A personal representative is a fiduciary with the duty to fairly administer and distribute the assets of a decedent’s estate for the benefit of the surviving spouse, heirs, devisees and creditors. This significant authority allows broad access to the assets of the deceased, but also creates the opportunity for an unscrupulous personal representative to steal. What are the remedies available to an interested person in an estate if they suspect that the personal representative is converting estate assets?
Michigan’s Estate and Protected Individuals Code gives the ability for affected persons to compel the court to order an interested person to appear and answer for alleged theft against the estate. “The court may order a person to appear before the court and be examined upon the matter of a complaint that is filed with the court under oath by a fiduciary, beneficiary, creditor, or another interested person of a decedent’s or ward’s trust or estate alleging [that] the person is suspected of having, or has knowledge that another may have, concealed, embezzled, conveyed away, or disposed of the trustee’s, decedent’s, or ward’s property.” MCL 700.1205(1)(a).
“If the person ordered [by the court to appear] refuses to appear and be examined, or refuses to answer the interrogatories asked of the person that relate to the complaint, the judge may by warrant commit the person to the county jail to remain in custody until that person submits to the order of the court.” MCL 700.1205(2).
If theft by the personal representative is discovered or strongly suspected, then harsh sanctions can be imposed:
- REMOVAL OF PERSONAL REPRESENTATIVE: “An interested person may petition for removal of a personal representative for cause at any time.” After receipt of removal proceedings, the personal representative cannot take further action except to account, to correct maladministration, or preserve the estate. “If removal is ordered, the court shall also direct by order the disposition of the property remaining in the name of, or under the control of, the personal representative being removed.” MCL 700.3611(1). The court may remove a personal representative on the grounds that he or she “mismanaged the estate” by stealing or converting assets. MCL 700.3611(2)(c).
- LAWSUIT FOR DOUBLE DAMAGES: The successor personal representative can demand that the removed personal representative return the money or assets to the estate that were stolen. If the removed personal representative fails to return the assets on demand, then “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.” MCL 700.1205(4). For example, if the personal representative converted $20,000.00 from the estate, then he or she can be liable for $40,000.00 in a civil action.
- CRIMINAL PENALTIES FOR EMBEZZLEMENT: A personal representative can also be criminally prosecuted for embezzlement from the estate by the county prosecutor or attorney general. Any personal representative who has collected “any goods, chattels, money or effects of the deceased” then “willfully appropriated the same to his own use”, and who was ordered by a judge to return those assets to the estate but “wilfully omit, neglect or refuse for 60 days to obey said orders” is considered to have committed the crime of embezzlement and is guilty of a felony punishable by a fine up to $5,000.00 or up to 10 years in prison, or both. MCL 750.176.
If the personal representative has not actually stole from the estate but there is reason to believe this can happen, then the heirs or other interested persons can ask the probate court to put additional security measures or restrictions in place:
- DEMAND FOR BOND: The probate court can require the personal representative to furnish a bond as financial security or protection for the estate in case assets go missing. “A person apparently having an interest in the estate worth in excess of $2,500.00 or a creditor having a claim against the estate in excess of $2,500.00 may make a written demand that a personal representative give bond. The demand must be filed with the register, and if appointment and qualification have occurred, a copy must be mailed to the personal representative. Upon filing of the demand, bond is required, but the requirement ceases if the person demanding bond ceases to be interested in the estate or if bond is excused as provided in section 3603 or 3604. After receipt of notice and until the filing of the bond or cessation of the requirement of bond, the personal representative shall refrain from exercising any powers of the fiduciary office except as necessary to preserve the estate. Failure of the personal representative to meet a requirement of bond by giving suitable bond within 28 days after receipt of notice is cause for removal and appointment of a successor personal representative.” MCL 700.3605.
- ORDER RESTRAINING PERSONAL REPRESENTATIVE: “On petition of a person who appears to be an interested person or acting on the court’s own motion, the court, by temporary order, may restrain a personal representative from performing a specified act of administration, disbursement, or distribution, or from exercising a power or discharging a duty of the personal representative’s office, or may make another order to secure proper performance of the personal representative’s duty, if it appears to the court that the personal representative otherwise may take some action that would jeopardize unreasonably the interest of the petitioner or of some other interested person.” MCL 700.3607(1). The court shall set a hearing date no more than 14 days after the issuance of the temporary restraining order. MCL 700.3607(2).
- SUPERVISED ADMINISTRATION: “Any interested person or a personal representative may file a petition for supervised administration at any time.” MCL 700.3502(1). Even if the decedent’s will directs unsupervised administration, “the court shall… order supervised administration on a finding that it is necessary for protection of persons interested in the estate.” MCL 700.3502(3)(b). “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). Generally, a personal representative cannot make any distributions from the estate of any kind without permission from the judge.
As an heir or beneficiary of an estate, you have the right to be treated fairly, to be reasonably informed of what is happening regarding the estate, and to not have your inheritance squandered by a dishonest or incompetent personal representative. If you feel that these rights are being violated, then you also have the right to secure a skilled probate lawyer to petition the court and protect your interests. Our law firm specializes in estate administration and will fight hard for you to obtain everything you are entitled to.
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.