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What Is The Difference Between Supervised And Unsupervised Estate Proceedings In Michigan?

by | Oct 14, 2021 | Wills, Trusts And Estates |

 

After a person dies and leaves property behind, probate administration may be required to properly oversee and distribute the decedent’s assets according to Michigan law.  The probate court will have to determine if there was a last will and testament, determine who the personal representative will be, and determine who the heirs and devisees entitled to inherit are.  The personal representative has the ultimate responsibility to ensure that the decedent’s final affairs are wrapped up and the property is processed according to the terms of the will or by Michigan’s intestate succession laws.  This administration may either be closely monitored by the judge or relatively relaxed in terms of oversight.  This blog article will explain the differences between supervised and unsupervised estate administration.

As a starting point, the concept of supervised and unsupervised administration should not be confused with informal or formal proceedings which are the methods that a decedent’s estate can be initiated.  Informal proceedings are when an estate is initiated by application and, after the proper notices and waivers are filed with the court, the probate register appoints a personal representative and admits a will to probate.  Formal proceedings are when a petition is filed with the judge to decide (after proper notice to all interested parties and a hearing) who should be the personal representative, whether there is a valid will and determine who all the heirs and devisees are.  Whether or not an estate arises by formal or informal proceedings, estate administration is unsupervised by default and can only become supervised upon request to the court.  MCL 700.3402(2)(c), MCL 700.3502.

A request for supervised administration may only be made in a petition for formal proceedings.  MCR 5.310(B).  Existing informal proceedings will turn into formal proceedings by petition if a request for supervised administration is later made.  “A petition for formal testacy and appointment proceedings including a request for supervised administration may be filed at any time during the estate proceedings if testacy has not previously been adjudicated.”  Id.  “If testacy and appointment have been previously adjudicated, a separate petition for supervised administration may be filed at any time during administration of the estate.”  Id.

Supervised administration means ALL of the following:

  • “Supervised administration is a single in rem proceeding to secure complete administration and settlement of a decedent’s estate under the court’s continuing authority that extends until entry of an order approving estate distribution and discharging the personal representative or other order terminating the proceeding.” MCL 700.3501(1).
  • “A supervised personal representative is responsible to the court, as well as to the interested persons, and is subject to directions concerning the estate made by the court on its own motion or on the motion of an interested person.” MCL 700.3501(2).
  • “Except as otherwise provided [by law] or as otherwise ordered by the court, a supervised personal representative has the same duties and powers as a personal representative who is not supervised.” MCL 700.3501(3).

The probate court will order a supervised administration if it is necessary to protect the estate’s assets and its heirs, devisees and creditors under the circumstances.  MCL 700.3502(3)(c).  The court may also consider less restrictive measures such as the requirement for the personal representative to post bond or become subject to more specific court orders.  “If the decedent’s will directs supervised administration, the court shall order supervised administration unless the court finds that circumstances bearing on the need for supervised administration have changed since the execution of the will and that supervised administration is not necessary.”  MCL 700.3502(3)(a).  “If the decedent’s will directs unsupervised administration, the court shall only order supervised administration on a finding that it is necessary for protection of persons interested in the estate.”  MCL 700.3502(3)(b).

“Unless restricted by the court, a supervised personal representative has, without an interim order approving exercise of a power, all the powers of a personal representative under this act, but shall not exercise the power to make a distribution of the estate without prior court order.”  MCL 700.3504.  This means that the supervised personal representative can only pass on property to heirs, devisees or creditors and close the estate with the judge’s permission.  All other powers of the personal representative are unaffected unless otherwise curtailed by court order.

In addition, the personal representative in a supervised administration is required to file the following documents with the court and serve copies on all interested persons:

  • INVENTORY: “Within 91 days of the date of the letters of authority, the personal representative must submit to the court the information necessary for computation of the probate inventory fee.” MCL 5.307(A); 5.310(C)(1).  An inventory fee is assessed on all decedent’s estates based on the value of their assets.   In an unsupervised administration, the inventory is submitted to the Court for calculate of the inventory fee but is not required to be filed especially if interested persons have concerns about privacy issues if the contents became a matter of public record.  However, in a supervised administration, the inventory MUST BE FILED.
  • ACCOUNTINGS: 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.” MCR 5.310(C)(2)(c).  These accountings must be filed within 56 days after the end of the accounting period.  MCR 5.310(C)(2)(a).  “The accounting period ends on the anniversary date of the issuance of the letters of authority or, if applicable, on the anniversary date of the close of the last period covered by an accounting.”  MCR 5.310(C)(2)(b).
  • NOTICE OF APPOINTMENT: The personal representative must file and serve PC 573 (Notice Of Appointment And Duties Of Personal Representative) with the indication that the estate administration is supervised. MCR 5.310(C)(3).
  • NOTICE OF ATTORNEY FEES: The personal representative must file and serve PC 576 (Notice Regarding Attorney Fees) with the written fee agreement that states the frequency of payment and notice that the interested person can object to the fees at any time prior to allowance. MCR 5.310(C)(4).
  • NOTICE TO SPOUSE: The personal representative must file and serve PC 581 (Notice To Spouse Of Rights Of Election And Allowances, Proof Of Service And Election) on the surviving spouse with proof of service filed with the court. MCR 5.310(C)(5).
  • AFFIDAVIT OF ANY REQUIRED PUBLICATION: The court may order publication in local newspapers to look for and identify any legal heirs. MCR 5.310(C)(6).
  • TAX INFORMATION: 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 was due. MCR 5.310(D).

“An estate being administered in supervised administration must be closed by an order for complete estate settlement under MCL 700.3952.”  MCR 5.311(B)(1).  A personal representative must file PC 593 (Petition For Complete Estate Settlement) with all of the accompanying accountings and distribution schedules and serve the same upon interested persons so that they have an opportunity to review and/or object.  The fiduciary fees, attorney fees, accountings and proposed distributions of personal and real property must be approved by the judge first.  A supervised administration cannot be closed by using the sworn statement method.

If an estate was previously closed and has to be reopened, it may only be reopened by formal proceedings through petition rather than informal proceedings through application.  MCR 5.312(A) states “[i]f there is good cause to reopen a previously administered estate, other than an estate that was terminated in supervised administration, any interested person may apply to the register to reopen the estate and appoint the former personal representative or another person who has priority.”  This does not necessarily mean that the reopened estate will be a supervised administration, but the judge would have to make a decision based on the individual circumstances.

If you are a personal representative or other interested person in an estate and are concerned whether or not supervised administration is appropriate, you should consult with a knowledgeable probate lawyer to determine what all the legal consequences are.  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.  Other interested persons are entitled to hire their own counsel, but it may be possible for the judge to order the estate to pay for their legal representation also if the interested person can show that the attorney’s legal services provided a benefit to the estate.  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.

 

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