Know the Best Techniques to avoid probate in Michigan
When a loved one dies, their estate goes through probate. This is often a time-consuming and challenging process, and it can also be costly. If you want to avoid probate in Michigan, there are things you need to know. Talk to a probate attorney today! We will discuss avoiding probate in Michigan and some of the options available.
After looking at the probate process, we will review the top techniques for avoiding probate in Michigan. These techniques include creating a trust, using a lady bird deed, Joint ownership of property, and POD or payable on death accounts. All of these methods will allow one to avoid probate.
Table of contents
- Know the Best Techniques to avoid probate in Michigan
- What is the Probate Process?
- Why do you want to avoid probate?
- Create a Trust
- Make use of a Lady Bird Deed
- Joint ownership of property
- Payable on Death Accounts for bank accounts and other financial accounts
- Do I need to talk to an estate planning attorney to avoid probate?
- What about small estates?
- Talk to a probate attorney to avoid probate!
What is the Probate Process?
Probate is the estate administration process set up under Michigan law for settling an estate after someone passes away. The probate goals include gathering assets, paying debts, and distributing property. During probate, a judge will appoint a person to oversee the administration of the estate.
This person may be called a personal representative or executor depending on what state the person that passed resided in. In Michigan, the probate court will determine the appointment of the personal representative.
Collection of the Decedent’s Assets
The personal representative has the job of gathering up the assets of the deceased person’s estate. These assets include real property and personal property. It includes checking if the decedent had a bank account or an account with a brokerage company. All of these assets are considered assets of the probate estate.
Retirement accounts often have beneficiaries and help avoid probate. However, if there are no beneficiaries, the retirement account assets will become part of the estate.
Life insurance policies also fall in a similar situation in that most have beneficiaries and will not be part of the probate estate. Again if there is no beneficiary, then the life insurance proceeds would be part of the probate estate.
Distribution of probate estate assets
After the decedent’s assets have been collected, the law provides how these assets are distributed. The time involved involves a minimum of four months and can go on for years. Often a family has the burden of paying a lawyer throughout this lengthy process.
Does having a will avoid probate in Michigan?
A will allow you to choose how you want your estate distributed after death. It does not avoid probate. A will must be “probated” in a probate court in Michigan.
The last will provide direction on how the decedent wanted their property distributed.
Probate Court in Michigan
When a person dies, their estate must go through probate to distribute their assets to their heirs. This process can be lengthy and expensive, which is why it’s essential to take steps to avoid probate. Probate Courts are set up to administer the decedent’s estate.
Why do you want to avoid probate?
There are a few key reasons people want to avoid probate: the time it takes to go through the process, the fees associated with it, and the fact that it is a public process. These factors can cause headaches for families already dealing with losing a loved one.
Create a Trust
Setting up a trust is the most common tool for avoiding probate. A trust can be used to hold assets while you are alive, and it can also be used to avoid probate after your death. A trust may own real estate, bank accounts, stocks, investment accounts and benefit from a life insurance policy.
There are several different types of trusts. There are recoverable trusts which allow a grantor to maintain control over the assets while they are alive. The revocable living trust is a popular trust option.
Irrevocable trusts are also difficult to change after being set up and funded. You will need to talk to an estate planning attorney to find the right trust for you.
There is no need for a probate to be established. A trust document is an effective way to avoid probate in that trust property is controlled by the trust. Talk to a lawyer about the advantages of administering trust property while avoiding probate.
Make use of a Lady Bird Deed
A lady bird deed provides for property transfer without going through probate. This type of deed allows the grantor (the person transferring the property) to name a beneficiary, who will inherit it upon death.
The advantage to this type of lady bird deed is the grantor maintains ownership of the property while they are alive. Another advantage is that the grantor can revoke this type of deed at any time.
Joint ownership of property
The joint ownership of significant assets is a standard method for passing property outside probate. A married couple, for example, may own their home as tenants by the entireties, which means that each spouse holds an undivided one-half interest in the house, and upon death, the surviving spouse would receive full ownership.
Forms of Joint Ownership can also be used on the types of property such as bank and investment accounts, stocks and bonds, personal property, etc.
Types of Joint Ownership in Michigan
In Michigan, there are a variety of joint ownership options. The most common are the following:
- Joint tenancy is when you and another person own the property together. The property is automatically transferred to the surviving owners when one owner dies. There is no need for probate. When couples (married or not) acquire real estate, automobiles, bank accounts, or other valuable assets in partnership, joint tenancy frequently works well. Each co-owner called a joint tenant in Michigan must own an equal portion.
- Tenancy by the entirety is a type of joint ownership similar to joint tenancy, but it is only available to married couples in Michigan.
Payable on Death Accounts for bank accounts and other financial accounts
A pay-on-death account with a designated beneficiary maintained at a bank or brokerage firm. These are also known as “Totten Trusts” or transfer-on-death accounts.
When an account owner dies, the assets in the account are remitted to the person or people designated as account beneficiaries.
Following the account owner’s death, most beneficiaries may complete a claim form and submit a copy of the death certificate without much difficulty. The POD beneficiary then collects the assets while avoiding probate.
Do I need to talk to an estate planning attorney to avoid probate?
Michigan law does not require working with an estate planning or probate attorney to avoid probate. However, it is always advisable to seek the help of an attorney who has experience with these types of matters.
An estate planning or probate lawyer can help you navigate the complex process of avoiding probate in Michigan.
What about small estates?
Michigan has a simplified probate process if the estate is under $24,000 and the heirs are known. Specific paperwork can be filed with the probate court, but it allows you to avoid the probate process.
Talk to a probate attorney to avoid probate!
A probate attorney can assist you in planning for your estate in a way that will help you avoid probate. There are many ways to do this, and each situation is unique. Your attorney can advise you on the best way to proceed, given your specific circumstances.
Bruce Law Firm has lawyers who can guide you on avoiding probate in Michigan. We have years of experience helping clients with all aspects of estate planning. Contact us today for more information!