Long Delayed Probate

One of the common complaints about the Probate process is that it takes a long time. This can be true and, even more frustrating for clients, sometimes those delays are not caused by action but rather inaction. Today’s example shows how the process can drag on despite a Personal Representative’s best efforts.

When Donna’s mother, Edith, passed away, Donna hoped that everything related to Edith’s estate would be simple. Edith owned a home and had both a checking and savings account. Edith had also taken the time to write out a simple form Will, leaving everything she owned to Donna, and have this Will witnessed and notarized as required by Michigan law. By any estimation this was to be a simple Probate and we were happy to assist Donna in completing it. Unfortunately, Donna and Edith had one problem-- they had not anticipated, Edith’s son Frank. 

Frank had not been active in his mother’s life and therefore Edith had chosen to make Donna the sole beneficiary and Personal Representative under her Will, leaving nothing to Frank. However because of the rules of Probate administration, Donna was required to give Frank notice of the proceeding, which is where problems began. Under Michigan law, while an informal Probate is favored, any interested party (which includes heirs of the decedent who were excluded under Will) may Petition the Probate court to seek a formal probate. In this matter, Frank filed such a Petition challenging the validity of Edith’s Will. 

When a Probate proceeding becomes formal it means that there must be Hearings before the Probate Judge, and when the Probate court schedules Hearings it does so based on the assigned Judge’s calendar. Unless there are extenuating circumstances, such as a time-sensitive emergency, these hearings are scheduled for a date weeks in the future so that the Parties involved have time to file written information with the Court and give the other Parties involved the required Notice. When Frank caused the informal Probate of Edith’s estate to become a formal proceeding the simple process of administering a relatively small estate transformed into a saga that Donna would not soon forget. 

The first Hearing on the matter was scheduled for six weeks from the date that Frank had filled his Petition challenging the validity of the Will. During the intervening time, we prepared a Response to Frank’s Petition evidencing the proper execution of Edith's Will and provided Frank and the Court with that Response. Three days before the scheduled Hearing we received Notice that Frank had hired an attorney to represent him and this attorney had promptly filed a Motion to Adjourn the scheduled Hearing in order to have time to properly prepare. While inconvenient, this type of request is common in Probate litigation and the Court willingly allowed the delay, moving the Hearing forward four weeks. 

In the next four weeks we attempted to communicate with Frank’s new attorney, but after an initial conversation received no replies. Nothing further was filed with the Court and the day of the scheduled Hearing the attorney did not appear in Court. As a result of the missing attorney, but the presence of Frank in the Court, the Judge further adjourned the Hearing for two weeks and we provided Notice to the Attorney who finally responded to communication indicating that he had never been paid a Retainer Fee by Frank, therefore had stopped working on the matter, and had never filed an Appearance with the court. Frank unfortunately neglected to tell the Court that his attorney had “fired him”. Nearly two weeks later we received another Motion requesting an Adjournment, this time due to Frank’s illness. The matter had not yet grown to the point where the Judge felt that delay was unwarranted and the matter was delayed five more weeks. This five week delay become nine weeks when Donna needed to travel for work and then the Judge was on vacation. 

Thankfully in the interim we were able to convince the Judge to grant Donna limited authority over Edith’s Estate in order to at least maintain the status quo of the property. We had been able to provide Notice to Creditors and prepare an Inventory of the Estate’s assets. All of this was beneficial when 26 weeks later we again appeared at the Probate Court for a Hearing to discover that Frank had a new attorney, retained the prior day, requesting a further delay. Thankfully, by this the Judge was able to see the chain of events, review our Response to Frank’s initial threadbare Petition as well as the additional work done by Donna in her limited capacity, and see through all of Frank’s excuses.. 

Since Parties are entitled to due process in the Court, the Judge could not simply reject Frank’s attorney’s request out of hand, but another Hearing was scheduled for two weeks later with the caveat that no further delays would be granted in the matter. As the Hearing day drew near, we received a phone call from the newest attorney indicating that he intended to withdraw from the representation because Frank had failed to communicate further information to him that would support Frank’s claim that Edith’s Will was invalid. When the day of the Hearing arrived, Frank failed to appear in Court. 

The Judge, after a seven month delay, quickly allowed Frank’s attorney to withdraw from the matter and named Donna as Personal Representative of the Estate. Normally this would be the point where Donna was able to proceed with the remainder of the Administration without further ado, but Frank was unwilling to let the matter drop. Over the course of the following year Frank filed a number of spurious motions with the Court forcing Donna to spend substantial additional time and effort in the administration of her mother’s estate. 

