How Do You Close A Decedent’s Estate In Michigan?

 

If the personal representative has completed all of the tasks required under the law (e.g. created an inventory, dealt with creditor claims, resolved tax issues, reached agreement on proposed property distributions, etc.), then the time has come to finalize estate proceedings.  Michigan law provides two methods in which estates may be closed in Michigan after everything is completed.  The method elected by the personal representative to complete the administration will depend on the unique circumstances of the estate (e.g. insolvency) or whether a particular method is directed by statute (e.g. supervised administration).  This blog article will explain the processes in Michigan by which an estate may be closed.

 

SWORN STATEMENT

“In unsupervised administration, a personal representative may close an estate by filing a sworn closing statement…”.  MCR 5.311(A).  The personal representative completes PC 591 (Sworn Statement To Close Unsupervised Administration), files it with the probate court and serves it on all interested persons to declare that he or she has done ALL of the following:

• “Determined that notice was published and the time limited for presentation of creditors claims has expired.” MCL 700.3954(1)(a).

• “Fully administered the decedent’s estate by making payment, settlement, or other disposition of all claims that were presented, of administration and estate expenses, and of estate, inheritance, and other death taxes, except as specified in the statement, including distribution of the estate property to the persons entitled. If a claim remains undischarged, the statement shall state whether the personal representative distributed the estate subject to possible liability with the distributee’s agreement or shall state in detail other arrangements that have been made to accommodate outstanding liabilities.” MCL 700.3954(1)(b).

• “Sent a copy of the statement to all estate distributees and to all creditors or other claimants of whom the personal representative is aware whose claims are neither paid nor barred.” MCL 700.3954(1)(c).

• “Furnished a full account in writing of the personal representative’s administration to the distributees whose interests are affected by the administration. The account shall clearly state the amount paid out of the estate in fiduciary fees, attorney fees, and other professional fees.” MCL 700.3954(1)(d).

The sworn statement cannot be filed any earlier than 5 months after the date of the original personal representative’s appointment.  MCL 700.3954(1).  If not objected to by any interested person, the personal representative will be discharged from any further liability to the estate.  “[T]the right of a successor or creditor whose right is not otherwise barred against the personal representative for breach of fiduciary duty is barred unless a proceeding to assert the right is commenced within 6 months after the filing of the closing statement.”  MCL 700.3956.  However, this does not bar “right to recover from a personal representative for fraud, misrepresentation, or inadequate disclosure related to the settlement of the decedent’s estate.”  Id.

“If an objection to the closing statement is not filed within 28 days after the filing date, the personal representative, the personal representative’s sureties, or a successor of either is entitled to receive a certificate from the register that the personal representative appears to have fully administered the estate in question.”  MCL 700.3958.  The probate register will issue PC 592 (Certificate Of Completion).  “The certificate is evidence of discharge of a lien on property given to secure the personal representative’s obligation in lieu of bond or a surety.”  Id.  However, “[t]he certificate does not preclude action against the personal representative or the surety.”  Id.

The sworn statement is the simplest manner to close estate administration, but it may not always be possible.  A sworn statement CANNOT be used to close a decedent’s estate subject to supervised administration.  MCL 700.3954(1); MCR 5.311(A); MCR 5.311(B)(1).  It is possible that the estate is insolvent and there is not enough assets to pay all of the creditors off.  The distribution of specific property may be contested but there is no clear direction spelled out in the last will and testament.  It is also possible that the personal representative wants the assurance that his or her actions are signed off by the judge to avoid possible litigation in the future.  In these instances, the personal representative may file a petition for complete estate settlement.

 

PETITION FOR COMPLETE ESTATE SETTLEMENT WITH TESTACY PREVIOUSLY ADJUDICATED (MCL 700.3952)

This petition can be filed whether the probate estate was filed under formal or informal proceedings AS LONG as there has been a formal determination of testacy (e.g. decedent died with or without a will) at some point during the estate administration.  “A petition for complete estate settlement must state the relief requested. If the petitioner requests a determination of testacy, the petitioner must comply with the requirements of the statute and court rules dealing with a determination of testacy in a formal proceeding.”  MCR 5.311(B)(1). “The personal representative may petition at any time, and an interested person may petition after 1 year from the original personal representative’s appointment.”  MCL 700.3952(1).  “However, the court shall not accept a petition under this section until the time expires for presenting a claim that arises before the decedent’s death.”  Id.

