How does the probate process begin?
When a person dies owning assets in his or her name alone, an estate must be started by a personal representative to handle the decedent’s assets and take care of settling the decedent’s affairs. This is called the probate or estate administration process. The personal representative can be an individual or corporation (such as a bank or trust company).
What happens after an estate is started?
The job of the personal representative is to settle the decedent’s affairs by notifying beneficiaries, gathering assets, paying debts and taxes, accounting for all estate transactions, and properly distributing the estate. The personal representative is the only one legally authorized to deal with the assets of the estate and handle matters of estate administration.
Why is there a probate process?
Reasons for the probate process include prevention of fraud and protection of creditors and rightful beneficiaries of estates. Beneficiaries are entitled to notice of the estate administration and an accounting of all estate transactions. They also have access to all documents filed by the estate. The probate process in Michigan is an efficient way to protect beneficiaries and creditors and to assure proper distribution of estate assets.
Do all of a decedent’s assets go through probate?
No. Assets held in joint ownership between spouses or with others with right of survivorship pass automatically to the survivor and may not be subject to probate. Bank accounts held in joint ownership or in trust for another are also not subject to probate. Assets with designated beneficiaries such as life insurance policies, annuities, transfer on death accounts, IRAs, and various retirement plans pass to named beneficiaries and are usually not subject to probate. Finally, assets held in a trust are governed by the terms of the trust rather than the decedent’s will and pass outside the probate process. It is important to note that assets controlled by the decedent at death, even if not subject to probate, are still subject to all the same death taxes as probate assets.
What are the costs of probate?
In Michigan, the costs of probate include filing fees, publishing notice to creditors, and the court inventory fee. In addition, legal fees are paid, on an hourly basis, to the attorney handling the estate work, which may include preparation of various death and income tax returns. The personal representative may charge a reasonable fee.
Does probate take a long time?
In Michigan, probate need not and normally does not take long. Personal representatives are accorded broad powers to accomplish the administration of estates expeditiously. They are empowered to handle most details (liquidating assets, paying debts and expenses, etc.) without seeking court approval for each and every transaction.
How does the probate process end?
The probate process ends upon receipt by the beneficiaries of their proper share of the estate and release of the personal representative from further responsibility for the administration of the estate.
The Truth About Living Trusts
What is a living trust?
A “living trust” is a legal entity to which your assets (bank accounts, securities, house, etc.) can be transferred and managed by a person, including yourself, or corporation (such as a bank or trust company) called a “trustee.” The trustee manages your assets in accordance with written instructions contained in a trust document. Living trusts can be revocable or irrevocable.
Are living trusts something new?
No. Living trusts have existed for centuries. They are more formally called “inter-vivos trusts.” Living trusts traditionally were and still are used for the management of assets of those requiring or desiring such services.
Why am I hearing so much about living trusts now?
Today, revocable living trusts are used as substitutes for wills, trusts so people can avoid the probate court cost and hassle.
Do I need a revocable living trust?
The answer depends on your unique family situation, financial position, and goals. Watch out for vendors with a one-size-fits all approach..
Does having a revocable living trust reduce taxes?
Not necessarily. Michigan does not have an estate tax. The federal estate tax is the same, regardless of whether assets are administered through a revocable living trust or a will. For the provisions of a living trust to control, a trust document must be prepared and your assets must be transferred to the trust during your lifetime. On the other hand, a living trust may reduce or eliminate court filings fees incurred after your death with a will. After death, both trustees of living trusts and personal representatives under wills require legal advice as to the proper payment of taxes and creditors, distribution to beneficiaries, document interpretation, and other issues. Also, a will is advisable even if you have a living trust to provide for the administration and distribution of assets not transferred to the trust during your lifetime.
Schedule a Free Consultation with a Michigan Probate Lawyer
If you have additional questions about the probate process in Michigan, contact our Bloomfield Hill, MI probate attorneys today to schedule a free consultation.