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Revenue Administrative Bulletin 1989-42

Revenue Administrative Bulletin 1989-42

INHERITANCE TAX – NOTICE REQUIREMENTS FOR RELEASING HOLDERS FROM TAX LIABILITY WHEN THEY DELIVER OR SURRENDER A DECEDENT’S PROPERTY

Approved: May 5, 1989

RAB-89-42. This Revenue Administrative Bulletin explains the notice requirements for transfers of assets owned by a decedent when the decedent was a resident of Michigan at the time of death.

Anyone having custody of assets which were owned at death by a resident decedent, who makes payment, delivers, or surrenders the assets to another, shall be liable for the Michigan inheritance tax, interest and penalty due on the estate of the resident decedent unless the holder either: (1) serves upon the Department of Treasury proper notice of the transfer, or (2) receives from the Department a waiver of the notice and 15-day waiting period.

Proper Notice

Notice is proper if it is: (1) served upon the Department by registered mail or personal service at least 15 days prior to the intended transfer and (2) contains all information requested on Michigan Department of Treasury form C-6507. (See Notice of Transfer, on the next page of this Bulletin.)

Automatic Waivers

Revenue Administrative Bulletin 1989-43 lists the automatic waivers issued by the Department. Some of the waivers in Revenue Administrative Bulletin 1989-43 waive both the notice and 15-day waiting period. Others waive only the 15-day waiting period. Notice is still required.

Transfers Which Must Be Reported to the Department of Treasury

The following is a partial list of transfers which must be reported to the Department under MCL 205.209-.209f. Unless a waiver has been secured, failure to serve the Department with notice of the transfer shall subject the holder of the assets to liability under MCL 205.209c, for the Michigan inheritance tax, interest, and penalty due of the estate of the decedent.

  1. Transfers of proceeds of a profit sharing trust, pension, or retirement trust.
  2. Paid-up life insurance policies.
  3. Endowments
  4. Annuities
  5. Assets in which the decedent has power of appointment or which become payable by reason of death, or in which the decedent has retained a life estate.  
  6. Pensions
  7. Mature life insurance left on deposit.
  8. Savings or share accounts.
  9. Checking accounts
  10. Individual retirement accounts
  11. “In-trust-for” accounts
  12. Deferred compensation accounts
  13. Accounts made join within two years of death
  14. Transfers occurring withing two years of date of death
  15. Any other asset in which the decedent has an interest

Catchall

The above list is not all inclusive. It is provided to assist asset holders in recognizing transfers subject to the notice requirements of MCL 205.209-.209f. All transfers of assets owned at death by a resident decedent must be reported to the Departments. Any transfers excepted in the text of MCL 205.209 are included in the catchall notice requirements of MCL 205.209e. As such, unless a waiver is obtained from the Department of Treasury, the party transferring the asset will be liable for tax, interest and penalty due on the estate of the decedent.

Notice of Transfer

The following information must be provided when giving notice of transfer:

  1. Name and address of the holder/requestor, AND
  2. Name and address of the decedent, date of death, county of probate, probate file number (if known), whether the decedent was a Michigan resident at death, AND
  3. Name and address of the payee/requestor, relationship of payee/requestor to the decedent, the capacity in which the payee is receiving the assets (as personal representative or as beneficiary), AND
  4. Number used by the transferor to identify the account or asset, value or amount of asset at date of death and, if reporting assets made join within two years of death, date made join, with whom made joint, AND
  5. Whether the assets are contained in a safe deposit box or compartment and, if so, box number, location and that the letters of authority were verified, AND
  6. Signature and title of holder/requestor, date of signature, phone number of signer.

Effect of Complying with Notice Requirements

Compliance with the notice requirements contained in MCL 205.209-.209f has the sole effect of releasing the holder from liability for Michigan inheritance tax, interest, and penalty due on the estate of the decedent. [MCL 205.209c] When the Department approves a transfer of assets, the approval does not confer a right to receive the assets, nor does the approval affect the holder’s liability to rightful owners or possessors, for improperly transferring assets to parties not entitled to receive those assets.