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Inventory Fees In Michigan: The Price of Probate

An inventory fee is the amount charged and collected by Michigan probate courts as an expense of administration on the value of the estate assets. MCL 600.871(1) provides a formula for how large this fee will be depending on the value of its assets (for convenience, most Michigan probate court websites provide a free calculator that will determine the inventory fee simply by keying in the total dollar value).

The inventory fee is not waivable and must be paid if the estate has sufficient funds, even if there are currently no liquid cash assets (e.g. in Estate of DeCoste, __ Mich App __;__NW2d__ (2016), the only asset in the estate was a home worth $56,200.00, but the Michigan Court of Appeals ruled that personal representative must pay the inventory fee whether it is by out-of-pocket amounts to be reimbursed by heirs later or by selling the house to liquidate the asset).

MCL 600.871(2) allowed that, "[u]ntil December 31, 2017, in calculating a fee under subsection (1), if real property that is included in the estate is encumbered by or used as security for an indebtedness, the amount of the indebtedness shall be deducted from the value of the real property." For example, if the estate owns a home appraising for $100,000.00 but was shackled by a mortgage with a balance of $80,000.00, then the value of the home for the purposes of calculating the inventory fee is only $20,000.00. A lower assessed value for assets almost always results in a lower inventory fee to be paid.  The lien deduction did expire at the end of 2017, but the Michigan Legislature ultimately passed an amendment to permanently eliminate the sunset provision and reinstate the lien deduction as of February 21st, 2018.

The inventory fee is an unavoidable expense of probate proceedings.  Even estates that have no assets whatsoever will generally be assessed an inventory fee of at least $5.00.  It is NOT assessed against assets that do not pass through the probate court (e.g. assets owned by a revocable living trust, joint accounts, life insurance proceeds paid to a beneficiary, lady bird deeds, etc.).  A skilled estate planning attorney can advise and assist you in implementing strategies to potentially avoid the probate court and paying the inventory fee on your hard-earned assets.  Do not hesitate to contact the probate and estate planning lawyers at Kershaw Vititoe & Jedinak PLC to assist you today.

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