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. Michigan’s Estates and Protected Individuals Code provides a formula for how large this fee will be depending on the total value of its assets:
- “In an estate of value less than $1,000.00, $5.00 plus 1% of the amount over $500.00.” MCL 600.871(1)(a).
- “In an estate of value of $1,000.00 or more, but less than $3,000.00, $25.00.” MCL 600.871(1)(b).
- “In an estate of value of $3,000.00 or more, but less than $10,000.00, $25.00 plus 5/8 of 1% of the amount over $3,000.00.” MCL 600.871(1)(c).
- “In an estate of value of $10,000.00 or more but less than $25,000.00, $68,75 plus 1/2 of 1% of the amount over $10,000.00.” MCL 600.871(1)(d).
- “In an estate of value of $25,000.00 but less than $50,000.00, $143.75 plus 3/8 of 1% of the amount over $25,000.00.” MCL 600.871(1)(e).
- “In an estate of value of $50,000.00 but less than $100,000.00, $237.50 plus 1/4 of 1% of the amount over $50,000.00.” MCL 600.871(1)(f).
- “In an estate of value of $100,000.00 to $500,000.00, $362.50 plus 1/8 of 1% of the amount over $100,000.00.” MCL 600.871(1)(g).
- “For each additional $100,000.00 value, or larger fraction thereof, over $500,000.00, $62.50.” MCL 600.871(1)(h).
- “For each additional $100,000.00 value, or larger fraction thereof, over $1,000,000.00, $31.25. MCL 600.871(1)(i).
When calucating this fee, “if real property that is included in the estate is encumbered by or used as security for an indebtedness, the amount of the indebtedness must be deducted from the value of the real property.” MCL 600.871(2). For example, if a $200,000.00 home has a $150,000.00 mortgage balance against it at the time of death, then the inventory value of the home is only $50,000.00.
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. In Estate of DeCoste, 894 NW2d 685 (2016), the personal representative, who was the only son and heir of his mother, commenced probate proceedings to transfer a house, the sole asset of the estate, into his name. He could not afford any of the costs associated with the probate proceeding and obtained a suspension of the filing fee. The personal representative petitioned the probate court to waive the inventory fees on the basis that there were no funds to pay the inventory fee on the house (worth $56,200.00) and he could not afford to pay it himself. The probate court judge denied his request. The Michigan Court of Appeals ruled that personal representative must pay the inventory fee whether it is by coming up with money out-of-pocket or by selling the house to liquidate the asset. If there are no liquid assets on the onset of probate administration, then the personal representative has the duty to locate money from other sources.
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 paying the inventory fee by structuring assets to avoid the probate process. If you need legal assistance, then do not hesitate to contact the probate and estate planning lawyers at Kershaw Vititoe & Jedinak PLC to assist you today.