“A petition under [MCL 700.3952] may request the court to determine testacy, if not previously determined, to consider the final account, to compel or approve an accounting and distribution, to construe a will or determine heirs, and to adjudicate the estate’s final settlement and distribution.”  MCL 700.3952(2).  “After notice to all interested persons and a hearing, the court may enter an order or orders, on appropriate conditions, determining the persons entitled to distribution of the estate, and as circumstances require, approving settlement, directing or approving estate distribution, and discharging the personal representative from further claim or demand of an interested person.”  Id.

The petitioner must complete and file PC 593 (Petition For Complete Estate Settlement, Testacy Previously Adjudicated) with the court and serve on all interested persons.  “A personal representative may [also] petition for discharge from liability with notice to the interested persons.”  MCR 5.311(B)(2).  To have the discharge granted, the following additional documents may also have to be filed and served:

• PC 577 (Inventory) – enough information must be provided to calculate the inventory fee.

• PC 583 (Account of Fiduciary, Short Term) and PC 584 (Account of Fiduciary, Long Form) – The personal representative must file accountings with the probate court that “must be itemized, showing in detail receipts and disbursements during the accounting period, unless itemization is waived by all interested persons, [and a] written description of services performed must be included or appended regarding compensation sought by a personal representative.” Thesse accountings are required under a supervised administration.  MCR 5.310(C)(2).

• PC 596 (Schedule Of Distribution And Payment Of Claims) – The personal representative must state whether properly presented claims have been paid or disposed of (and what must still be paid), what assets will be distributed to devisees and heirs, and what fiduciary and attorney fees and costs must be paid.

• PC 573 (Notice Of Appointment And Duties Of Personal Representative) with proof that all interested persons were served within 14 days of the personal representative’s appointment.

• PC 576 (Notice Regarding Attorney Fees) with proof that all interested persons were served with this document and the written Fee Agreement within 14 days of the personal representative’s appointment.

• PC 581 (Notice To Spouse Of Rights Of Election And Allowances, Proof Of Service And Election) with proof that the surviving spouse was served within 28 days of the personal representative’s appointment.

• PC 587 (Notice Of Continued Administration) with proof that all interested persons were served not later than 28 days after the anniversary of the personal representative’s appointment every year (provided the estate was open more than one year).
• The personal representative must file with the probate court proof that all Michigan inheritance taxes have been paid (if the decedent died before Oct. 1, 1993), proof from the Michigan Department of Treasury that all estate taxes have been paid if a federal estate tax return is required, or proof that no federal estate tax return was required so no Michigan estate tax is due. MCR 5.310(D).

If the probate court is satisfied that administration was completed, the judge will sign PC 595 (Order For Complete Estate Settlement) approving the accountings and distributions of assets.  However, the court will not sign PC 597 (Order Of Discharge) until the personal representative provides evidence that all payments of claims and distributions have been made and the judge is satisfied that all of the duties regarding statutory notices, taxes and inventories have been completed.  Upon issuance of the Order of Discharge, the personal representative will be released from additional liability.

 

PETITION FOR ADJUDICATION OF TESTACY AND COMPLETE ESTATE SETTLEMENT (MCL 700.3953)

“A personal representative administering an estate under an informally probated will or a devisee under an informally probated will may petition for a settlement order for the estate that does not adjudicate the decedent’s testacy status.”  MCL 700.3953(1).  This petition can be used if:

• The estate is in unsupervised administration AND

• The court has not determined formal testacy (e.g. whether or not decedent died with or without a valid last will and testament).

“The personal representative may petition at any time, and a devisee may petition after 1 year after the original personal representative’s appointment.”  Id.  “However, the court shall not accept a petition under this section until the time expires for presenting a claim that arises before the decedent’s death.”  Id.  The petition may NOT request for a determination of testacy if the estate is in a supervised administration.  MCR 5.311(B)(2). 

