For many Michigan residents and others around the country, “probate” can be a frightening word. Often times, it brings to mind complex court processes that set family members at odds with one another as everyone battles it out to grab a piece of a loved one’s estate. It is only natural that some imagine the probate process to be a chaotic free-for-all, since that is often the impression given in various movie and television shows where wills are contested, scheming relatives try to cheat heirs out of their inheritance, and assorted other shenanigans occur with regularity. In reality, probate is dramatically different than what is typically portrayed in the entertainment media. To understand just how different, it is important to have at least some insight into what Michigan’s probate process really is, and how it works.
Why Probate is Needed
Probate is, after all, a necessary process in a world where the death of any individual mandates the proper and legal settling of the decedent’s estate. Contrary to what some may believe, probate is there to protect the interests of the deceased in seeing that his or her last wishes are faithfully followed or – in the event that there was no will – that heirs receive their inheritance in accordance with the state’s laws governing intestacy. It is also a necessary process to ensure that any debts and taxes owed by the deceased are paid, to protect the rights of creditors.
Probate does one other thing that is vital for any civilized, functioning society: it enables this distribution and estate settling process to be conducted in an orderly fashion, supervised by a court so that fraud and manipulation of the type typically seen in those television shows and movies is minimized as much as humanly possible. Put simply, probate is essential for handling any estate that contains assets that have no other lawful means of ownership transfer to another party.
What Assets Qualify for Probate?
Probate does not apply to all assets, of course. For example, if you own any assets using joint tenancy, then those assets will pass directly to the surviving tenant when one of you dies. Assets owned by you and a spouse can be owned using tenancy by the entirety and automatically go to the surviving spouse after a death. Beneficiary designations on life insurance policies, retirement accounts, and bank accounts assigned as payable-on-death also have no need for this process. Trust assets typically avoid probate as well.
Michigan Probate Not Always Necessary
It is also important to note that even if your assets are all of the sort that might normally require probate, the process can be avoided in Michigan if the total value of your estate is less than $15,000 (as adjusted by statute) or in cases where that value can only pay for burial, medical expenses, the homestead allowance, and a few other necessary expenses. Probate can also be unnecessary if the estate’s worth is below that $15,000 (as adjusted by statute) mark and there is no real estate included. In Michigan, these assets can be claimed with an affidavit, or simply go to the spouse or other surviving heirs. There is also a provision for heirs to take ownership of vehicles up to $60,000 in total value by using a simple form.
How Probate Works
The probate process typically begins when the named executor of a will contacts the probate court to have it recognize his or her authority to serve as the decedent’s personal representative in the settling of the estate. The exception is where there is no will and the court names a personal representative to handle the affair. The court then provides something known as Letter of Authority for Personal Representative, that provide the executor with the necessary authority to take charge of the estate’s disposition.
That personal representative is charged with a number of important duties. At the start of the process, he or she must identify and gather all of the decedent’s assets, take a comprehensive inventory of them, and ensure that they are secure. Often times, an appraisal will be necessary – though that may be avoided in certain cases. Once the appraisal is accomplished, creditors must be identified so that they can make their claims for reimbursement of debts owed to them. Once claims are approved, those debts, along with any taxes owed to various government jurisdiction, must be paid using the estate’s assets.
Once those debts are paid and probate process costs like appraisal fees, attorney fees, court costs, and the administrator’s fees are taken care of, the remainder of the estate can be distributed in accordance with the provisions of the deceased’s Last Will and Testament. In cases where no will was found, those assets are distributed as required under the state’s laws for intestate estates. Once distribution is accomplished, the executor submits a report to the court and a judge formally closes the estate.
Why Worry About Probate?
On the surface, it seems as though probate is a relatively painless process that no one should even bother to try to avoid. There are some drawbacks, however, that can make probate an unwelcome process for some families. The entire process is time-consuming, and can last for months or even a year. Since creditors have a full four months to file claims, you can rest assured that most probate will last at least that long. Moreover, the court costs and other fees can significantly reduce the inheritance available for your heirs. And then there is the possibility that some family member just might decide to challenge your will based on allegations that you were either incompetent or under someone’s undue influence.
The good news is that you can avoid probate by using tried and true estate planning techniques that ensure that your wealth is preserved for your heirs and distributed without the need for court supervision. At Biddinger & Estelle, PC, our attorneys have the knowledge and experience you need to secure your assets and help you plan strategies that will enable you to leave behind a legacy worthy of the life you lived. Probate might not be the chaotic free-for-all depicted on film, but that still doesn’t mean that the probate process is right for everyone. If you’re interested in finding out whether another option might be better for your unique needs, contact us online or call us at (989) 872-5601 now.