The Dangers of Dying Without an Estate Plan: The Consequences of Michigan Intestate Succession
Today, we embark on a sobering exploration of the difficulties that can arise when someone passes away without first creating an estate plan. Dying without a clear plan in place triggers Michigan's intestate succession laws, a default mechanism that determines the fate of your assets. Let's delve into the intricacies of intestate succession, the role of the probate court, and the consequences of failing to dictate your own plan.
Please note that this post is not exhaustive, and every situation is unique. In the event that you have questions about probate administration or your specific case, it’s advisable to speak with an attorney. Contact Thompson Legal to schedule a discovery call with a Michigan probate lawyer.
1. Intestate Succession and the Probate Court:
Intestate succession is governed by statutes like MCL 700.2101. The probate court becomes tasked with appointing a personal representative, inventorying assets, and making distributions. Without explicit directives, the court will rely on a strict predefined hierarchy to determine who gets what.
2. Administration of the Estate: Who Takes the Reins?
Funeral Representative
Michigan Compiled Laws (MCL) 700.3206 describes the appointment of a funeral representative in cases where the deceased has not already designated someone. Without a designated representative, members of the armed forces will have priority given to the Department of Defense. MCL 700.3206 gives the next highest priority to the surviving spouse of the deceased. If the surviving spouse is unavailable or unwilling to serve, the next in line for consideration are the decedent's children, followed by the decedent's parents, siblings, and other relatives.
Personal Representative
Michigan Compiled Laws (MCL) 700.3203 addresses the appointment of a personal representative in cases where there is no will, an invalid will, or an executor is unable or unwilling to serve. MCL 700.3203 provides the surviving spouse with the highest priority for appointment. If the surviving spouse is unwilling or unable to serve, the next in line are other devisees (those inheriting under a will) of the decedent, including heirs if there is no valid will. In instances where no eligible individuals that can be identified, the statute allows for the appointment of a creditor, followed by any other person as the court deems suitable.
3. Notification of the Estate:
Notifying interested parties of estate progress is a key duty of all personal representatives. Michigan Compiled Laws MCL 700.1105(c) provides that notices should “include but is not limited to, the incumbent fiduciary; an heir, devisee, child, spouse, creditor, and beneficiary and any other person that has a property right in or claim against a trust estate or the estate of a decedent …”. The term "interested persons" expands far beyond immediate family, encompassing heirs, devisees, children, spouse, creditors, beneficiaries, or anyone with a property right. Interested parties are required to be sent notice of all important aspects of estate administration, and their objections are given great weight by the probate court.
Public Record
It's important to note that various pleadings filed throughout the process, including asset inventories, lists of interested parties, and financial accountings, all become part of the public record. While this transparency is inherent to the legal proceedings, it also brings forth considerations for individuals with confidentiality concerns. The public accessibility of these documents means that sensitive details regarding the estate, its assets, and the identities and addresses of interested parties are exposed.
4. Asset Distribution Without a Plan:
When Decedent Leaves a Spouse
Michigan Compiled Laws (MCL) 700.2102 outlines intestate distribution when the decedent is survived by a spouse. In such cases, the surviving spouse is entitled to the entire estate unless the decedent's descendants are also the descendants of the surviving spouse. If there are surviving descendants who are not descendants of the surviving spouse, the surviving spouse is entitled to the first $150,000, plus a fraction of any remaining balance. Surviving spouses are also entitled to certain exemptions and allowances during intestate administration.
When There is No Surviving Spouse
On the other hand, MCL 700.2103 provides guidelines for the distribution when there is no surviving spouse. The statute establishes a hierarchy of potential heirs, starting with the decedent's descendants—children and their descendants—who inherit the entire estate. If the decedent has no surviving descendants, the estate passes to the decedent's parents in equal shares. In the absence of surviving parents, the estate goes to the decedent's siblings and their descendants, with distribution based on representation.
When There are No Heirs
Michigan Compiled Laws (MCL) 700.2105 outlines the disposition of intestate property when there are no heirs at law, establishing the State of Michigan as the default beneficiary. If an individual's estate is administered intestate, meaning there is no valid will or the will does not cover all the assets, and there are no surviving legal heirs—such as children, parents, or siblings—designated to inherit the estate, the state steps in as the ultimate recipient.
Personal Representative Compensation
Personal representatives are permitted to request reasonable compensation for their efforts administering the estate. What is reasonable depends on the complexity of the estate and the technical skills required of the fiduciary. Personal Representative fees are paid as a priority administrative expense, before any distributions are made the beneficiaries. This means a greedy or inefficient personal representative might end up costing your heirs - literally.
5. Additional Considerations:
Debts
Michigan Compiled Laws (MCL) 700.2110 addresses the discharge of debts owed to the Decedent. This means that unless otherwise specified, any informal loans or debts owed to you will be forgiven. Therefore, if it is your intent to have a loan or debt paid back to your estate or beneficiaries, you’ll need to account for that in your estate plan.
Bonds
The appointment of a personal representative for your estate typically involves certain administrative and financial requirements. Notably, the appointed personal representative will likely be required to qualify and post a bond. This process serves as a protective measure, ensuring accountability and safeguarding the interests of the estate and its beneficiaries. However, the qualification and bonding requirements introduce additional hurdles in terms of both administration and finances.
Restricted Authority
Michigan probate courts are also likely to restrict the authority of a personal representative to do certain actions. These restrictions generally include the ability to (1) enter into settlement agreements, (2) sell real estate, and (3) transfer assets outside the State of Michigan. This adds a layer of judicial scrutiny and validation to each decision.
Guardianship
For individuals without an estate plan, especially those with minor children, the determination of guardianship becomes a matter entirely subject to court approval. To avoid leaving such crucial matters solely to court discretion, individuals are strongly encouraged to establish a well-thought-out estate plan that designates preferred guardians and provides clear instructions for the care of minor children in the event of unforeseen circumstances.
Conclusion:
The absence of an estate plan transforms what should be a deeply personal and straight forward matter into a complex legal puzzle. Without a clear plan in place, the court becomes the architect of your legacy. A comprehensive estate plan can ensure your assets, debts, and minor children are protected. Don't let procrastination dictate your future — contact with Thompson Legal to speak with a Michigan probate and Estate Planning attorney.
This blog is for informational purposes only. It is not intended as legal advice. In the event you would like to speak with a probate lawyer about your case Contact Us at (734) 743-1646 to schedule a consultation.
