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Michigan's Probate Code (Question & Answer Format)
Why did Michigan adopt a new Probate Code?On April1, 2000, a new probate code, the Estates and Protected Individuals Code (EPIC) became effective in Michigan. EPIC replaces the Revised Probate Code, which was in effect since 1979. The drafting of EPIC began about 10 years ago because many practitioners believed the old probate code, which was a combination of the Uniform Probate Code and Michigan's 1939 probate code, could use some improvement. The Uniform Probate Code, drafted by University of Michigan Law School professor Richard V. Wellman, was published in 1969 by the National Conference of Commissioners on Uniform State Laws. It was developed to provide guidance and a template for more uniformity among the states' probate laws. In varying degrees, many states have incorporated portions of the Uniform Probate Code in their state probate codes. EPIC follows the 1969 Uniform Probate Code much more closely than did Michigan's old probate code, but also includes provisions unique to Michigan that EPIC's developers believed would better serve Michigan residents.
Whose idea was it to have a new probate code? Many persons participated in the development of EPIC: legislators, persons involved in groups that provide services to the elderly and handicapped, attorneys who specialize in estate planning, and so forth. The length of time in its development and the number of people involved make EPIC an "epic" production in more than just name! Some of the other significant changes are highlighted below.
What documents and proceedings are affected by EPIC?EPIC covers wills, trusts, and the administration of an estate or trust. It determines who will inherit your estate if you die without a will. It controls matters relating to disability, such as guardianships, conservatorships, and powers of attorney.
Are existing wills, trust, and powers of attorney still valid?Yes, the documents you signed before EPIC became effective are still valid. However, they will be interpreted under the new rules of EPIC rather than under the rules of the old probate code. You may wish to review your estate planning documents with your attorney to fully understand how they will be interpreted under EPIC and to make sure your documents will still accomplish your goals.
Is independent probate (an informal procedure with little if any court involvement) still an option? Yes. One of the most popular aspects of the old probate code was its adoption of "independent probate," which in contrast to "supervised" administration allowed a decedent's estate to be administered free from day-to-day involvement with the probate court. Today, the majority of estates in Michigan are administered by independent proceedings. EPIC retains this concept, but has further streamlined the process, which it refers to as "unsupervised administration."
Under EPIC, unsupervised administration becomes the default procedure for administering an estate. If your personal representative (the person you name in your will to administer your probate estate) believes there will be disputes over his or her appointment as administrator or disagreement over decisions involving settling your estate (the sale of your home, for example), he or she may petition the court for supervised administration. In that case, a probate court judge will review all documents and decisions made in regard to your estate.
How does EPIC affect the estates of people who die without wills?EPIC has updated the rules that determine the distribution of an estate of a person who dies without a will. We refer to dying without a will as dying "intestate." One example of how EPIC changes the rules of intestacy is the share to which a surviving spouse is entitled. Under the old probate code, if you died without a will, your surviving spouse was entitled to the first $60,000 of your estate, plus half of the remaining assets; your children were entitled to the other half. Under EPIC, your surviving spouse is entitled to the first $183,000 (2006), plus half of the remaining assets. [Note: If you were married previously, and had children from a previous marriage, but no children from the current marriage, your surviving spouse under the previous probate code would receive only one-half of the estate. Under EPIC, the surviving spouse receives the first $122,000 (2006) and one-half of the balance.] Another example is that EPIC expands the classification of heirs who would receive your estate if you died intestate with no surviving parents, spouse, or descendants to include not only your siblings and their children, but also other more remote descendants of your siblings (such as your grandnieces and grandnephews). EPIC also changes a number of other intestacy rules, including those involving inheritance by or from an illegitimate child.
If you don't currently have an estate plan, do your family a favor and get one done. Don't depend on the intestacy rules to provide the best administration of your estate. Having an estate plan not only guarantees that your estate will pass to those persons you want to benefit, it also enables you to determine such important issues as who will be the person responsible for the administration of your estate.
Under EPIC, may a safe deposit box still be opened before probate is administered?Yes. However, there is an important procedural change under EPIC. If the safe deposit is opened only to determine if a will or a deed to a burial plot is in the box, any will or burial plot deed, as well as a written statement that no other items were removed from the safe deposit box, must be delivered to the probate register or a deputy probate register.
What about the transfer of vehicles? When the total value of the vehicles is less than $60,000 and there are no other probate assets, your spouse can transfer the vehicle titles simply by taking a death certificate and the vehicle titles to a Secretary of State office.
