Common Probate Process Mistakes in Michigan

Probate is the legal process by which a deceased person’s estate is distributed to their heirs or beneficiaries. It is generally required under Michigan law if the decedent owned assets solely in their name, regardless of whether they had a will. Unfortunately, probate can be complex and stressful at a time when a family may be experiencing overwhelming grief. It’s not uncommon for mistakes to be made during probate, whether because the decedent’s family was unfamiliar with the process, or the personal representative simply neglected their duties. 

Here are ten common probate process mistakes — and how to avoid them: 

1. Failing to File a Petition Quickly

Every probate matter in Michigan is commenced by filing a petition with the probate court. There is no specific deadline in Michigan to start the formal probate process. However, it’s crucial not to wait too long to do so. Delays in filing can result in loss of documents, accrual of property taxes, unnecessary accumulation of debt, and various other complications. Assets that require ongoing maintenance may also depreciate in value. By filing a petition promptly, you can protect the value of the estate and ensure that the probate process runs smoothly. 

2. Selecting the Wrong Type of Probate Proceeding

One of the most common probate process mistakes in Michigan is selecting the wrong type of probate proceeding. The different types of proceedings under Michigan law include the following: 

• Formal probate — This is the court-supervised process of administering a decedent’s estate. It involves filing a petition, appointing a personal representative, notifying creditors, taking an inventory of assets, paying taxes, and distributing the estate. Since there is the potential for disputes, the formal probate process can be lengthy and costly.
• Informal probate — Informal probate is typically used in straightforward cases where there are no disputes. There is less court supervision and fewer steps before the estate can be administered.
• Small estate administration — When the value of the estate is $50,000 or less, Michigan law allows for a simplified small estate process. This option is usually faster and less costly than the formal probate process.

A probate attorney can best advise which type of probate proceeding is right for your circumstances. 

3. Not Identifying All Estate Assets

A probate process mistake often made in the early stages is failing to identify all assets in the decedent’s estate. While this can sometimes be challenging if you are unfamiliar with what property your loved one had owned, you may be able to find out by looking at tax returns, bank statements, and pieces of mail. It’s also essential to differentiate estate assets from non-estate assets — for instance, an account with a beneficiary designation would not need to go through probate.   

4. Mismanaging the Estate Assets

A personal representative is responsible for managing the assets in the estate prudently and acting in good faith. If the decedent’s property is mismanaged, or the personal representative is not acting in the best interests of the estate, the beneficiaries may have the right to pursue legal action.   

5. Ignoring Debts

The estate is responsible for settling the decedent’s debts and paying all creditors. Ignoring these debts can result in the creditors taking legal action and seizing assets in the estate to satisfy their claims. In addition, a personal representative may be held personally liable for any losses resulting from failing to pay a creditor’s claim. 

6. Failing to Pay Taxes

While Michigan does not have a state inheritance or estate tax, there are still federal tax laws that must be complied with. These taxes are due nine months from the date the decedent died, although the time for filing can be extended an additional six months. Failure to make this tax payment to the IRS can result in the personal representative being held liable for the tax amount. If assets were already transferred to the beneficiaries, the IRS could collect the tax obligation from those individuals. 

Additionally, the executor must pay the decedent’s property taxes when the owner passes away. If the tax bill is not paid, a lien could be placed on the property — and it could ultimately be foreclosed upon. The estate is responsible for these taxes until title is transferred to the beneficiary. 

Another commonly overlooked tax an estate may owe are income taxes. Any income generated by the estate over $600 requires a Form 1041. Income may be generated by the estate in connection with stocks, bonds, mutual funds, and savings accounts — or if the property is operated as a rental.

7. Not Stopping Recurring Payments or Subscriptions

If your loved one had any subscriptions or recurring payments coming out of a bank account, they must be stopped or transferred. Notify the service provider and the bank — many companies will also issue refunds for payments made after the date of death. Failure to stop automatic payments can mean these costs will come out of the estate.    

8. Failing to Maintain Adequate Records

Not keeping detailed records is one of the most common probate process mistakes, and it can easily be avoided by keeping an accurate accounting. Importantly, the personal representative of the estate is responsible for keeping records of all financial transactions related to the estate, itemizing expenses, documenting assets, recording liabilities, and preparing the accountings. If proper records were not maintained, the beneficiaries may be entitled to file objections to the final accounting. This can result in delays and additional costs. 

9. Making Distributions to Heirs Before Probate is Closed

Another common probate process mistake is making distributions before the probate matter is closed. Notably, there are very specific procedures that must be followed before an heir or beneficiary can receive their inheritance. After the probate process has been completed, the court would have to issue an order before any assets could be distributed. Prematurely distributing assets can expose a personal representative to liability, complicate the probate process, and lead to delays.   

10. Not Working with a Probate Attorney

A major probate process mistake is not working with an attorney. This area of law is complex, and many of the common pitfalls can be avoided by having legal representation. A knowledgeable probate attorney can assist with navigating the procedures associated with probate, help resolve family disputes efficiently, and reduce the emotional strain during a difficult period.

Contact an Experienced Michigan Probate Attorney

Whether you are a personal representative or a beneficiary of an estate, it’s critical to have counsel by your side to ensure the probate process is streamlined. To learn more about how we can help with your probate matter, contact us today. Our team of attorneys is committed to guiding families through the probate process and offering the legal support they need.