The death of the primary breadwinner in a family unit is a devastating loss both emotionally and financially. Fortunately, Michigan law provides measures to protect the widowed spouse and dependents while the decedent’s estate is being settled by the personal representative. The surviving spouse (and children if applicable) have the right to claim the homestead allowance, family allowance and exempt property allowance for support while probate proceedings are pending. These allowances have priority over any other creditor claims against the estate except for the costs and expenses of administration and the reasonable funeral and burial expenses.
HOMESTEAD ALLOWANCE (MCL 700.2402)
- The homestead allowance is superior to the family allowance and the exempt property allowance.
- The surviving spouse is entitled to a homestead allowance of $15,000.00 (adjusted to $23,000.00 in 2018).
- If there is no surviving spouse, the homestead allowance of $15,000.00 (adjusted to $23,000.00 in 2018) is divided in equal shares among the decedent’s minor children (under age 18) and dependent children. Children include the decedent’s natural and adopted children but do not include stepchildren, foster children, grandchildren or more remote descendants.
- The homestead allowance is in addition to any share passed to the surviving spouse or child by the last will and testament, intestate succession or elective share.
- The personal representative does not need to seek prior court approval to pay the homestead allowance.
FAMILY ALLOWANCE (MCL 700.2403)
- The family allowance is inferior to the homestead allowance but superior to the exempt property allowance.
- The surviving spouse, minor children that the decedent was obligated to support, or children of the decedent that were actually being supported are entitled to a reasonable family allowance for their maintenance during the administration of the estate. The allowance may be paid in a lump sum or periodic payments.
- The family allowance is payable to the surviving spouse, if living, for the use of the surviving spouse and minor and dependent children; otherwise to the children or persons having care and custody of said children. If a minor child or dependent child is not living with the surviving spouse, then the allowance may be paid partially to the child (or that person having care and custody of the child) and partially to the spouse, as their needs may appear.
- The statute does not specify a maximum dollar amount, but the personal representative may grant up to $18,000.00 (adjusted to $27,000.00 in 2018) paid as a lump sum or periodic payments with additional amounts that may be authorized by the probate court. MCL 700.2405.
- The family allowance amount is granted within the sound discretion of the probate court, and the judge should consider the needs of the widow and the value of the estate, not just the income of the estate. Montgomery v Trombley, 276 Mich 439; 267 NW 648 (1936).
- “The reasonableness requirement of the family allowance provision permits examination of multiple factors, including the decedent’s intent and the other resources available to the petitioner to meet expenses that could include other allowances.” The probate court may consider if the surviving spouse has a substantial income, whether life insurance proceeds paid in a lump sum or periodic payments were intended to preserve the surviving spouse or children so other assets may be conserved, or whether a living trust existed to provide necessary income. In re Seymour Estate, 258 Mich App 249 (2003).
- The family allowance shall not continue for more than one year if the estate has insufficient assets to discharge other allowed claims.
- The family allowance is in addition to any share passed to the surviving spouse or child by the last will and testament, intestate succession or elective share.
- The death of an individual entitled to family allowance terminates the right to allowances not yet paid.
EXEMPT PROPERTY ALLOWANCE (MCL 700.2404)
- The exempt property allowance is inferior to both the homestead allowance and the family allowance.
- The surviving spouse (or, if no spouse, the children of the decedent in equal shares) are “entitled to household furniture, automobiles, furnishings, appliances, and personal effects from the estate up to a value not to exceed $10,000.00 (adjusted to $15,000.00 in 2018) more than the amount of any security interests to which the property is subject.”
- If there is insufficient exempt property, the spouse or children are entitled to take any other assets of the estate necessary to make up the $10,000.00 value (adjusted to $15,000.00 in 2018).
- Unlike the homestead allowance and the family allowance, the definition of “children” entitled to receive exempt property includes all the adult children of the decedent, not just minor and dependent children.
- The personal representative should avoid including personal property bequested to another by the decedent’s last will and testament within the exempt property allowance.
- The Michigan Court of Appeals decided In re Estate of Jajuga, 312 Mich App 706; 881 NW2d 487 (2015) and determined that, although a child was fully and explicitly disinherited in the decedent’s will, he or she was still entitled to claim exempt property from the estate due to the existing statutory language at that time. In response, the Michigan Legislature amended MCL 700.2404, effective August 8th, 2018, and added the following language: “The decedent may exclude 1 or more of the decedent’s children from receiving exempt property or assets to make up a deficiency of exempt property … by either of the following means:”
- “The decedent by will expressly states that “[t]he child takes nothing” OR “[t]he child takes an amount of $10.00 or less from the estate.”
- “The decedent by will expressly states that the child is not to receive exempt property under this section.”
Personal representatives must be particularly mindful of these allowances and their priority against other claims especially when the estate is insolvent to pay all of its debts. In addition, both the personal representative or an interested person affected by these allowances may petition the probate court for relief regarding disagreeemnts in the entitlement for allowance, the amount of allowance to be paid, or the selection of property to satisfy the allowance. Seeking the advice of a skilled lawyer is invaluable in helping determine your rights and responsiblilites under the law. If you wait until estate administration is complete, it may be too late to assert your lawful claims and they will be barred forever. If you are a personal representative or an heir and have questions about these statutory allowances or any other aspect of probate law, do not hesitate to contact the experienced attorneys at Kershaw, Vititoe & Jedinak PLC.