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How Do Michigan Probate Courts Handle Disputed Property Ownership In Estate Administration?

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Whether or not an item of personal property belongs to a decedent's estate is not always an easy determination. When it comes to real property or a vehicle, it is easy to determine legal ownership by simply looking at the title or deed (assuming that the real estate or vehicle was not conveyed by fraud). But what about tangible items such as clothing, jewelry or even money? Matters can become very confusing if any of the heirs lived with the decedent and claimed that they had already received the property as a gift during the decedent's lifetime. What if other heirs dispute that the estate property was gifted before death? How can the truth be determined if the decedent isn't alive to say that the gift was made?

There are three elements required to establish an inter vivos gift ("made during the donor's lifetime") under Michigan law:

  • (1) The donor must possess the intent to transfer title gratuitiously to the donee. This means that he or she planned to "invest ownership in the donee beyond the power of recall by the donor." Osius v Dingell, 375 Mich 605, 611; 134 NW2d 657 (1965). An inter vivos gift "is not only immediate, but absolute and irrevocable." In re Reh's Estate, 196 Mich 210, 217; 162 NW 978 (1917).
  • (2) There must be actual or constructive delivery of the subject matter to the donee, unless it is already in the donee's possession. This means "delivery must be unconditional and must place the property within the dominion and control of the donee." Osius v Dingell, 375 Mich 605, 611; 134 NW2d 657 (1965).
  • (3) The donee must accept the gift. However, this must be fully consummated during the lifetime of the donor or the gift will fail. In re Casey Estate, 306 Mich App 252, 264; 856 NW2d 556 (2014).

Whether a party intended to gift property presents a question of fact. In re Rudell Estate, 286 Mich App 391, 404; 780 NW2d 884 (2009). This means that deciding if a gift occurred depends on what the donor said or did, whether property was actually transferred, and how the donee responded to it while the donor was alive.

Consider the following example of a clear and unequivocal gift. On your birthday, your grandmother gives you a birthday card containing a $100.00 bill. The donor ("grandma") possessed the intent to transfer title gratuitously to the donee ("you") by placing the money in a card addressed to you on a special occasion. The actual delivery of the subject matter occurs when the donor ("grandma") actually hands the card to the donee ("you"). Finally, the gift is complete when the donee ("you") accepted the gift by taking the card containing the money. There is little dispute that grandma intended to permanently part with the cash.

Now consider an example of a more uncertain transfer of property. Instead of a birthday card with a $100.00 bill, your grandmother instead opens a checking account containing $100.00 and tells you that you have the right to access the account as a joint-tenant but to only withdraw funds for the purpose of buying books for your law school class this coming semester. Although it appears to be a gift, this set-up is problematic in many ways:

  • (1) The donor does NOT possess the intent to transfer title gratuitiously to the donee. Since grandma remains on the checking account as a joint tenant, she retains the ability to recall the funds placed in the account at any time. Since the gift can be revoked at a whim, there is no intent to transfer title.
  • (2) There is NO actual or constructive delivery of the gift to the donee. In this scenario, the fact that the monies remain in a joint account mean that they are not in your dominion or control. Furthermore, grandma's stipulation that the funds may only be used to buy law school books means that the delivery was not "unconditional".
  • (3) The donee MUST accept the gift by withdrawing all funds. As long as any funds remain in the account at grandma's command to recall, the "gift" is not complete.

Under this arrangement, it would be very difficult to sue grandma if she was to suddenly drain all of the money in the bank account back to her control because it does not appear a gift was actually made.

When it comes down to a dispute on whether an item is estate property, it is helpful to consider what kind of instances of ownership were retained by the decedent. If it appeared that the decedent wished to retain some kind of control over the item, then it should properly be considered estate property. For example, a decedent keeps cash and jewelry in a safety deposit box at the bank. As a matter of convenience, the decedent added his adult son as a joint tenant to the safety deposit box so that the son can withdraw funds for the decedent's convenience and care. During the decedent's life, the adult son did make withdrawals from the safety deposit box for the decedent's benefit and for no other reason. When the decedent passed on, does that mean that the items contained in the box were now gifted to the adult son? The fact that the safety deposit was jointly held does not necessitate a finding of the contents being a gift but merely allows a joint right of access, which is "one factor which may properly be considered in arriving at the decedent's intent regarding another's interest in such contents." City Bank & Trust Co, NA v Leightner, 67 Mich App 247, 250; 240 NW2d 762 (1976). Merely having joint access does not confer ownership. The decedent's stipulation that those items and monies would only be used for his convenience coupled with the fact that the safety deposit box was ONLY accessed for that purpose makes it clear that there was no gift to the adult son.

In conclusion, claiming a gift was made requires evidence of intent, delivery and acceptance. It would be hard for the adult daughter to claim she was gifted mom's earrings if they never left her jewelry box. Likewise, the deceased mechanic's brother cannot claim he was gifted all of the automotive tools in the garage if, during his life, he was only advised that he could borrow said tools while repairing his car at the home. If any of the elements of a gift fail, the probate court will likely determine the contested item belongs to the estate and will be distributed by the terms of the last will and testament or intestate succession.

Individuals who wrongly misappropriate estate property under the guise of a "gift" should beware. The personal representative can undertake any of the following causes of actions against the thief:

  • COMMON LAW CONVERSION - The tort of conversion is any distinct act of dominion wrongfully exerted over another person's personal property in denial of or inconsistent with the rights therein. Head v Phillips Camper Sales & Rental Inc, 234 Mich App 94, 111; 593 NW2d 595 (1999). To support an action for conversion of money, the defendant must have an obligation to return the specific, identified money entrusted to his care." Blue Cross & Blue Shield of Michigan v Folkema, 174 Mich App 476, 479; 436 NW2d 670 (1988). The wrongdoer can be subject to compensatory, exemplary or even putative damages.
  • MCL 700.1205(5): DOUBLE DAMAGES - "If a person embezzles or wrongfully converts a decedent's property before letters of authority are granted, or refuses, without colorable claim of right, to transfer possession of the decedent's property to the personal representative upon demand, that person is liable in an action brought by the personal representative for the benefit of the estate for double the value of the property embezzled, converted, or withheld." For example, a person who wrongfully takes a $5,000.00 ring from the estate can be liable for $10,000.00 to the personal representative.
  • MCL 600.2919a: STATUTORY CONVERSION TREBLE DAMAGES - "(1) A person damaged as a result of either or both of the following may recover 3 times the amount of actual damages sustained, plus costs and reasonable attorney fees:"
  • (a) Another person's stealing or embezzling property or converting property to the other person's own use.
  • (b) Another person's buying, receiving, possessing, concealing, or aiding in the concealment of stolen, embezzled, or converted property when the person buying, receiving, possessing, concealing, or aiding in the concealment of stolen, embezzled, or converted property knew that the property was stolen, embezzled, or converted.

Contests over estate property often just don't include the items of monetary value but frequently include sentimental keepsakes as well (e.g. photographs, heirlooms, etc.). This injection of grief and emotion can ignite the most bitter battles over seemingly trivial things. If you are an heir, personal representative or another interested person involved in a dispute over estate property, you can benefit from the guidance of a skilled probate lawyer in your corner to advocate your position. Do not hesitate to contact the experienced attorneys at Kershaw, Vititoe & Jedinak PLC to get the best representation for your legal issue today.

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