Does EPIC change any of the signing requirements for documents? EPIC has new procedures for the execution of wills and trusts that allow these documents to be "self-proving." This can be very helpful if a will is later challenged and the original witnesses to the execution of the will cannot be located because it is conclusively presumed that the signature requirements for a valid will have been met if the will is self-proved. The other requirements of proper execution are presumed without the testimony of the witnesses to the will but subject to rebuttal. If you have an existing will, it can be made self-proving. See your estate-planning attorney about how this can be done.
Will EPIC affect the way my assets are distributed among my family members after my death?It may, depending on how your estate plan is set up. A common way of describing how assets should be divided after both spouses have died would be to say the remaining assets should be divided among your descendants "by right of representation." EPIC changes the meaning of the legal term "by right of representation."
Under the old probate code, if you left your estate to your descendants "by right of representation," at your death, your estate would be divided into as many shares as you had children, either living or dead. For example, if you had one living child, and two children who predeceased you, your estate would be split into three equal shares: one for the living child, and one for each deceased child. Your living child would receive 33.3% of your estate. Each deceased child's 33.3% would then be divided between that child's descendants. Let's say one of your deceased children left six children, and the other deceased child only left one child. Your grandchildren in the six-child family would each receive 5.5% of your estate, while the grandchild in the one-child family would receive 33.3% of your estate. EPIC changes these rules.
Under EPIC, your surviving child would still receive 33.3% of the estate. However, the two shares representing your deceased children would be recombined, and divided equally among the seven grandchildren who were the descendants of the deceased children. In this case, each of the seven grandchildren would receive 9.5% of your estate. In other words, all grandchildren would be treated alike. You should consult with your estate planning attorney to make sure your current documents will produce the result you want.
Do I still have to use a will to nominate guardians who will care for my minor children if I die? No. Under EPIC, you may nominate guardians who will care for your minor children after your death without preparing an entire will solely for that purpose. Under the old probate code, the nomination of a guardian had to be made in a will.
What happens if I get divorced? The old probate code provided that if you divorced, or had your marriage annulled, any gift to your former spouse was automatically canceled. Your nomination of your former spouse as a fiduciary (such as the personal representative of your estate) was also automatically canceled. EPIC expands this concept to include not only a former spouse, but also any relative of the former spouse. Let's say that although you and your spouse have divorced, you still want to make provision for your stepchildren in your will or to name your spouse's accountant brother as fiduciary of your estate. Under EPIC, the gifts to your stepchildren and the designation of your former brother-in-law as fiduciary are automatically canceled. You must redo your documents after the divorce to override EPIC's cancellation.
What about my pets?Under EPIC, it is now possible to create a trust to provide for the care of your pet after your death. There was no equivalent to this provision under the old probate code.
Does EPIC change the way living trusts are administered in Michigan?A living trust is a trust that is revocable during your lifetime. EPIC contains several changes that relate to living trusts. Some key changes involve accounting requirements and rules about creditors.
Under the old probate code, a trustee was required to provide annual accountings to all presently vested beneficiaries. For instance, if after your death your spouse was entitled to distribution of income and discretionary distributions of principal from your trust, and the remaining estate was to be distributed to your children when your spouse died, the old probate code required the trustee to give annual accounts of the trust to your spouse and children during your spouse's lifetime. Under such circumstances, many people prefer that their children not receive accountings until after the surviving spouse dies. EPIC allows you to override the accounting requirements by inserting language in your trust that limits who is entitled to receive an accounting of the trust.
EPIC also changes the rules regarding claims against a living trust. EPIC provides that the property held by a living trust is subject to creditors' claims at the time of your death, just as assets held by your probate estate would be. However, in order to make a claim against your living trust, the creditor must present the claim within a four-month period that is set by a publication notice. Previously, such trusts were vulnerable to creditors' claims for up to six years.
Does EPIC change any of the duties of a trustee, personal representative, or other fiduciary? EPIC adopts the Michigan prudent investor rule. The person responsible for handling the administration of your trust or estate will be subject to these rules. The requirements imposed on the fiduciary by EPIC include the following:
- The fiduciary must look at the investment portfolio as a whole.
- The fiduciary must take into account the terms, purposes, and requirements of the governing instrument (such as a will or trust).
- The fiduciary must set an investment strategy that has appropriate risk and return objectives.
- The fiduciary must diversify the investments, except in certain special circumstances.
This summary is intended as a source of general information. If you have questions or desire additional information, please contact Ryan M. Wilson at (517) 377-0897 or rwilson@fraserlawfirm.com.