Probate
What is Probate?
Probate is the court-supervised process of settling a deceased person’s estate. The word “probate” can also refer to the act of proving a will, but it generally refers to the process by which an estate is administered after death. The probate process generally consists of nominating a personal representative, notifying heirs and creditors of the decedent’s demise, taking an inventory of the decedent’s property, and then distributing the estate to the devisees, heirs and creditors.
Where does probate happen?
Pursuant to MCL 700.1302, the Probate Court has exclusive legal and equitable jurisdiction to any matter related to the settlement of a decedent’s estate, whether testate or intestate. The Probate Court also has jurisdiction to handle guardianships, conservatorships and mental commitment proceedings. Every Michigan county has a Probate Court with the exception of ten counties that have consolidated to form five Probate Courts districts. Every probate court district and the remaining Michigan counties have at least one probate judge each elected to six year terms.
The Monroe County Probate Court is served by two judges, the Honorable Frank L. Arnold and the Honorable Cheryl E. Lohmeyer. Judge Arnold was appointed to his position by the governor in 2010 and retained in the general election in 2012, having replaced retiring Judge Pamela Moskwa. Judge Lohmeyer was appointed to her position by the governor in 2014, having replace Judge John Hohman who was elevated to the position of State Court Administrator the previous year.
Do all of my assets have to pass through probate when I die?
Not everything. Assets that don’t go through a will or intestate succession include:
- Property transferred to a living trust
- Life insurance benefits
- Funds in a 401(k), individual retirement account or any other retirement account that has names beneficiaries
- Funds held in a transfer-on-death account
- Payable-on-death bank accounts
- Property owned with someone else in a joint tenancy or tenancy by the entirety
- Property transferred by way of an Enhanced Life Estate Deed, better known as a “Lady Bird” Deed.
Under certain circumstances, the following property of the decedent may also avoid probate:
- Unpaid wages – an employer in Michigan may pay decedent employee’s wages to the spouse, children, parents or siblings in that order unless employee filed a request with the employer to the contrary.
- Clothing and cash up to $500 – may be delivered to a decedent’s spouse, child or parent showing identification and an affidavit indicating relationship to decedent and there are no pending probate proceedings if property is held by a hospital, nursing home, morgue or law enforcement agency.
- Motor vehicles and watercraft – If combined value of vehicles does not exceed $60,000 and combined value of watercraft does not exceed $100,000, title may be transferred by the Michigan Secretary of State to next to kin upon submitting a death certificate, an affidavit of kinship and a certificate of title for the vehicles or watercraft.
What is a Personal Representative?
Often called an “executor” in other jurisdictions, the personal representative is an individual named in the will and/or appointed by the court to take charge of the estate. The personal representative is empowered to act once it receives a document called “Letters of Authority for Personal Representative” from the probate court. Until receiving such authority, the personal representative has no power to act even if explicitly named in the will.
The duties and responsibilities of the personal representative upon receiving authority include:
- Recording all estate transactions
- Collecting rent, interest and other income from properties or businesses owned by the estate
- Determine all benefits payable to the estate and its beneficiaries such as life insurance, pension and pension
- Give notice to devisees and heirs of the administration of the estate
- Give notice to creditors of the estate to file their claims
- Obtain possession of all known assets of the estate
- Determine the value of the assets of the estate, up to and including hiring accountants or appraisers to determine value for the purposes of tax liability, distributions and inventory fees
- Meet obligations of filing and paying estate taxes, claims, administrative expenses, distributions and allowances
- Prepare and distribute annual accountings to the estate’s beneficiaries
- Follow all other legal requirements with respect to the sale and distribution of assets and the payments of claims, allowances and fees.
The personal representative is entitled to employ the assistance of attorneys, accountants, appraisers and other professionals that can assist in the administration of the estate. The personal representative is also entitled to receive reasonable fees from the estate for the execution of their duties.
The extent of the personal representative’s unilateral authority may depend on whether the estate is subject to supervised administration or unsupervised administration. Under a supervised regime, the probate court would have to approve all payments and distributions before the personal representative can take action. The personal representative will also have to undertake final accountings to close the estate once all of the claims and distributions are paid.
The personal representative can also be removed from their position by proceedings initiated by an interested party or the probate court if he or she is delinquent in performing their duties. The personal representative has all the duties and responsibilities of any fiduciary in the State of Michigan and may personally be liable for losses caused by his or her malfeasance or incompetence in office.
Who can be the Personal Representative?