“A petition under this section may request the court to consider the final account, to compel or approve an accounting and distribution, to construe the will, or to adjudicate the estate’s final settlement and distribution.”  MCL 700.3953(2).  “After notice to all devisees and the personal representative and a hearing, the court may enter appropriate orders, on appropriate conditions, determining the persons entitled to distribution of the estate under the will, and, as circumstances require, approving settlement, directing or approving estate distribution, and discharging the personal representative from further claim or demand of a devisee who is a party to the proceeding and those the devisee represents.”  Id.  However, if the judge finds that all or part of the estate is intestate (e.g. no last will and testament), then this petition must be dismissed and a new petition must be filed under MCL 700.3952.

The petitioner must complete and file PC 594 (Petition For Adjudication Of Testacy And Complete Estate Settlement) with the court and serve on all interested persons.  “A personal representative may [also] petition for discharge from liability with notice to the interested persons.”  MCR 5.311(B)(2).  To have the discharge granted, the following additional documents may also have to be filed and served:

• PC 577 (Inventory) – enough information must be provided to calculate the inventory fee.

• PC 583 (Account of Fiduciary, Short Term) and PC 584 (Account of Fiduciary, Long Form) – The personal representative must file accountings with the probate court that “must be itemized, showing in detail receipts and disbursements during the accounting period, unless itemization is waived by all interested persons, [and a] written description of services performed must be included or appended regarding compensation sought by a personal representative.” Thesse accountings are required under a supervised administration.  MCR 5.310(C)(2).

• PC 596 (Schedule Of Distribution And Payment Of Claims) – The personal representative must state whether properly presented claims have been paid or disposed of (and what must still be paid), what assets will be distributed to devisees and heirs, and what fiduciary and attorney fees and costs must be paid.

• PC 573 (Notice Of Appointment And Duties Of Personal Representative) with proof that all interested persons were served within 14 days of the personal representative’s appointment.

• PC 576 (Notice Regarding Attorney Fees) with proof that all interested persons were served with this document and the written Fee Agreement within 14 days of the personal representative’s appointment.

• PC 581 (Notice To Spouse Of Rights Of Election And Allowances, Proof Of Service And Election) with proof that the surviving spouse was served within 28 days of the personal representative’s appointment.

• PC 587 (Notice Of Continued Administration) with proof that all interested persons were served not later than 28 days after the anniversary of the personal representative’s appointment every year (provided the estate was open more than one year).
• The personal representative must file with the probate court proof that all Michigan inheritance taxes have been paid (if the decedent died before Oct. 1, 1993), proof from the Michigan Department of Treasury that all estate taxes have been paid if a federal estate tax return is required, or proof that no federal estate tax return was required so no Michigan estate tax is due. MCR 5.310(D).

If the probate court is satisfied that administration was completed, the judge will sign PC 595 (Order For Complete Estate Settlement) approving the accountings and distributions of assets.  However, the court will not sign PC 597 (Order Of Discharge) until the personal representative provides evidence that all payments of claims and distributions have been made and the judge is satisfied that all of the duties regarding statutory notices, taxes and inventories have been completed.  Upon issuance of the Order of Discharge, the personal representative will be released from additional liability.

 

CLOSING AN ESTATE THAT WAS REOPENED

“After completion of the reopened estate administration, the personal representative shall proceed to close the estate by filing a petition under MCL 700.3952 or MCL 700.3953 or a supplemental closing statement under MCL 700.3954.”  MCR 5.311(B).  “If a supplemental closing statement is filed, the personal representative must serve a copy on each interested person. If an objection is not filed within 28 days, the personal representative is entitled to receive a supplemental certificate of completion.”  Id.

 

AN ATTORNEY CAN HELP YOU CLOSE AN ESTATE

If you a personal representative and need guidance on the proper way to close an estate, you should consult with a knowledgeable probate lawyer to ensure that the correct process is used for the situation.  A personal representative is absolutely entitled to hire an attorney to assist them (at the expense of the estate) to ensure that all duties are being completed according to law.  If you have any questions about probate administration or need legal representation, do not hesitate to contact the experienced attorneys at Kershaw, Vititoe & Jedinak PLC for assistance today.