Most estate attorneys are conservative on tax. They draft documents and refer the rest out. Daniel Benson holds an MBA in finance alongside his Juris Doctor, and tax is a core part of his practice. Smart tax decisions made early often save ten to a hundred times what the planning itself costs. The wrong decision quietly compounds for decades.
Why tax planning is part of estate planning
You cannot really separate the two. Every trust, entity, and titled account in your plan has a tax answer the day it is signed and a different one the day you pass it on. An estate plan that ignores tax can be technically valid and still quietly cost your family a meaningful amount of money. Our approach is integrated. When we build or review an estate plan, we look at it through the tax lens at the same time, so the plan we recommend actually holds up across the rest of your financial life. The goal is not complexity. The goal is making sure no easy money is being left on the table.
Daniel Benson holds an MBA in finance in addition to his Juris Doctor, and tax is a substantive part of his practice. That combination is uncommon among general estate attorneys in mid-Michigan, and it is the reason clients with significant assets, a business, or a more complex situation work with us instead of a generalist.
When clients usually need tax counsel
Most people do not need a tax attorney. The ones who do tend to look like the situations below, and they almost always benefit from talking to us early rather than after a deadline has already passed.
- High-net-worth families. Estates approaching or above the federal estate tax exemption usually need careful planning to avoid an unnecessary tax bill on the next generation.
- Business owners. A business sale, a transition to children, or even just bringing in a partner has long-term tax consequences that should be set up well in advance.
- An IRS letter. Anything from the IRS is time-sensitive. Engaging counsel early almost always produces a better outcome than waiting.
- Significant gifts to children or grandchildren. Larger gifts, family loans, helping with a home, and education funding all have tax considerations worth getting right.
- An estate over the federal exemption. Whether through a successful career, an inheritance, or appreciated real estate, families that have crossed the threshold need a plan that accounts for it.
Michigan does not have a state estate or inheritance tax
This is the most common tax question we hear, and the answer is the good news. Michigan has no state estate tax and no inheritance tax. A Michigan resident who passes away owning only property in Michigan does not owe any state-level death tax.
There are two caveats worth knowing. First, the federal estate tax can still apply if the estate is large enough. Second, Michigan residents who own real estate or other property in other states can still be on the hook for tax in those states. A vacation home in Hawaii, a condo in Maine, or rental property in Minnesota are common examples. We plan around the whole picture, not just the Michigan piece.
Step-up in basis at death
One of the most powerful features in the tax code is something called the step-up in basis. Here is the simple version. When you pass an asset to your heirs at death, the tax cost of that asset is generally reset to its current value. Decades of built-in gains can be wiped out as a result.
That is why holding onto appreciated assets until death is often better than giving them away during life. The same asset gifted while you are alive carries your original cost forward to the recipient, who will owe capital gains tax on all of that growth when they sell. It is one of the biggest tax decisions families make, and it deserves a real conversation.
| Question | Hold until death | Gift during life |
|---|---|---|
| What does the recipient inherit for tax purposes | A fresh tax cost equal to today's value | Your original cost carries over to them |
| Future capital gains on the asset | ✓ Often eliminated for the heir | × Recipient owes tax on all the growth when sold |
| Effect on your taxable estate | Asset stays in your estate | Asset and its future growth move out |
| Loss of control over the asset | You keep full control during your lifetime | You give it up |
| Usually the better fit when | Your estate is under the federal exemption and assets have grown a lot | Your estate is above the exemption and the asset still has room to grow |
Tax planning for business owners
For most business owners, the business is the single most valuable thing in the estate and one of the most tax-sensitive parts of the plan. The decisions that drive long-term outcomes get made early and rarely revisited. We revisit them.
That includes how the business is structured, how owners are paid, how a future sale will look, how a transition to family or to a partner is set up, and how the business fits into the rest of your estate plan. Each of those is a tax conversation as much as a legal one. We work through them with you in plain language and coordinate with your CPA so the plan we land on is one your accountant can actually implement and defend.
Aircraft tax planning, sales and use tax
Buying or selling an aircraft is one of the most common situations where Michigan owners get hit with a tax bill they did not see coming. The numbers can be substantial, and the rules are not the same as the ones you are used to from buying a car or a boat. The good news is that most of the surprises are avoidable when the planning is done before the purchase, not after.
The two taxes most owners ask about are Michigan sales tax and Michigan use tax. Sales tax generally applies when you buy an aircraft from a Michigan dealer. Use tax is the one that catches people: it can apply when you buy out of state and bring the aircraft into Michigan, or when an aircraft is hangared, based, or used here over time. Whether either tax actually applies in your situation depends on how the deal is structured, where the aircraft is delivered, where it will be based, and how it will be used.
- Pre-purchase tax planning. Reviewing how the deal is structured, where it closes, and where the aircraft will be based, before any contracts are signed.
- Ownership structure. Whether direct ownership, an LLC, or a leasing arrangement makes the most sense for your tax, liability, and estate goals.
- Use tax exposure. Understanding when Michigan use tax can apply to an aircraft purchased out of state, and what is required to support a different result.
- Multi-state and nexus issues. Many aircraft owners spend time in more than one state. We help you think through where tax can be triggered and what records actually matter.
- Estate and succession planning. Aircraft are high-value assets that often need their own treatment within the broader estate plan, including business use, partial ownership, and beneficiary planning.
