The Probate Process
Only those assets that are held in the decedent’s individual name are subject to the probate process, so property owned jointly with others generally will not be involved in the process. Property held jointly usually passes to the survivors without having to go to probate court. Life insurance proceeds and retirement accounts for which the decedent properly named beneficiaries also are not generally involved in the probate process.
The goal of the probate process is essentially to provide a final accounting of the decedent’s assets, ensure his or her creditors are paid, and provide for an orderly distribution of the remaining balance of the estate. Through the probate process, property held in the decedent’s individual name is ultimately transferred to the heirs. If there is a will, the probate court will follow the provisions of the will in transferring the assets. If there is no will, Michigan law (assuming the decedent lived in Michigan) will apply to determine to whom the estate goes and who will handle the estate.
The probate process differs depending not only on the nature of the decedent’s assets, but also the extent and relationship he or she had with family members, whether or not there is a Last Will or Trust, and the exact terms of the estate planning documents. While the process varies from case to case, the process generally includes the following steps:
1. THE APPLICATION.
The probate process is commenced either by filing an Application or a Petition with the probate court and paying certain filing fees. If the decedent had a Will, the person he or she named as the personal representative (or “executor”) handles the paperwork. If the decedent did not have a Will, the probate court will decide who will handle his or her affairs. Starting the process “informally” with an Application is advisable in many situations, but in some cases may be a problem. Beginning the process “formally” with a Petition is more time consuming but ultimately may offer protection to the personal representative and heirs. Each situation must be analyzed to determine which process is more advantageous.
2. PUBLIC NOTICE.
After filing the Application or Petition, a Notice must be published in a local newspaper announcing to the public that the decedent died and left an Estate. The personal representative must be identified, including his or her address, and certain other information regarding the decedent must also be included. The Notice often elicits solicitations, as well as claims from creditors and others, both legitimate and otherwise.
The executor must identify and gather all of the decedent’s probate assets, establish a value for each item (in some cases by obtaining an appraisal), and then file with the probate court a written inventory containing all of that information. The court will charge the Estate an inventory fee based on the value of the Estate assets. The personal representative must sufficiently describe all the property, including providing an adequate legal description for real estate. The court must also be satisfied with the method of determining the value of property. If anything is out of place, or omitted, the personal representative may be held liable.
If anyone makes a claim against the Estate, the personal representative must determine if it is legitimate and, if appropriate, must pay the claim with Estate funds. Establishing the legitimacy of claims is important. Often creditors are willing to settle claims in order to avoid a dispute in the probate court. There are strict timelines involved in the process. As a personal representative, you must know the options available to you in dealing with creditors.
5. ESTATE TAXES.
If the Estate is subject to estate taxes, the personal representative must prepare and file Form 706 (U.S. Estate Tax Return) and pay the estate tax with estate funds within nine (9) months of the date of death. As attorneys and CPAs, we are especially adept at handling the preparation of U.S. Estate Tax Returns and can help our personal representative clients navigate the channels of the IRS. In addition, the Estate must file an estate income tax return (Form 1041). Finally, the decedent’s final income tax return (Form 1040) will have to be prepared.
6. ACCOUNTING AND CLOSING.
The personal representative must prepare an accounting of all his or her activity, and provide a copy to everyone. If everything is in order, the personal representative may then distribute the remaining assets to the heirs and close the Estate. Closing the Estate is perhaps the most critical step of the process. Great care must be taken that all the details have been handled and that everyone involved in the process has received the proper information in a timely manner. You may choose to close the probate Estate “informally” or “formally.” The decision will rest on various factors and issues that may have arisen during the probate process, and the degree of protection the personal representative desires. As your probate counsel, we have the experience to advise you on this critical and final decision.
RESPONSIBILITIES OF THE PERSONAL REPRESENTATIVE
The personal representative will manage all of the Estate assets from the time of the decedent’s death until the Estate is ready to be closed. Specifically, the personal representative may need to maintain and sell real estate, handle personal property (including motor vehicles), maintain insurance on all such property, monitor the mail, pay bills, file all required tax returns, manage bank accounts and investments, and ultimately distribute the funds to the appropriate heirs. Any personal representative will naturally have questions and concerns throughout the process. Our firm can assist you along the way.
Typically, the probate process will begin several weeks after an individual dies. There is no legally required time frame in which to begin the process although, once started, the earliest it may be completed is four (4) months thereafter. The process usually takes many more months and, depending upon the circumstances, may last as long as one year. If any family members, other heirs, or creditors object to any decisions made by the personal representative, the process may take much longer.
We practice in the probate courts and with the probate laws every day. We are familiar with each court’s unique procedural rules, and we have an in-depth knowledge of the probate code. We are also equipped to handle tax related problems and take advantage of opportunities in this field. As your probate lawyers, we will provide comprehensive representation and advice so you can rest assured that your probate matter is handled appropriately.