What is probate?
Probate is the legal process by which ownership of a deceased individual’s property is transferred to someone entitled to receive it. It includes a procedure to determine and settle the debts and liabilities of the decedent.
When is it needed?
Probate is required for property and assets owned by the deceased in his or her name alone at death. Typically, it is not required for joint assets owned with another person who has survivorship rights. It also isn’t required when a living person has been named as beneficiary, or for assets transferred into trust by the owner during lifetime or by beneficiary designation upon the owner’s death.
What happens to assets that are not probated?
Ownership, or legal title, remains in the deceased person’s name and is not transferred to anyone else. This may cause the assets to be inaccessible or lost. For example, a bank is unable to release money from an account titled in the decedent’s name alone, and will eventually turn it over to the State of Michigan as unclaimed property. Real estate on which property taxes remain unpaid for three years is forfeited to the State of Michigan.
Who is entitled to receive probated assets?
If the deceased executed a Will (i.e. died “testate”) then, at the end of the probate process, estate assets are distributed to those named in the Will. If the deceased left no Will (i.e. died “intestate”), estate assets go to his or her closest relatives as specified in state law. However, under Michigan statute, a surviving spouse and/or certain children are entitled to receive “allowances” or “exempt property” ahead of those named in the Will. This even happens ahead of creditors to whom the deceased owed money.
What if the deceased’s individual assets have only small value?
Under certain circumstances, Michigan law permits transfer of assets using an Affidavit or small estate procedure, short of full probate. If potential probate assets consist only of vehicles with total value not more than $60,000 or watercraft not exceeding $100,000 in value, titles can be transferred through the Secretary of State without involving the probate court.
How much does probate cost?
Administration costs largely fall into two categories: court costs, and attorney fees. Court costs include an initial filing fee of $175, a sliding scale inventory fee paid to the probate court. The inventory fee is based on the value of the probate assets. There is also a fee to publish a Notice to Creditors, which is usually under $50. For estates of modest or average value, court costs generally total $700 or less. Attorneys typically charge on an hourly basis for probate work. Total attorney costs will depend on the hourly rate and the hours required.
What are some common myths about probate?
- It can be avoided when a person has a Will. Wills only control the disposition of that individually owned property of a deceased person that does need to be probated. The Will directs who is entitled to receive these assets after they are probated.
- A personal representative (executor) can act immediately after a decedent’s death. The Will nominates the persons who are to serve as personal representative in order of priority. A named person may accept or decline, and does not have actual authority to act on behalf of the deceased until appointed by the probate court. This may occur in informal probate as soon as initial paperwork is filed with probate court.
- Assets are frozen until probate is over. When the court appoints a personal representative, he or she has full authority to gather, manage, sell, or dispose of all estate assets. This is subject to the provisions of the Will and the requirements of Michigan law. Real estate may be auctioned or listed for sale with a realtor. An estate sale may be held for tangible personal property, while probate is in progress.
The biggest misconception about probate
- Probate takes a long time and is expensive. It generally takes 6 months to a year to complete. But things do not come to a standstill (see the previous bullet point). Determining which of the deceased’s creditors to be paid requires a published notice of the person’s death. It also includes a mailed notice to all known creditors during the 4-month period following the publication. A personal representative who makes early distribution of too many estate assets risks being held liable to estate creditors who submit timely claims against the estate. Also, the duty to file a decedent’s final income tax return, or a fiduciary income tax return for the estate, may require an estate to remain open until necessary tax documents and information become available. Most probates are conducted routinely and efficiently when an attorney guides a personal representative. It becomes lengthy and expensive when family members fight and hire attorneys to duke it out in court.
What if I have other questions?
Contact Zolton Law Offices at our Saginaw office for more information.