Pursuant to MCL 700.3203, persons who are not otherwise disqualified have priority for appointment as personal representative in the following order:
1. Person nominated by a power conferred in a will
2. Decedent’s surviving spouse if spouse is a devisee
3. Other devisees of the decedent
4. Decedent’s surviving spouse if spouse is NOT a devisee
5. Other heirs of the decedent
6. Nominee of a creditor (if more than 42 days after decedent’s death)
7. State or county public administrator (if more than 42 days after decedent’s death, decedent had no known heirs and there are no heirs or devisees under a will)
A devisee is a person named in the will to inherit. An heir is a person that may have an entitlement to inherit by virtue of Michigan’s Intestate Succession laws such as a spouse, child or parent. Heirs may not necessarily be devisees if there is no will or an heir is not named as a devisee in a will.
As mentioned above, a person does not have the authority to act as a personal representative until they are conferred with Letters of Authority from the probate court. Pursuant to MCL 700.3310, an applicant to become a personal representative must give notice to each person having a prior or equal right to appointment that has not waived the right.
If the probate court denies an applicant’s appointment to become personal representative, there is no appeal. In this situation, the applicant would have to begin probate proceedings by way of formal supervised administration.
What are my Options in Filing Probate?
1. Informal Unsupervised Administration – Allows the personal representative to act independently without court intervention unless such intervention is requested by the personal representative, beneficiary, heir, unpaid creditor or some other interested person. This is the preferred norm in administrating estates.
2. Formal Supervised Administration – Require the probate court’s review and approval in estate administration such as sale of real estate, payment of personal representative and attorney fees, review of personal representative’s receipts and disbursements, and prior approval of distributions to heirs and devisees. While more expensive than unsupervised administration, it provides more protection to the personal representative and interested persons.
3. Small Estate – Michigan law provides for a simplified procedure for estates that have a gross value of $21,000 after funeral and burial expenses. Pursuant to MCL 600.871, if there is real property included in the small estate is encumbered by a lien for indebtedness, the amount of the indebtedness shall be deducted from the value of real property. For example, if there is personal property worth $20,000, a parcel of real estate worth $50,000 and a mortgage on the property worth $60,000, the $10,000 of indebtedness on the real property doesn’t offset the value of the other property and the estate is worth $20,000. Upon filing of the Petition and Order for Asssignment, $25.00 filing fee, paying the inventory fee and showing evidence satisfactory to the Court of the payment of the decedent’s funeral and burial costs, the court may order the property be turned over to surviving spouse or heirs.
4. Estates under $15,000 – Pursuant to MCL 700.3983, an estate this size with no real property may be resolved without probate by way of the decedent’s successor presenting a sworn statement to a person or entity (such as a bank) possessing the decedent’s personal property. To use, at least 28 days must lapse from the decedent’s death and an application or petition for appointment for a personal representative is not pending in any other jurisdiction.
An attorney can help advise you in which kind of probate might be appropriate under the circumstances, if any.
What is the Inventory Fee?
Pursuant to MCL 600.871, in all estates in which proceedings are undertaken for probate, the probate court shall charge a fee as an expense of administration on the value of all the assets in the estate. Fees are as follows:
- In an estate of value of less than $1000.00, $5.00 plus 1% of the amount over $500.00.
- In an estate of value of $1000.00 or more, but less than $3000.00, $25.00.
- In an estate of value of $3000.00 or more, but less than $10,000.00 $25.00 plus 5/8 of 1% of the amount over $3000.00.
- In an estate of value of $10,000.00 or more, but less than $25,000.00, $68.75 plus 1/2 of 1% of the amount over $10,000.00.
- In an estate of value of $25,000.00 or more, but less than $50,000.00, $143.75 plus 3/8 of 1% of the amount over $25,000.00.
- In an estate of value of $50,000.00 or more, but less than $100,000.00, $237.50 plus 1/4 of 1% of the amount over $50,000.00.
- In an estate of value of $100,000.00 or more, but less than $500,000.00, $362.50 plus 1/8 of 1% of the amount over $100,000.00.
- For each additional $100,000.00 value, or larger fraction thereof, over $500,000.00, $62.50.
- For each additional $100,000.00 value, or larger fraction thereof, over $1,000,000.00, $31.25
Inventory fees are due and payable to the probate court on or before the closing of the estate or within one year after the commencement of probate proceedings, whatever occurs first. A final accounting won’t be accepted by the probate court until the fees are paid in full and shown on the final accounting.
Do I Need An Attorney for Probate?
While it is possible for a personal representative to manage an estate without an attorney, it should be noted that the position of personal representative is one of significant duties and responsibilities that should not be taken lightly. An attorney can advise and guide you through the probate process to ensure both compliance with the law and the fair and efficient administration of a loved one’s estate.
The assistance of an attorney is not only limited to assisting the personal representative. If you are an heir, devisee or creditor to an estate and are dissatisfied with the performance of the current personal representative, an attorney can help protect your rights. Contact our office for a low cost consultation regarding your probate matter today.
