeds $50,000.00 the excess over exemptions of the first $50,000.00 shall be taxed as provided in this subsection and the transfer of that portion of the property in excess of $50,000.00 and up to $250,000.00 shall be taxed at the rate of 4% of the clear market value of the property. The transfer of that portion of the property in excess of $250,000.00 and up to $500,000.00 shall be taxed at the rate of 7% of the clear market value of the property. The transfer of that portion of the property in excess of $500,000.00 and up to $750,000.00 shall be taxed at the rate of 8% of the clear market value of the property. The transfer of that portion of the property in excess of $750,000.00 shall be taxed at the rate of 10% of the clear market value of the property.
(4) The exemptions of section 1 and subsections (1), (2), and section 2d shall apply and be granted to each beneficiary‘s interest in the property, and not to the entire estate of a decedent. A deduction or exemption from the tax shall not be made for an allowance granted by the order of a court for the maintenance and support of the widow or family of a decedent pending the administration of the estate when there is income from the estate accruing after death, which is available to pay the allowance, or for a longer period than 1 year, or for a greater amount than is actually used and expended for the maintenance and support of the widow or family for 1 year.
(5) Except as provided in this act, in cases other than those specified in subsection (3), the tax shall be at the rate of 12% upon the clear market value of the property transferred not exceeding $50,000.00, 14% upon all in excess of $50,000.00 and up to $500,000.00, and 17% upon all in excess of $500,000.00.
(6) For the estate of a decedent who dies after December 31, 1992, a tax is not imposed under this section on the transfer of any property, real or personal, of a family-owned business or the transfer of the ownership of a family-owned business to a qualified heir or heirs.