The duty of the personal representative in probate is to prepare and either present or file an inventory of assets and serve it upon all of the interested parties of a probate estate. But what exactly does this entail?
We’re going to cover a particular aspect of the responsibilities and duties of a personal representative, which is the duty to inventory. This is a requirement to identify the assets that the decedent owned at the time of their death. This does not include assets they receive post-death, but assets that existed on the date of death. The Probate Pro can help you with your inventory of assets in Royal Oak probate if you need assistance.
Within 91 days of the personal representative’s appointment, there’s a requirement to prepare and either present of file an Inventory. However, there is not necessarily a requirement to file it with the court. In an informal probate administration, you may only have to present it for purposes of calculating the gross inventory fee that is paid to the probate court.
In supervised or formal probate proceedings, you will have to file the inventory. Nonetheless, under each circumstance, there’s a requirement to notify the interested parties of the inventory so they are aware of the relevant assets as of the date of death.
It is not uncommon for this issue of itemizing and inventorying assets to cause confusion for those in Royal Oak going through the probate process. There are some assets that the deceased may have owned, but may they owned it jointly, with a named beneficiary, or in their trust. These are not probate assets; they flow according to a different process.
In a joint ownership, the joint survivor takes the property outside of probate. If assets are in a trust, then the trust will administer them outside of probate. And when there’s a named beneficiary, like with a life insurance policy or a bank account, the beneficiary identified in that account agreement is the one who receives the assets outside of probate. These are non-probate assets and do not get reflected on the probate court inventory.
In addition, there’s some confusion about what you list on the inventory and with how much detail. Statute MCL 700.3706 provides that the personal representative shall prepare an inventory of the property owned by the decedent at the time of death, listing them with reasonable detail. The term “reasonable detail” is subject to court interpretation. In some circumstances, “very particular detail” is required – such as, all of the tools, pieces of jewelry, and smaller pieces of property. But in most estates, it is more generalized.
If there is a dispute with the estate, the inventories tend to be much more detailed. The reasonable detail, as reflected in the statute, requires a very specific itemization. In most estates in which the family is getting along well, the detail is a little less formal than that, but there is no one-size-fits-all. You and your attorney must identify the right level of description to satisfy the statutory requirement.
This is a circumstance where you want your lawyer to identify the level of detail required for purposes of valuation. The larger the inventory value, the higher the gross inventory fee owed to the probate court. We often see personal representatives trying not to inflate the value – and for good reason.
In addition, there’s a requirement to identify the type and amount of encumbrances that may exist, as well as identifying the value as of the date of death. With real estate, we generally value it as twice the State Equalized Value, unless the property was recently appraised or sold. But with other assets, it can be a little more complicated; you may have to get an actual valuation in the form of appraisal. In estates in which the family is getting along, people generally estimate the valuation rather than spending the money for a formal appraisal.
Royal Oak personal representatives also need to know there is a difference between an inventory and an accounting. An inventory is the description of the starting point of assets that existed as of the date of death. The duty to account is generally a yearly rhythm from that inventory, identifying any income and expenses, and the remaining assets that exist after each year of administration if the estate goes on for more than a year.
You can access the Michigan Inventory calculator here.
Inventory is completed on a state court administrative order (SCAO) form and is either presented to the probate court, or filed and then served upon the interested persons in the probate estate. If it is later determined there are additional assets, the statute requires the personal representative to amend the inventory.
This process can be more than you bargained for, which is why we invite individuals in Royal Oak to call our attorneys for guidance in the inventory of assets in probate. Call the pros now and make things easier moving forward.