- State audits and notices. If the State of Michigan has already sent a notice, response options narrow quickly. Getting counsel involved early almost always produces a better outcome.
This is one of those areas where a one-hour conversation before the deal closes is worth far more than the bill that arrives months later. If you are thinking about a purchase, a sale, or a change in how an aircraft is held, talk to us before you sign.
Advanced trust strategies for larger estates
For families whose estates are approaching or above the federal exemption, there are several trust structures that can move significant wealth to the next generation while keeping the IRS happy. You may have heard the names. Each one has tradeoffs in flexibility, control, and timing, and none of them are right for every client.
- Irrevocable Life Insurance Trust (ILIT). Used to keep a life insurance payout out of the taxable estate so more of it goes to your family.
- Grantor Retained Annuity Trust (GRAT). A way to pass future growth on appreciating assets to your beneficiaries with little or no use of your lifetime exemption.
- Spousal Lifetime Access Trust (SLAT). Lets one spouse make use of their lifetime exemption while keeping the family's indirect access to the assets through the other spouse.
- Charitable trusts and donor-advised funds. Align giving you already plan to do with meaningful tax efficiency.
- Dynasty trusts. Designed to keep wealth in the family across multiple generations without a fresh tax bill at every level.
- Annual gifting programs. Done consistently across years and family members, simple gifting can transfer more wealth than most advanced techniques.
We will only suggest one of these if it actually moves the needle for your situation. If a simpler plan does the job, that is what we recommend.
When the IRS gets involved
If you have received a letter from the IRS, the most important thing to know is that the clock is already running. Whether it is a notice about a return, an audit on an estate or business, or a collections matter, deadlines pass quickly and options narrow with them.
We represent clients on tax matters that connect to our practice, including estates and trusts, gifts, and businesses. The most consistent finding across the cases we take over from somewhere else is the same: the situation got harder because someone waited. Engaging counsel early almost always produces a better outcome.
If your matter is something we are not the right fit for, we will tell you and refer you to a colleague who is.
Working alongside your CPA
We work with your CPA, not in place of one. Your accountant is the right person for preparing returns and reporting what has already happened. We design the structure that determines what those returns look like, and attorney-client privilege protects sensitive planning conversations in a way the accountant relationship generally does not.
On most engagements, we ask your CPA to join at least one working session, so the plan we deliver is one they can carry out, file, and stand behind. The two roles complement each other, and the result for you is a plan that holds up across all the people advising you.
A direct review of your situation, an honest answer about whether planning right now will save you meaningful money, and (if it will) a written quote within one business day. Most planning work is flat-fee. Contested matters are scoped transparently before we begin.
Frequently asked questions
Does Michigan have an estate tax or inheritance tax?
No. Michigan does not have a state estate tax or an inheritance tax. The federal estate tax can still apply for larger estates, and Michigan residents who own property in other states may face tax in those states. We help families plan around the whole picture, not just the Michigan piece.
When does someone need a tax attorney?
The most common situations: a family whose net worth is approaching or above the federal estate tax exemption, a business owner thinking about a future sale or succession, significant gifting to children or grandchildren, an estate that will require careful planning to avoid unnecessary tax, or a letter from the IRS. If any of those describe you, an early conversation usually pays for itself many times over.
Should I give assets to my children now or leave them in my estate?
It depends on the asset and your situation. Giving away assets during your lifetime can remove future growth from your estate, but the recipient inherits your original cost. Assets passed at death generally get a fresh tax basis, which can wipe out decades of built-in gains. Cash is usually a better gift than highly appreciated stock or real estate.
What is the step-up in basis at death?
When you pass an asset to your heirs at death, its tax cost is generally reset to its current value. That can eliminate decades of capital gains that built up during your lifetime. It is one of the most powerful features of the tax code and a major reason why holding appreciated assets until death is often better than giving them away during life.
Do I need a tax attorney if I already have a CPA?
Often yes, on the planning side. Your CPA is the right person for preparing returns and reporting what has already happened. A tax attorney designs the structure that shapes those returns: trusts, entities, gifting plans, and business decisions. Attorney-client privilege also protects sensitive planning conversations. We work alongside your CPA, not in place of one.
What kinds of trusts can help reduce taxes?
There are several trust structures that can help families with larger estates pass more wealth to the next generation, including GRATs, SLATs, and ILITs. Each has different rules and tradeoffs around flexibility, control, and timing. None of them are right for every client. We walk you through the options in plain English and only recommend one when it actually helps.
Can you help with an IRS letter or dispute?
Yes, on tax matters connected to estates, trusts, businesses, and gifts. If you have received a letter from the IRS, getting counsel involved early almost always produces a better outcome than waiting. If your matter is something we are not the right fit for, we will tell you and point you to someone who is.
Do I owe Michigan use tax if I buy an aircraft out of state?
Often yes, depending on how the deal is structured, where the aircraft is delivered, and where it will be based and used. Michigan use tax can apply to aircraft purchased out of state and brought into Michigan, even when no sales tax was charged at purchase. Whether it actually applies in your situation, and what records support a different result, is exactly the kind of question to work through before the purchase closes, not after a notice arrives.
Ready to talk through a tax issue?
Whether you are planning ahead, restructuring a business, weighing a large gift, or dealing with the IRS, the first step is a consultation. You leave with clear answers and no pressure either way.