It sounds unbelievable: mere weeks after your elderly parent passes away, while you're still grieving, trying to clean out their home and sort through their possessions, you find that someone else has opened their estate in the probate court and been appointed executor. And not just "someone else" like a sibling or other relative, but someone you've never met or heard of. Someone completely unrelated to you or your deceased parent.
It sounds like identity theft, but in fact, it's perfectly legal under Michigan law—and it can have devastating consequences for family who wait just days too long to open a probate estate for their deceased loved one, who is legally known as the decedent in a probate matter.
In Michigan, there is an order of priority for persons to serve as personal representative of an estate. First priority is given to someone named in a will, followed by the decedent's surviving spouse, other devisees in a will, and other heirs. This is a logical order, based on the decedent's wishes and closeness of relationship.
But what happens if none of those people go to the probate court to open a probate case? Under Michigan probate law, 42 days, just six weeks, after a death, a creditor of the estate can nominate someone to serve as personal representative. Or, under certain circumstances, the state or county public administrator may be appointed personal representative of a decedent's estate after 42 days. One of those circumstances is that "no interested person applied or petitioned for appointment of a personal representative within 42 days after the decedent's death." In other words, even if you were named as executor in your parent's will, if you don't open the probate estate within six weeks, someone else can.
Far from just taking the work of being executor off your hands, however, a public administrator also takes the power to manage the estate out of your hands. They must still act in the best interest of the estate, but they have some latitude to determine just what that is. The problem is that their ideas about what's best for the estate may differ radically from what you and other heirs want.
Far from just taking the work of being executor off your hands, a public administrator takes the power to manage the estate out of your hands.
In a recent Macomb County case, a bereaved family learned the hard way that there is a difference between what is legal and what is right. While the family was focused on cleaning out their father's home, which they told was worth less than was owed on it, a public administrator was appointed as personal representative. Like many people, the decedent's adult daughter had no idea how to probate an estate, so she didn't contest the appointment when notified.
The public administrator hired a realtor known for "flipping" houses in foreclosure. That realtor also owned a company called Probate Asset Recovery (PAR), which paid the filing fee for the probate case—unusual, but not illegal. The decedent's house was sold for a profit, which was arguably a benefit to the estate. But because an estate must pay parties that perform services for it, the realtor's companies ended up with nearly $14,000 from the estate, while the decedent's daughters and her siblings got around $3,000 each.
The public administrator in question has been opening a significant number of probate estates using PAR. He claimed not to know who owned the company, or that it was owned by the same realtor who oversaw the sale of the property. The public administrator, like all personal representatives, was also entitled to payment for his services from the estate.
In the case described above, the whole problem could have been avoided in a couple of simple ways. If the deceased had placed most of his assets, including his home, in a living trust, there would have been no incentive for a public administrator to open an estate, and no opportunity for possibly unscrupulous parties to profit from it at the family's expense. A living trust can be quickly and easily prepared by a Michigan estate planning attorney and may help families bypass probate altogether.
What if it's too late for a trust, because your loved one has already passed away? Then the lesson is: DO NOT DELAY in opening the probate estate. Under no circumstances should you let those 42 days elapse without opening an estate and having a person you know and trust—maybe yourself—appointed as personal representative. Even if you feel you don't know what you're doing, you're entitled to the help of a probate attorney, whose services are paid for out of estate funds.
If, as sometimes happens, those weeks slip by before you realize it, don't assume you must accept an appointment of a public administrator as personal representative of your loved one's estate. Retain a probate attorney immediately and challenge the appointment. If you don't, you could lose all control over how the estate is managed.
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