Sadly, most people do not die with signifiant assets. Studies indicate that the average American has only $3,800 in savings and over $6,200 in credit card debt. Clearly, this is not the American Dream realized. If you include the value of a person’s home, the average American’s net worth is about $121,000. If home equity is excluded from the calculation, the median senior-citizen household had a net worth of just $28,518 (source-census data from 2010).
Since the vast majority of people die with only a modest amount of money, most do not need to commence a full probate estate to distribute the assets. The following are strategies available to distribute a Michigan small probate estate to the family.
Bank Accounts-One of the most common situations that arises is when the person dies with only a small bank account. In this situation, Michigan law provides for an efficient process to remove the money from the bank account. The process requires no lawyer and no court intervention. After waiting at least 28 days from the date of death, presenting a death certificate, swearing under the penalty of perjury that the person died with no real estate, a family member can sign a special form, present it to the bank and withdraw the money. Yes, it is that simple! To qualify, the total value of the accounts cannot exceed $22,000 (as of 2014 and will be adjusted each year with inflation.)
Small Probate Estates-There are times that a family member cannot afford to wait 28 days after death before accessing a bank account. Usually this occurs when there is a need to remove money from a bank account to pay for the funeral and/or burial expense. Thankfully, there is a process to remove the money immediately after death. A small probate estate, called a Petition and Order for Assignment can be filed with the probate court. Often, this is called a short form probate because a personal representative is not appointed and no Letters of Authority are issued. A court order is presented to the bank to allow for the withdrawal. An heir or the person who paid the funeral bill may petition the court. The court will order that the property be used to pay any unpaid funeral and burial expenses first (or to reimburse whoever paid those expenses). The court will order that the remaining property be assigned to the spouse or to decedent’s heirs if there is no surviving spouse. An heir (other than a surviving spouse who qualifies for allowances, or minor children) who receives property through a small estate distribution remains responsible (up to the value of property received) for any of the decedent’s unsatisfied debts for 63 days after the order.
This process can be used if the date-of-death value of decedent’s property (real estate and personal property) minus the funeral and burial expenses is less than $22,000 (as of 2014 and will be adjusted each year with inflation).
Vehicles-Another common scenario involves a person that dies with limited assets and a car. In this situation, Michigan law provides for an efficient process to transfer the title to the vehicle. Here is how it works. The surviving spouse, or, if no spouse, the next closest kin must complete a Certification From the Heir to a Vehicle form and present it to the Secretary of State branch with the title, the current registration or license plate number, and a copy of the death certificate. If there is no surviving spouse, and there are several closest next-of-kin (multiple brothers or sisters), all share the inheritance equally. The person must certify that the total value of all vehicles owned by the deceased does not exceed $60,000 and that the there is no probate estate nor is one expected in the future.
Summary Proceedings-There are times that individuals will die with minimal assets held at an investment firm or another entity that requires the presentation of a certified Letter of Authority. In these circumstances, Michigan law provides that an unsupervised estate may be commenced, a personal representative appointed, and then the estate can be quickly closed. The personal representative may immediately disburse the estate to persons entitled to it and may then file a summary closing statement. To qualify for a summary proceeding, the inventory value must be less than the liens and encumbrances, administration costs and expenses, reasonable funeral and burial expenses, homestead allowance, family allowance, exempt property, and reasonable and necessary medical and hospital expenses of the decedent’s last illness.
Personal Items and/or Small Sums of Cash-The decedent’s wearing apparel and cash of $500 or less may be transferred to a decedent’s spouse, child or parent without court intervention. The transfer can occur by a hospital, nursing home, law enforcement agency. All that is needed is proof of identity as a spouse, child or parent, a sworn statement as to the proof of the relationship, and that there is no application or petition pending for probate estate administration.
The Probate Pro can assist you with any of these small probate estate issues.