The function of probate is to supervise the transfer of the decedent’s property to his or her heirs. For a relatively simple estate, the probate process takes approximately one year (see example below). When disputes arise, as is often the case, probate can be substantially more expensive and protracted.

Probate is a relatively expensive undertaking, primarily because it involves numerous filings with the probate court over an extended period of time. Probate is a creation of the Michigan legislature and is currently governed by a set of rules known as the “Revised Probate Code” (“RPC”).

The RPC is specifically designed to administer estates in a formal and deliberate manner.
The RPC prescribes waiting periods for:

1. the appointment of the person or persons who will administer the probate estate (the “Personal Representative” or “PR”);
2. notification to all heirs of the decedent; and
3. notification to all of the decedent’s creditors. Heirs and creditors are notified of the commencement of the probate proceeding to allow them an opportunity (within the statutorily prescribed time frame) to assert any claim they may have against the estate.

The Michigan legislature did not have a sinister intent in drafting the RPC. Rather, the waiting periods and filing requirements are designed to protect the decedent’s rightful heirs and legitimate creditors.

Time is allowed for “interested parties” to object to the appointment of the PR, to locate and file the decedent’s most recent Will, to notify and allow interested parties to step forward and object to division of the decedent’s assets, and even to claim that the decedent was not competent or was under duress at the time of the execution of his or her Will.

The underlying philosophy behind the filing requirements and waiting periods is that with time comes the truth. Unfortunately, since attorneys tend to bill by the hour, the effect of numerous court filings and waiting periods is increased attorney fees. Contrary to popular belief, the bulk of the cost of probate is attributable to attorney fees, not court costs.

Once appointed, the PR must give all of the decedent’s heirs and creditors (“interested parties”) notice of his or her appointment. Interested parties may object to the PR’s appointment and seek the appointment of another PR. Throughout the probate process, interested parties must be regularly advised of the PR’s actions. Naturally, all of the required notice and reporting requirements equate to more delay and attorney fees.

Soon after appointment, the PR must publish notice of the decedent’s death in a legal newspaper. The newspaper notice is for the benefit of creditors of the estate and marks the beginning of the “publication period.” A good part of the delay in probate results from the four-month publication period during which creditors of the decedent may make claims against the estate. At the expiration of the publication period, creditors are barred from asserting their claims.

Probate provides a cutoff date for claims against the estate. Absent probate, creditors would be able to assert claims for up to six years after the death of the decedent (the statute of limitations on contract actions). The Estates and Protected Individuals Code (“EPIC”) (effective April 1, 2000) creates a similar notice procedure for assets held in trust. Under the new EPIC procedure, the trustee may “register” a trust with the probate court. The new notice procedure has the effect of shortening the current six year statute of limitations on creditor’s claims against a trust to only four months.

Probate may be advantageous in estates where a family fight is expected. In such cases, the probate court will be the final adjudicator of disputes, and will act to preserve the assets of the estate. Where disputes are anticipated, “supervised” probate should be elected. “Independent” probate should be elected where there is relative harmony in the family, and where no problem creditors are lurking.

SUPERVISED PROBATE

In supervised probate, all actions of the PR must be approved by the court. Court approval requires appearances before the judge, and therefore more attorney involvement. Despite the added costs, PRs often choose supervised probate over independent probate in order to insulate themselves from disgruntled heirs. Since the PR’s actions are sanctioned by the court, heirs who are unhappy with a particular action of the PR (e.g. sale of decedent’s residence for a particular price or sale of an asset to one heir over another) will not be able to challenge the PR later.

INDEPENDENT PROBATE

Independent probate is a less formal probate procedure, “free of judicial intervention and without order, approval, or other action of the court.” Independent probate allows a quick and relatively private means of settling an estate. As with supervised probate, the first step in an independent probate estate is to appoint the PR.56 While the independent PR is not required to obtain a court order to perform specific duties such as selling real estate, continue a business, or assign the residue of the estate, the PR can utilize all the procedures available in supervised administration if the PR desires.

SMALL ESTATES

Probate estates with total real and personal property valued at $15,000 or less may be eligible for a quick probate procedure.57 In Michigan, a Petition and Order for Assignment, Estate Not Exceeding $15,000 is filed. The law requires the assignment of the estate to the person who paid the funeral or burial expenses to the extent of the payment, with the balance going to the surviving spouse or, if there is no spouse, to the decedent’s heirs.

Personal Representatives have three basic duties:

1. to collect, preserve and value estate assets;
2. to pay debts, taxes, and administration expenses; and
3. to distribute the estate to the appropriate persons.

The duration and the cost of administering a probate estate will depend on a number of factors including the number of heirs and the size and diversity of the estate’s assets. Lack of cooperation from the heirs or disputes among them can substantially prolong the estate administration process.

Ancillary probate in another state may be necessary if a decedent who resided in Michigan also owned real property in another state. In such cases, an ancillary probate proceeding in the state where the real estate is located would be necessary to obtain clear title to the real estate. For this reason, individuals with real estate in other states are strongly urged to transfer ownership of such real estate to a Revocable Living Trust.

The following time line identifies the more important dates in the administration of a “typical” independent probate estate. As indicated, the probate process generally takes one year to complete. Keep in mind that supervised probate takes even longer, because it involves court appearances which must be scheduled and attended by interested parties.

Example Time Line

1/1/99 Date of death

1/31/99 Letters of Authority are issued by the probate court appointing PR

2/10/99 Notice of Appointment as PR and other documents must be sent to interested parties within 10 days after appointment.

2/20/99 Date on which PR publishes notice to creditors of decedent’s death and of time frame in which to file claims. Four (4) month publication period begins.

4/30/99 90 days after appointment of PR, PR must send copy of estate inventory to interested parties.

6/20/99 4 months after notice to creditors is published, creditors’ claims are now barred and PR may proceed to pay claims allowed against estate.

6/30/99 5 months after the PR is appointed is the earliest date the estate may be closed.

7/1/99 6 months after the date of death is generally when the decedent’s assets may valued for federal estate tax purposes (“Alternate Valuation Date”).

10/1/99 9 months after the date of death is the deadline to file federal and state estate tax returns and to pay any tax due.

11/15/99 Date on which PR sends verified closing statement to interested parties.

11/15/99 Date on which PR has completed the transfer of decedent’s assets to interested parties.

11/15/99 Date on which PR filed closing statement and proof of service upon interested parties with court.

12/15/99 30 days after the closing statement is filed is the deadline for any interested parties to object to it; if no objection is filed, the PR is entitled to receive a certificate that he/she appears to have fully administered the estate.

4/15/00 Decedent’s federal income tax return is due and estate’s federal income tax return is due.