Preparing your Michigan estate plan in 2026: Balancing essential local tools like Lady Bird Deeds with the significant new federal tax exemption limits.
This guide provides an overview of the 2026 estate planning landscape in Michigan. Whether you are starting from scratch or updating an existing plan to account for recent tax shifts, here is what you need to know.
The 2026 Shift: What’s New?
The most significant change this year isn’t at the state level, but the federal one. The “sunset” of the 2017 Tax Cuts and Jobs Act has arrived, fundamentally altering how we approach high-value estates.
1. Federal Estate Tax Exemption
As of January 1, 2026, the federal estate and gift tax exemption has been cut significantly. While inflation adjustments have cushioned the blow slightly, the exemption is now approximately $15 million per person (down from nearly $28 million for a married couple in previous years).
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The “Portability” Rule: This remains a vital tool for Michigan couples. If the first spouse passes away without using their full exemption, the survivor can “claim” the remainder, protecting up to $30 million for the family.
2. Michigan Specifics: No State Estate Tax
Good news for the Great Lakes State: Michigan still does not have a state estate or inheritance tax. Your heirs will not owe the State of Michigan a “death tax” regardless of the estate’s size. Your primary focus should remain on federal taxes and avoiding the costs of probate.
Essential Pillars of a Michigan Estate Plan
To protect your family in 2026, a comprehensive plan should include these four components:
A. Revocable Living Trusts
Trusts remain the gold standard in Michigan for one reason: Probate avoidance. * In 2026, the Small Estate Threshold in Michigan is $53,000. If your assets (excluding real estate) exceed this amount, your family may be forced into a lengthy, public probate court process unless those assets are held in a trust.
B. The “Lady Bird” Deed (Enhanced Life Estate Deed)
Unique to states like Michigan, this is a “probate-free” way to transfer your home. It allows you to retain control of your property during your life but transfers it automatically to your beneficiaries upon death, bypassing the court and protecting the asset from Medicaid Estate Recovery.
C. Updated Powers of Attorney
Michigan recently updated its standards for the Uniform Power of Attorney Act (UPOAA). If your financial Power of Attorney was signed before 2024, it may still be valid, but it might not be “user-friendly” for modern banks.
Tip: Ensure your documents explicitly mention Digital Assets (crypto, social media, and cloud storage) to comply with Michigan’s RUFADAA laws.
D. Electronic Wills (E-Wills)
Michigan has become increasingly friendly toward digital execution. While “traditional” paper wills are still the norm, 2026 standards now allow for more robust remote notarization and, in some cases, electronic signatures, provided they meet strict audio-visual recording requirements.
2026 Quick Reference Table
| Feature | 2026 Status / Limit |
| MI State Estate Tax | $0 (None) |
| Federal Exemption | ~$15 Million per person |
| Annual Gift Exclusion | $19,000 per recipient |
| MI Small Estate Limit | $53,000 |
| Probate Necessity | Required if assets exceed small estate limit and aren’t in a Trust |
Why “Wait and See” is a Risky Strategy
With the federal exemption lower than it has been in years, more Michigan families are finding themselves “taxable.” Additionally, if you haven’t reviewed your plan since the 2024-2025 legislative updates, your “Personal Representative” (Michigan’s term for Executor) might face hurdles with outdated forms.
We Can Help ~ Michigan Estate Planning in 2026
The estate planning attorneys of the Penzien Legal Group, PLLC have been helping families and business owners with their estate planning needs for more than two decades. If you are looking for a compassionate professional that can help you through the estate planning in Michigan in 2026, conduct a review of your existing estate plan, or if you would like additional information about our services, give us a call at (586) 464-1900 or complete our contact us form. Call to set up a strategy session today.