CategoryProbate

Recent Changes in Michigan Estate and Probate Law

I probably sound like a broken record when I talk about the “living” nature of an estate plan. I always remind our client families that it’s critically important to review their estate plan on a regular basis (for example, every 3-5 years), and especially when you experience life changes. That’s why we include ongoing 3-year reviews in all of our planing levels. You life will change, what you have will change, and what you want to have happen will change. Your plan needs to keep up with those changes or it is likely to fail you when it’s needed the most.

And . . . the law will change (often)!  So, being fresh off several days of continuing ed, I thought I would share some of the key changes in Michigan’s law related to estate planning and probate. “Recent” means within the last 1-2 years. So here goes:

  • Probate inventory fee. This is probably the biggest change of them all. The “inventory fee” that each estate is required to pay to the probate court will be less for almost everyone (at least until 2018). That’s because the value of real estate that is used to compute the inventory fee is now based on the equity value of the real estate rather than the market value (MCL 600.871(2)). Think of all the underwater or barely above water homes we’ve seen so much of in the past several years. Using equity value rather than market value can appreciably lower the inventory fee.
  • Trust decanting. No, I’m not talking about wine . . . I promise. Generally speaking, trust decanting is “pouring over” the assets of a trust into a different trust and may be done for various reasons (changing terms of the trust, changing administrative or tax provisions, etc.). And this can be done even if the original trust is irrevocable (either because you wanted it that way from the outset or because someone has passed away and a previously revocable trust became irrevocable). There was some belief that case law (e.g., court-based law) allowed for “decanting,” but now we don’t have to worry about that “grey area,” because Michigan law explicitly allows it. I’m very much in favor of this because it provides client families with more flexibility.
  • 529 Plan creditor protection. This is a HUGE planning opportunity for client families planning for their children’s college education. Effective January 2, 2013, 529 plans are protected from creditors whether owned by the parent or child (MCL 600.6023(1)(l)(iii)). This is a great way to help make sure the college savings aren’t taken by creditors.
  • Property tax uncapping. Big change here for certain transfers of real estate made after December 31, 2013. Current law stated that a “transfer” of real estate “uncaps” the annual property tax increase restriction on assessors. As of December 13, 2013, it will not be a “transfer” (and therefore will not uncap the property tax value) to change ownership of residential real estate if the person (or people) who is taking ownership is related to the current owner within the first degree (MCL 211.27a(7)(s)). Now, there are some questions about the what “first degree” means and we’re hoping for some clarification from either the legislature or the regulators. I’ll do my best to keep you updated on how they define that.

There were many more changes, but I figured most readers are probably sleeping by now so I just listed the changes I feel are most important to my estate planning and probate client families. I welcome any questions or comments you have on these items or anything else.

Michael Lichterman is an estate planning and charitable planning attorney who helps families and business owners create a lasting legacy by planning for their Whole Family Wealth™.  This goes beyond merely planning for “stuff” – it’s about who your are and what’s important to you.  He focuses on estate, charitable, and asset protection planning for all generations (“young” and “experienced”), the “sandwich generation” (caring for parents and children), doctors/physicians, nurses, lawyers, dentists, professionals with minor children, family owned businesses, and pet planning.  He enjoys creating life long relationships with his clients centered on their family’s values, insights, stories and experiences.

How to Transfer a Michigan Automobile After Someone Dies

I hear the following question asked quite a bit after a loved one passes away: “he (or she) had a car, not really worth all that much.  Is there a way we can just transfer that without a court proceeding?”  The short answer is . . . maybe.  As with many legal questions, it depends on the specific facts and circumstances of your situation.  For example, if the automobile was in a trust (not something we recommend), then you must transfer it according to the terms of the trust.  And, if there is property that would require opening a probate estate to transfer it, then the automobile will be a part of that probate estate.

But, Michigan does have a quick transfer procedure available if certain requirements are met.  The requirements are:

  • The total values of the vehicles (all together) must be under $60,000, and
  • There must be no other property for which a probate proceeding (formal or informal) is necessary.

