Choosing the Right Tax Year for Trusts and Estates Can Make a Difference

One unique aspect of Fiduciary Income Tax Returns is the ability to choose between a calendar year or a fiscal year for tax reporting. While this decision may seem purely administrative, it can have meaningful tax and timing implications for trusts, estates, and beneficiaries.

A calendar year runs from January 1 through December 31 and is typically due April 15 of the following year. A fiscal year—often used for estates—ends on the last day of the month before the decedent’s date of death and is due four and a half months after the close of that fiscal year.

 

For example, if a decedent passes away on March 26, the estate’s first fiscal year may run through February 28 of the following year, with a June filing deadline. This structure can allow for income deferral and more strategic planning around distributions.

 

Selecting the correct reporting period should be done carefully and in coordination with legal and tax advisors. As part of a comprehensive approach to estate planning in Ann Arbor, this decision can help fiduciaries manage cash flow, reduce overall tax exposure, and maintain compliance with IRS rules.

👉 Learn how tax planning fits into effective trust and estate administration.

 

***This is not to be construed as tax advice.  Attorneys are PSED Law do not practice tax law.  Please see the advice of a CPA for professional advice.

Fiduciary Income Tax Returns: What Trustees and Personal Representatives Need to Know

Administering a trust or estate comes with a long list of responsibilities, and one of the most commonly misunderstood is the requirement to file a Fiduciary Income Tax Return. While many fiduciaries focus on asset distribution and honoring the decedent’s wishes, tax compliance plays a critical role in protecting both the estate and its beneficiaries.

A Fiduciary Income Tax Return is filed using IRS Form 1041 and reports income earned by a trust or estate after the decedent’s death. Trusts and estates are treated as separate tax entities, meaning they may be required to file even when the decedent no longer has individual filing obligations.

 

A return must be filed if the trust or estate earns $600 or more in gross income during the tax year or if any beneficiary is a nonresident alien. Income commonly reported includes interest, dividends, capital gains, business income, and distributions from retirement accounts.

 

For families navigating estate planning in Ann Arbor, understanding these requirements early can help avoid penalties, missed deadlines, and unnecessary complications during administration. Working with experienced estate planning counsel ensures fiduciaries meet their obligations while keeping the broader goals of the estate in focus.

 

👉 Read more about fiduciary filing obligations and trust administration here.

 

***This is not to be construed as tax advice.  Attorneys are PSED Law do not practice tax law.  Please see the advice of a CPA for professional advice.

Dividing a Business in Divorce: What an Ann Arbor Divorce Attorney Wants You to Know

When a divorce involves a closely held business, professional practice, or other significant enterprise, property division becomes especially complex. In Michigan, a business owned or developed during the marriage is often considered marital property, at least in part.

Courts are generally reluctant to force divorced spouses to continue operating a business together, recognizing that such arrangements are rarely practical. Before a business can be divided, however, it must be properly valued—often with the assistance of financial experts.

Judges consider ownership interests, control, and each spouse’s direct and indirect contributions. One spouse may have invested capital or managed daily operations, while the other provided indirect support by maintaining the household or caring for children. Michigan courts recognize that both forms of contribution can be critical to a business’s success.

Courts also assess whether a particular division would undermine the business’s viability. If an equal split would jeopardize continued operations, a more practical and equitable solution may be ordered.

Working with an experienced Ann Arbor divorce attorney is essential in these cases. We help clients identify, value, and protect business interests while advocating for fair and sustainable outcomes in high-asset divorce matters. Contact us today to schedule your initial consultation.

Who Gets What in a Michigan Divorce? Guidance from an Ann Arbor Divorce Attorney

Dividing property during a divorce is often straightforward when a couple has limited shared assets and maintains separate finances. As wealth grows, however—particularly through real estate, investments, or business interests—property division can become far more complex and contentious.

Michigan law requires courts to divide marital property equitably, not necessarily equally. While a 50/50 split is common, equity allows judges flexibility to reach a fair result based on the specific facts of each case. This distinction is especially important when one spouse owns or controls higher-value assets.

When spouses cannot agree on how to divide property, the circuit court evaluates evidence and testimony and considers factors such as the length of the marriage, each spouse’s contribution to the marital estate, earning capacity, health, financial needs, and overall fairness. Courts may also examine whether one spouse sacrificed career or educational opportunities to support the household or the other spouse’s professional success.

An experienced Ann Arbor divorce attorney can help present these factors clearly and persuasively to protect a client’s financial future. Our attorneys work closely with clients to pursue equitable outcomes through negotiation or litigation, depending on what best serves their long-term interests. Contact us today to schedule your initial consultation!

Simple Steps to Prevent Estranged Relatives from Inheriting Your Assets

Even with a carefully drafted will or trust, outdated paperwork can cause major problems. Many accounts—such as life insurance policies, retirement plans, and payable-on-death accounts—transfer directly to the listed beneficiary. That means if an estranged family member remains on an old designation, they may inherit those funds regardless of what your will says.

Other tools, like no-contest clauses, can help discourage legal challenges by stating that anyone who disputes your estate plan will forfeit what they would have received. Documenting your decisions and choosing a capable, neutral personal representative or trustee also strengthens your plan and minimizes future conflicts.

 

Regular updates are essential. Reviewing your estate plan every few years—or after major life events—ensures that estranged relatives stay excluded and that all documents reflect your current wishes. 

 

Read more on our website!

 

If you want to prevent the wrong people from inheriting your estate, our experienced team can help. We offer thoughtful, strategic guidance for your estate plan in Washtenaw County tailored to your personal and family circumstances.

Keeping Estranged Family Members Out of Your Estate Plan: What You Need to Know

If you’re estranged from a family member, you probably don’t want them inheriting your property—yet without the right estate planning documents, Michigan law may give them exactly that. When someone passes away without a will, intestacy laws determine who inherits, and the court will not consider personal relationships or family conflicts.

To prevent unintended inheritances, the first step is creating a legally valid will that clearly names your beneficiaries—and just as importantly, clearly excludes anyone you don’t want to inherit. Adding a disinheritance clause and ensuring proper execution can further protect your wishes.

 

A revocable living trust is another powerful tool. Because trusts avoid probate and remain private, they reduce opportunities for disputes and challenges, especially from estranged relatives. Trusts also allow you to outline exactly who inherits and under what conditions.

 

Read more on our website!

 

These decisions can feel overwhelming, but you don’t have to navigate them alone. Our attorneys provide strategic, compassionate guidance for your estate plan in Washtenaw County to help you protect your legacy and ensure it reflects your wishes—not Michigan’s default rules.

Green Card Requirements: What Lawful Permanent Residents Need to Know

Many lawful permanent residents (LPRs) don’t realize that failing to carry their green card can lead to a federal misdemeanor charge — even if it’s just an honest mistake. U.S. immigration law (8 U.S.C. §1304(e)) requires all LPRs age 18 and older to keep their green card in their possession at all times.

USCIS notifies green card holders of this rule, but over time, it’s easy to forget. As U.S. ICE enforcement efforts rise, being unprepared could cause avoidable complications. The best approach is to carry your original card and keep a photo of both sides stored securely on your phone for backup.

If your card has expired or gone missing, you can apply for a replacement using Form I-90 on the USCIS website. Filing online provides an instant receipt you can carry while you wait for your new card.

Read the full article on our website!

 

For help replacing your card or understanding your obligations as a lawful permanent resident, contact a trusted immigration attorney in Ann Arbor. Our firm can assist with applications, renewals, and compliance so you can maintain your legal status with confidence.