The moral of this story is that in the end the right party triumphed, but that there are more efficient ways of reaching the same result. Had Edith taken the time to speak with an experienced attorney she could have learned about deeds that would transfer her home to Donna automatically at her death and been instructed to name Donna as the beneficiary of her bank accounts. These two actions, which collectively cost almost nothing, would have saved thousands of dollars in fees and hours of time because the assets would then have passed to Donna without having to go through the probate process. This is just one example of how a small amount of planning now can result in huge future savings. 

Matt and Al

Understanding Informal Probate

Our recent blogs have focused on the benefits of estate planning. As we have indicated in the past, even if an individual does not do any of their own planning, there is a default plan under Michigan law that addresses the distribution of assets in the absence of other instruction. While this is only one aspect of the Probate process, it is a good place to start a series of the examples focused how an estate plan, or lack of one, affects post-death administration. 

Alice was the wife of Bill, the mother of Carole and Don, and the grandmother of six loving grandchildren. She stayed active in her later years volunteering with a number of organizations and was well respected in the community. After her husband, Bill, passed away, she became the sole owner of all of their joint assets and never felt the need to do any additional estate planning to address the distribution of her home, bank accounts, and the IRA she rolled-over to her own IRA after Bill’s death. She never saw the need to worry about what would happen after she died. Despite Alice's lack of concern, her estate was valued at more than $500,000.00 and required a fair amount of work.

Since Alice owned all of her assets individually and did not have a Will, it was necessary to open a probate estate in order for Carole and Don to gain the authority to gain access to and manage Alice's assets. Michigan law allows for three forms of probate administration, the small estate affidavit (for states with a total value of under $20,000), the informal probate proceeding (a simplified form of probate requiring more limited involvement of the probate court), and the formal/supervised probate proceeding (used to handle any litigation involving an estate). To administer his mother’s estate, Don retained our firm to assist him with the informal probate process. 

When opening an informal probate proceeding without a Will it is necessary to provide the court with a variety of information, including the identity of all of the decedent’s heirs, the identity of the proposed Personal Representative (as well as any other individuals with equal priority to serve in that role under the law), and a statement that the person applying for the informal probate is unaware of the existence of any Will belonging to the decedent. Don’s application for informal probate requested that the court appoint him as the Personal Representative though he had equal priority under Michigan law with his sister Carole. Upon receiving the Probate Court's appointment and his Letters of Authority Don then had 28 days to inform Carole of his actions. It is at this point in the estate administration process that it is first possible for an “informal” probate to become a “formal” probate. Had Carole chosen to challenge Don's appointment as Personal Representative the Probate Court would hold a Hearing on the matter and the administrative process would, at least temporarily, transition to a formal probate.

Fortunately, Carole and Don have a strong relationship and Carole lived outside of the state, so it made sense to everyone for Don to serve as the Personal Representative negating the need for a more formal probate proceeding. As Personal Representative, Don was then obligated to fulfill certain duties, including informing any known creditors of Alice of her death, publishing a notice to unknown creditors, assembling an inventory of the estate assets and keeping the Court and Carole informed of the status of each of these actions. As he proceeded with his duties, Don also became responsible for paying Alice’s outstanding bills, closing her accounts, and eventually selling her home. After he completed these duties, Don divided the remaining assets equally between himself and Carole as required by the Michigan Intestacy Statutes. Because of the various notice requirements, the minimum time for completion is 6 months and maybe longer depending upon the types of assets in the estate

It is worth noting that not all of Alice’s assets passed through the Probate process. While inventorying Alice’s assets Don learned that Alice had designated beneficiaries of her IRA many years earlier, naming her grandchildren to receive equal shares of that account. This beneficiary designation superseded the intestacy statute because the IRA custodian was contractually obligated to pass the IRA to the grandchildren, and the court had no jurisdiction in that asset. Thankfully, all of Alice’s grandchildren were over the age of 18 so this distribution was able to happen without any additional complication. If any of the grandchildren have been under the age of 18, the Probate Court would have required that a guardianship and conservatorship proceedings be instituted to protect the interests of the minors. This proceeding would have continued until all of the grandchildren reach the age of 18, necessitating annual accountings and hearings with the Probate Court. Consider how the children would have felt if Alice had spent most of her other assets maintaining her lifestyle and the only significant asset was the IRA. Was it really Alice’s intent to essentially “disinherit” her children in favor of her grandchildren?

The probate of Alice’s estate was a relatively simple process without any conflict between heirs, without the discovery of unknown creditors, and without difficulty in distributing assets to heirs. Even with that simplicity it took nearly a year to complete the process. With a little bit of planning on Alice’s part much of the work done by Don could have been significantly simplified and it certainly would have decreased the cost in both attorney’s fees and Don’s time. We recommend that everyone put some form of planning in place, because the value of that planning is worth many times its cost. Keep in mind that estate planning is not a one size fits all process, you should take the time to work with an attorney who will assist you in preparing the plan that is appropriate for your circumstances.

Matt and Al