If your situation meets those requirements, you can use this Secretary of State Form TR-29 to transfer the vehicle(s) to the deceased person’s heirs.  The person signing the form certifies that there is no probate proceeding pending for the decedent’s estate and that no probate proceeding will be started in the future. If available, the vehicle title must be attached to this form. The form requires that the following vehicle information be provided: year, make, body style, vehicle number, and title number. If the vehicle is being transferred to someone other than the surviving spouse, the surviving spouse must certify that the title is free of all liens.

You can find some additional helpful information at this State of Michigan website.

Michael Lichterman is an estate planning and charitable planning attorney who helps families and business owners create a lasting legacy by planning for their Whole Family Wealth™.  This goes beyond merely planning for “stuff” – it’s about who your are and what’s important to you.  He focuses on estate, charitable, and asset protection planning for all generations (“young” and “experienced”), the “sandwich generation” (caring for parents and children), doctors/physicians, nurses, lawyers, dentists, professionals with minor children, family owned businesses, and pet planning.  He enjoys creating life long relationships with his clients centered on their family’s values, insights, stories and experiences.

What Are Michigan Probate Letters of Authority?

If you’ve been called upon to help administer the estate of a relative or friend who has passed away, you may find that financial institutions are unwilling to give you access to the deceased person’s accounts without a copy of Letters of Authority.  I received just such an email this week.  A lady’s husband had passed away and she was not able to access his accounts because the financial institution required a copy of the Letters of Authority for the probate of his estate.  So, what are Letters of Authority?

First, a little background about probate.  Probate is the court process that your “stuff” (real estate, bank accounts, etc.) go through when you pass away to the extent that you owned anything in your name when you died.  You see, while we are alive we buy/sell/transfer things with our signature.  But, after we’re gone, we can no longer sign to transfer our assets.  So, a Personal Representative is appointed during the probate court process, and the Personal Representative’s signature effectively substitutes for your own.  It is the Personal Representative’s signature that will ultimately distributed the estate assets to the estate beneficiaries.

So, back to our question – what are Letters of Authority?  Letters of Authority are the legal document signed by the probate court stating that the Personal Representative is the legal representative of the estate and authorized to sign on behalf of the estate.  That’s the main reason that financial institutions request Letters of Authority – because they want to make sure they are working with the legal representative of the estate, not just someone who *says* they are.

That said, I’ve seen many situations where the financial institution’s request was not valid, such as when no probate estate is needed because the deceased person had a fully funded living trust.  If you find yourself frustrated in handling a probate estate or dealing with financial insitutions’ where the deceased person had accounts, give us a call at 616-827-7596.

Michael Lichterman is an estate planning and charitable planning attorney who helps families and business owners create a lasting legacy by planning for their Whole Family Wealth™.  This goes beyond merely planning for “stuff” – it’s about who your are and what’s important to you.  He focuses on estate, charitable, and asset protection planning for all generations (“young” and “experienced”), the “sandwich generation” (caring for parents and children), doctors/physicians, nurses, lawyers, dentists, professionals with minor children, family owned businesses, and pet planning.  He enjoys creating life long relationships with his clients centered on their family’s values, insights, stories and experiences.

Correcting a Death Certificate in Michigan

This is one of those things that you never really think about yet seems to come up with surprising frequency.  As a matter of fact, I hadn’t thought much about it until the conversation came up on an email listserv I belong to.  So here’s the quick explanation in case you or someone you know ends up in this situation.

The best part is that the “what to do” part is relatively easy.  You can get the paperwork online by going here: http://www.michigan.gov/documents/deathcorrpublic_6733_7.pdf.    You’ll need to print it out, fill it out and mail it (along with the $40 fee) to:

Vital Records Changes
PO Box 30721
Lansing, MI  48909

If you want additional, certified copies they are $12 each.  You can contact the Michigan Vital Records Changes Unit by calling (517)-335-8660.  And you can always contact us if you have questions as well.

Ok, so remember how I said the “what to do” part is relatively easy?  The kicker is that the process of making the change can take some time . . . sometimes as long as 3 to 4 months!

