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Probate Administration and How
to Avoid It
What is probate?
Probate is a judicial proceeding to transfer a decedent's
property to his or heirs. The purpose of probate is appoint
a personal representative who is authorized by the court
to transfer a deceased person's property in accordance
with the terms of his or her will, or if there is no will,
then in accordance with Michigan law.
Will all of my assets be transferred by a probate court?
Probate proceedings are only necessary to transfer property
in the sole name of the decedent. Probate is not required
to transfer all types of property. Certain assets can be
held in joint ownership by two or more persons, which allows
the surviving joint owner(s) to obtain ownership upon the
death of others. In addition, some assets provide the owner
with an opportunity to name a beneficiary to receive the
property upon their death. These types of assets do not
require probate proceedings because a mechanism to transfer
ownership is already available. A will or trust does not
alter the ownership of joint property, nor does it change
beneficiary designations.
Should I try to avoid probate?
Probate is simply a means to transfer ownership of property
upon death. Michigan's system of probate proceedings for
decedent's estates is quite efficient compared to many
other states'. However, there are four reasons to avoid
probate:
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To save money: The cost of planning to avoid probate is usually less than the cost
of probate proceedings after a person dies. If you own property in more than one state,
it is generally much less expensive to avoid probate
than to administer the property in two separate locations.
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To save time: Probate proceedings will take at least
5 months to complete. Planning to avoid probate can
significantly reduce the time it takes for property
to be distributed to heirs.
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For privacy: Probate proceedings are public. Any interested
person can review a probate court file, including a
will, the plan of distribution, the identity of the
heirs, and the property owned by a decedent. Keeping an estate out of probate will keep your family matters private.
- For convenience: Probate administration can be inconvenient for many people. There are accounts to keep, hearings to attend in some cases, property to distribute, and a myriad of other details associated with a person's duties as personal representative. Avoiding probate may reduce the inconvenience of administering a decedent's estate.
How much does probate cost?
There are three components to the cost of probate - filing
fees, attorney fees, and the administrative fee. The current
filing fee is $150 to start proceedings. Attorney fees are a function of the amount of time an attorney spends
on a case. Attorney fees must be charged by the hour -
flat fees and percentage fees are not allowed. The range
of attorney fees is very broad and depends exclusively
on the issues involved with each case. However, most cases
move smoothly through probate, and fees are often less
than $2,500. The administrative fee is assessed by the
court, and is a function of the value of the property that
is being transferred through the probate proceedings. The
fees are set by state law. As an example, the administrative
fee on a $100,000 estate would be $362.50, and the fee
on a $1,000,000 would be $1,175.00. In summary, most probate cases can be completed for $3,000 to $5,000. However, the fees can be much higher in complex cases.
Who pays for probate?
The decedent's estate pays for probate administration.
The fees and costs associated with probate administration
must be paid before any property is distributed to heirs.
How long does the probate process take?
Probate proceedings will take at lease 5 months to complete,
and should be concluded within 1 year - although some cases
are open for much longer. However, most of this time is
spent waiting for creditors to make claims against the
estate. Creditors have at least 4 month to make claims.
Nevertheless, some property may be available for distribution
to heirs prior to the end of the period for creditors to
make claims. This is determined by the personal representative
on a case-by-case basis.
Who represents the deceased person in probate court?
A personal representative is appointed by the probate
court to represent the decedent's estate. The personal representative
can be nominated by the decedent in their will, or if there
is no will, then Michigan law will determine the person
to be appointed.
Will my assets be tied up in court?
Probate proceedings take at lease 5 months to complete,
and should be concluded within 1 year. However, some property
may be available for distribution to heirs before the proceedings
are complete. This is determined by the personal representative
on a case-by-case basis.
What if the amount of the decedent's assets is very small?
Expedited probate proceedings are available for estates
under $18,000 (maximum for 2005). In most cases, the assets can be distributed
immediately. A simple one-page form is available from the
court to authorize the transfer of assets from a small
estate.
What methods are available to avoid probate?
There are a number of methods to avoid probate. Here are some options:
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Create and Fund a Living Trust: A properly funded living trust will avoid probate. A person creating a living trust is called a "Grantor". The person managing the trust is called the "Trustee". The process of transferring property to a Trustee is called "funding". A Grantor must transfer (or "fund") all of his or her property to a Trustee who will then manage and distribute the property after the Grantor's death. Probate is avoided because the transfer of property to the Trustee is completed before the Grantor dies. As a result, probate is not necessary to facilitate any other transfers of property. Property that is not "funded" to the Grantor's trust must be transferred using probate.
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Use our "Asset Transfer Guide To Avoid Probate in Michigan": We developed this exclusive guide to give our clients the option of avoiding probate without the expense and inconvenience of a living trust. With our help and these step-by-step instructions, our clients can achieve their estate planning goals with virtually no post-death administrative hassle or expense. The Asset Transfer Guide show you how to transfer any asset in Michigan to an heir without probate, while retaining exclusive control during your lifetime. Contact us to see if this strategy is right for you.
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Execute a Durable
Power of Attorney: An agent may be appointed to act
on behalf of another person (the "principal")
with respect to the personal and financial matters
specified in a power of attorney. A power of attorney
can be drafted so that it continues to be effective
even if the principal becomes disabled, thereby eliminating
the need for a court-appointed conservator.
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Execute a Health Care Directive: A "Patient Advocate"
is a person designated to make medical decisions on
behalf of another person, including termination of life support. Using this type of document
may alleviate the need for a court-appointed guardian.
Probate avoidance must be considered in light
of your overall estate planning objectives.
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