Scott & Huff, P.C.

1000 S. Garfield Ave.
Suite 3
Traverse City, MI 49686
(231) 933-5322

So Why All The Fuss About Probate?

By: Diane Kuhn Huff

          The purpose of this article is to take the mystery out of the probate process and, perhaps, demonstrate that probate isn’t as horrible as it’s been portrayed.  In fact, sometimes it makes good business sense.

The urban legend started under the old probate rules.  Under the old rules, probate required court hearings to start the proceeding, sell real estate, pay creditors and distribute the estate.  Both the Executor and Attorney received a percentage of the estate as a fee. 

            In 1979 the probate laws changed to allow unsupervised probate.  The Personal Representative (formerly called the Executor) can now administer, distribute and close the estate without supervision, and sometimes without any court hearings.  Attorneys and Personal Representatives can no longer charge a percentage of the estate. 

            The Probate process is started by filing an Application or Petition with the Court requesting the Will be admitted and a Personal Representative be appointed. If there is no Will, the process is the same.  Required information is provided by affidavit.  A copy of the documents are sent to all heirs at law and beneficiaries under the Will. 

If there are no objections, and the interested persons consent to the Petition, the court signs the Order, nominates the Personal Representative and issues Letters of Authority, all without a court hearing.  If there is an objection, the court addresses it at the hearing.  Some claims, such as requests to set aside a Will, must be set for trial.  Once the Personal Representative is appointed, he or she can go about the business of wrapping up the deceased’s affairs without any court supervision. 

           The Personal Representative is required to file a “Notice to Creditors” in the newspaper where the deceased lived.  This Notice advises that all creditors of the estate must file their claim within 4 months of the Notice or lose their right to collect what is owed.  For example, suppose the deceased borrowed $10,000 from neighbor Joe, signed a promissory note and owed on the note when he died.  If no Notice to Creditors is filed, neighbor Joe has 6 years to sue for payment under the promissory note.   After the Notice to Creditors is published neighbor Joe has only 4 months to request the money.  If he fails to request payment within the 4 months, the estate does not have to honor the promissory note.  This may sound unfair to neighbor Joe, but the purpose of the Notice to Creditors is to limit the time bills can be requested so that the estate can be wrapped up in a timely manner and, the beneficiaries can receive their property free and clear of any old debts. 

Within 91 days after the court issues the Letters of Authority, the Personal Representative must submit the Inventory to the court and send a copy to the interested persons.  The Inventory lists all assets the decedent owned in his or her name alone. 

            If there is surviving spouse, the Personal Representative must send a notice to the spouse of his or her rights, elections and allowances.  A surviving spouse has certain rights that take priority over all devisees and over some creditors. 

            After the 4 month creditor’s claim period ends, the Personal Representative pays the bills, spousal elections and allowances. The Personal Representative can then distribute the estate.  If there is a Will, the named devisees receive their share.  If there is no Will, Michigan statute dictates who receives the property.

            Lastly, the Personal Representative prepares a final accounting.  The final accounting itemizes all receipts into the estate, such as dividends, interest, rent, and refunds.  The final accounting also itemizes all disbursements from the estates, such as bills, funeral expenses, expenses of last illness, spousal elections, and distributions to the devisees.  The final accounting also lists items sold and the selling price.  The Personal Representative signs a Sworn Statement advising the Court and beneficiaries that all creditors have been paid, there are no outstanding claims, and the estate has been distributed. The final accounting and Sworn Statement is sent to all beneficiaries of the estate and unpaid creditors.  The interested parties have 28 days to object.  If there is no objection, the Court will issue a Certificate of Completion and the estate is closed.

           The earliest the estate can close is approximately 6 months from filing the Petition or Application to open the probate estate.  The longest delay is waiting out the 4 month notice to creditors.  However, the 4 month claims notice adds such value to finalizing all debts of the deceased that it is well worth the wait.   Most delays have nothing to do with probate, but are delays due to type of asset held or objections from interested parties and heirs.  For example, there may be problems with the real estate.  The disinherited heirs may claim undue influence by the person inheriting the property.  Anything can happen when people and money mix.  These same delays can occur in a trust estate or an estate that transfers to joint owners.

The essential difference between a Probate estate and estates that transfer outside of Probate is the notice requirements.  Some notices, such as providing a copy of the Will, the notice to creditors, inventory, and accounting, are also required or highly recommended for trusts.  Notices serve the dual purpose of keeping the Personal Representative honest, and keeping the beneficiaries informed. Fewer objections and resentments arise when all parties are fully informed. 

Of course there is a cost for Probate.  The filing fee is $150.00 and there is an inventory fee based on the size of the estate.  Also, you may also have professional fees if an attorney is assisting in the estate.  A firm that handles probate estates in a regular basis usually has an efficient system to handle estates which keeps costs down.

So, does this mean that a Will is the preferred method of transferring property at death.  Not necessarily.  There is no perfect plan for every situation.  A qualified estate planning attorney will discuss the pros and cons of each method with the client and make a decision that bests meets the client’s situation and objectives.

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