Michael Lichterman is an estate planning attorney who helps families and business owners create a lasting legacy by planning for their Whole Family Wealth™.  This goes beyond merely planning for finances – it’s about who your are and what’s important to you.  He focuses on planning for  the “experienced” generation, the “sandwich generation” (caring for parents and children), doctors/physicians, nurses, lawyers, dentists, professionals with minor children, and family owned business succession – and he is privileged to do so from a Christian perspective.  He takes the “counselor” part of attorney and counselor at law very seriously, and enjoys creating life long relationships with his clients – many of which have become great friends.

The Power of the Spouse and ERISA

The Michigan Court of Appeals, in a case that was quite shocking to me (read here), recently held that the requirement that a surviving spouse consent to a beneficiary designation under ERISA trumps a pre-marriage election made by the plan participant.  In this case, the gentleman who died had named his son as beneficiary of his personal savings plan (PSP).  He subsequently married and then later died.  The wife petitioned the court to determine that she, not the deceased gentleman’s son, was entitled to the funds from the PSP account.  The court determined that the clear language of section 1055(c)(2) of ERISA and the fact that the wife did not consent to the change entitled the wife to the funds.

I must admit, wording of the statute as such or otherwise, it amazes me that a surviving spouse’s consent literally trumps whatever designation the deceased spouse may have made prior to the marriage.  Please share your thoughts – I’m curious to know if I am the only one who disagrees with that outcome.

Inheriting as an Adopted Child

A recent case I handled help outline the rights of adopted children to inherit from or through their biological parent.  To my knowledge, and that of the attorney who served as public administrator and personal representative, this was a case of first impression in Michigan.  Neither of us was able to find a Michigan case directly on point.  The focus was how the Adoption Code and the Estates and Protected Individuals Code (“EPIC”) were to be read together given the change in treatment of adopted children brought about by EPIC in 2000.

Prior to EPIC, the Adoption Code cut off a cut off an adopted child’s ability to inherit from his or her natural parents, with the adoptive parents taking the place of the natural parents for inheritance purposes (MCL 710.60).  This was true even in the case of a step-parent adoption – where one natural parent’s parental rights are terminated and the adopted child is adopted by the spouse of the other natural parent.  As the late Walter Cronkite said, “and that’s the way it was.”

Along came EPIC, effective April 1, 2000, and amended the Adoption Code to include an exception for Section 2114(2) of EPIC.  Section 2114 of EPIC defines the parent and child relationship, specifically stating in paragraph (2) that “an adopted individual is the child of his or her adoptive parent or parents and not of his or her natural parents, but adoption of a child by the spouse of either natural parent has no effect on either the relationship between the child and that natural parent or the right of the child or a descendant of the child to inherit from or through the other natural parent.” What a mouthful.  What does it mean?  It means that there is an exception to the general rule that an adopted child is cut off from his or her natural parents for purposes of intestate succession – the exception is a step-parent adoption.  Because of EPIC, a child adopted by a step-parent continues to be able to inherit from or through his or her natural parents.

Without case law on point, this could be left up to interpretation . . . what does from or through mean?  How far up the line of ancestry does it go?  And on and on.  Our position was stated as follows: “the Adoption Code’s general rule terminating the ability of an adopted child to inherit from the parent whose rights were terminated is subject to the exception provided for in EPIC.  This exception applies to what is commonly referred to as a ‘stepparent adoption;’ where one biological parent’s parental rights are terminated and the spouse of the other biological parent adopts the child.  In effect, the adopted child has three parents for purposes of intestate succession: both natural parents and the adoptive parent.”  This case was the exact situation provided for by the Adoption Code and EPIC.  Those statutes allowed my client to inherit from his biological grandmother.  Because there was no surviving spouse and my client is the only lineal descendant of his biological grandmother through his biological father (her only child), he is entitled to inherit her entire estate through his biological father.

The Chief Judge of the Kent County Probate Court agreed with us and my client was able to inherit the entire estate, making him very happy.  If you live in Michigan, have any questions, and would like to schedule an initial consultation, please contact me.