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Inheritance Tax Law

The salient features of the law are as follows:

What is Taxed

The tax is imposed upon the transfers both of real estate and personal estate of the value of $100 or over, and upon any interest therein or income therefrom in trust or otherwise to persons or corporations not exempt by law from taxation, except as stated below in Paragraph (1), under heading "Exemptions and Rate of Taxation."

Kinds of Transfers Taxed

(1) Where the decedent was at the time of his or her death a resident of the State of Michigan every kind of transfer is taxed, whether by will or by the intestate laws of the State of Michigan, or by deed, grant, bargain, sale or gift made in contemplation of the death of the grantor, vendor or donor or intended to take effect in possession or enjoyment at or after such death.

(2) Where the decedent was at the time of his or her death a non-resident of the State of Michigan, the transfer is taxed when it is either by will or the intestate law either of the State of Michigan or of the place where decedent died, and the property transferred is within the State of Michigan; or where the transfer is of property within the State of Michigan and is made by deed, grant, bargain, sale or gift in contemplation of the death of the grantor, vendor or donor or intended to take effect in possession or enjoyment at or after such death.

Exemptions and Rate of Taxation

(1) When the transfer is to or for the use of one or more of the following named persons:

a. Father or mother.

b. Husband or wife.

c. Child, whether natural or adopted as such in conformity with the laws of the State of Michigan.

d. Any person to whom the decedent, grantor, donor, or vendor for not less than ten years prior to such transfer stood in the mutually acknowledged relation of parent.

e. Any lineal descendant.

f. Brother or sister.

g. Wife or widow of a son or husband of a daughter, the transfer is not taxable at all unless it is personal property of the clear market value of $2,000 or over to each beneficiary. If the transfer is of personal property of the clear market value of $2,000 or over to any beneficiary, the entire transfer to such beneficiary is taxed at the rate of 1% upon the clear market value thereof.

So it results that whenever the beneficiary is one of the persons described in the foregoing schedule, there is no tax at all upon the transfer of real estate to him or her and there is no tax upon the transfer of personal estate to him or her unless its clear market value is $2,000 or over; in which event the tax is 1% upon the entire value thereof and not merely upon the surplus.

(2) In all other cases the transfer both of real estate and personal estate, if of the value of $100 or over, is taxed at the rate of 5% upon the clear market value of the property transferred to each beneficiary.

When Due

The tax is due and accrues at the date of death, except where the transfer is dependent or determinable upon the happening of some contingency or future event by reason of which its present clear market value cannot be ascertained, in which case the tax is due and payable when the beneficiary comes into actual possession or enjoyment of the property.

Discount and Penalties

(1) If the tax is paid within twelve months from the time it accrues a discount of 5% is allowed.

(2) If the tax is not paid within eighteen months from the time it accrues interest is charged at the rate of 8% per annum from the time the tax accrued unless by reason of

claims made upon the estate, necessary litigation, or other unavoidable cause of delay the tax could not be determined and paid; in which case interest at the rate of six per cent per annum is charged from and after the expiration of said period of eighteen months until the tax is determined or could be determined, and after the determination or after the time it could be determined interest is charged at the rate of 8% per annum until the tax is paid.

(3) Where the beneficiary does not come into actual possession or enjoyment of the property transferred and is not therefore required to pay the tax until that time, interest is charged at the rate of 5% per annum from the accrual of the tax until the date of payment.

Other Provisions

The tax is a lien upon the property transferred until paid and not only the person to whom the property is transferred, but also the administrator, executor and trustee of every estate so transferred is personally liable for the tax until its payment, except where the property transferred is real estate which the beneficiary does not take possession of or enjoy immediately because of an intervening estate.

There are drastic provisions to enforce the payment of the tax and the estate cannot be closed until the tax is paid; and no safe deposit company, trust company, bank or other institution, person or persons holding securities or assets of a decedent shall deliver or transfer the same to the executors, administrators or legal representatives of the decedent or their assignees until notice of the time and place of such intended delivery or transfer be served upon the County Treasurer by said company, bank, institution, person or persons at least five days prior to said delivery or transfer.

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Compensation, or Fees, of
Administrators and
Executors

Compensation, or fees, of Administrators are fixed by law and are as follows:

The Executor or Administrator shall be allowed all necessary expenses in the care, management and settlement of the estate and for his services such fees as the law provides (See below), together with all extra expenses:

PROVIDED, That when the deceased shall by his will make some other provision for compensation to his Executor, that shall be deemed a full compensation for his services, unless he shall, by written instrument filed in the Probate Court, renounce all claim to the compensation provided by the will.

When no such compensation shall be provided by the Will, or the Executor shall renounce all claim thereto, he shall be allowed commissions upon the amount of personal estate collected and accounted for by him and of the proceeds of real estate sold under an order of the Court for the payment of debts, as follows:

For the first $1,000, at the rate of 5%.
For the next $4,000, at the rate of 22%.
For all above $5,000, at the rate of 1%.

And the same commissions shall be allowed to Administrators; and in all cases, such further allowances may be made as the Judge of Probate shall deem just and reasonable for any extraordinary services not required of an Executor or Administrator in the common course of his duty. Illustration

Suppose an estate is valued at $16,000.00, consisting of vacant real estate of the value of $10,000.00, which yields no rental, and personal property consisting of bonds

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