Estate Administration

     Sometimes, despite our best attempts to completely fund a Living Trust, a person dies and has assets in their own name. When this happens Michigan law requires that those assets pass through probate. In prior posts we discussed the process of probate in general, but if you have a client whose estate will be subject to probate, it is important to deal with the specifics of probate on a timely basis.     The biggest challenge often is getting the client to understand the probate process and the need to collect information quickly. The client is often a grieving family member and occasionally not in the best position to give their full attention to completing the work of probating the estate. While it is possible to delay some aspects of the process some matters must be handled quickly. For example, there may be a need to manage and preserve some of the assets. Securing real estate or protecting and storing other valuables demands immediate attention. In order to deal with these matters, there must be a Personal Representative for the estate and that is where the Probate court normally first gets involved.
     The probate process usually begins by petitioning the Probate Court for the appointment of a Personal Representative. The Personal Representative is the person designated to administer the Estate and has the legal authority to do anything necessary with respect to estate administration. Parties interested in the probate (such as the spouse, children and grandchildren) must be listed on the petition, which also needs to include an inventory of estate assets. If the interested parties all waive the right to a formal hearing, the court can appoint a Personal Representative immediately upon filing of the petition. In order for the process to proceed quickly, the person desiring to be the Personal Representative should collect specific information prior to the first meeting with the attorney in order to avoid delays in starting the probate process. That information includes:

1. Original of the Last Will and Testament, if there is one
2. Names and addresses of all "interested parties" which include spouse, children, grandchildren, and any other potential beneficiaries named in the Will or by the state intestacy statute 
3. A list of all "probate assets". 

"Probate assets" are only those assets that are in the name of the decedent alone and/or in the state of Michigan. Any assets owned jointly with another person, owned by a revocable trust, or that pass by a beneficiary designation are not included in the probate process. It is important to review assets because occasionally assets are titled differently than expected. 
     The Personal Representative’s responsibility is to find all of the estate’s assets. To assist in that process, once the court names a Personal Representative, that person can request information from banks, brokers, life insurance companies, and other financial institutions. Sometimes the however the client it is at a loss to determine the scope of the decedent's estate or where such assets might be located. In addition to reviewing a decedent's financial papers, one good place to start locating assets is by reviewing the prior year's income tax return. The return will list any assets that generated income, including bank accounts and property. In addition, many people now initiate all their financial transactions through the Internet. Determining and gaining access to a decedent's electronic accounts has become very important. Checking property tax records and local register of deeds records is also a way to discover other assets. If the decedent owned assets in another state, the Personal Representative may have to institute an ancillary probate for those out-of-state assets. Finally, the Personal Representative should also change the decedent's mailing address to the Personal Representative's mailing address so that information about accounts and creditors will be readily available.
     Another of the Personal Representative's duties is managing and preserving all of the assets of the Estate. The Personal Representative has a fiduciary duty to prudently manage these assets. The Personal Representative can appoint a qualified professional investment manager to oversee investment decisions. Another part of this duty is insuring assets of the estate against lose. Appraisals of various assets may be necessary in order to ensure fairness and equity in dealing not only with beneficiaries but also with creditors.
     In addition to collecting and preserving assets, the Personal Representative is charged with notifying known and unknown creditors on a timely basis. Known creditors must receive an actual notice and unknown creditors are notified by publication in the local legal news. If there is proper notification, creditors have only 63 days to file a claim against the estate, otherwise their claim is forever barred. 
     While completing all of the previous tasks, the Personal Representative must also determine and notify beneficiaries of their interest in the estate. If there is no Will, the state intestacy statute controls the beneficiary designations. When there is a Will, the provisions of the Will control who is to receive assets of the Estate. In any event, potential beneficiaries should receive initial notification and be advised on a regular basis of the process prior to the eventual distribution of assets. If there is any dispute as to who are beneficiaries, the Personal Representative can ask the Court for ruling on that issue. The Personal Representative should provide an annual accounting of the estate administration to keep the beneficiaries fully advised. 
     Unfortunately, there is no convenient time to institute probate proceedings because it often involves the death of a loved one, but proper communication between the attorney and the Personal Representative, and then between the Personal representative and the interested parties can make the process easier for all involved.