Does a Small Estate Still Have to Go Through Probate?

When individuals pass away, they leave behind property that is classified as probate or non-probate. In order to be classified as non-probate property, the property must either be jointly held by the deceased and another person, or it must be the type of property that has a beneficiary. Examples of non-probate property include joint bank accounts, most retirement accounts, and life insurance policies. If property has a joint owner or a named beneficiary, it automatically transfers to that person upon the other’s death. As a result, there is no need for non-probate property to go through estate proceedings.

Probate property consists generally of every other type of property that doesn’t have a joint owner or a named beneficiary. All property that is solely in the deceased person’s name, whether it is a vehicle, solely-owned bank account, real estate, or personal property, is probate property that typically much go through estate proceedings in probate court in order to be distributed to the deceased’s heirs.

If an individual passes away and leaves behind only a small amount of probate property, it may be possible to avoid the probate process altogether, depending on the overall value of the probate estate. The dollar value of a small estate under Michigan law can change from year to year. For 2018, in order to qualify as a small estate, the total value of a decedent’s assets must be $23,000 or less, after the payment of funeral and burial expenses. Real estate is the net value of the real estate, or the market value of the property less any mortgages or other liens. Personal property, however, is simply listed at market value, without any deductions for liens. If this is the case, the assets automatically go to the surviving spouse. If there is no surviving spouse, then the assets go to any direct descendants, starting with the decedent’s children.

If a small estate includes real property, it can be transferred via the assignment of property process. An heir or a person who paid the funeral bills must file a petition in probate court, listing all of the property in the small estate and all known heirs, along with a certified death certificate. The probate judge will briefly review and approve the assignment of property. There is no notice to creditors during this process, but any creditor can attempt to collect the debt within 63 days of the court-ordered distribution of property. In this case, the heirs who received the property will have to pay the debt, at least up to the amount of property that they received. However, spouses and minor children who inherited the property do not have to pay the debts from the property that they inherited.

A small estate that contains no real property can be transferred completely outside the probate court by using an affidavit. In this situation, the person who will inherit the property can present an affidavit and a death certificate to whomever holds the property. This process cannot occur until 28 days following the individual’s death. In assessing whether a small estate go through the affidavit of transfer process, there are no deductions from the value of the estate for funeral and burial expenses. However, all personal property is valued at net value, rather than market value.

Planning for your family’s future is not an easy process and involves many different options, including creating an estate plan and ensuring that other legal documents are in place. We are here to answer your questions and calm any concerns that you may have, in hopes of creating the estate plan that is most beneficial for you. Here at Legacy Law Center, we know how to represent your interests and work toward a plan for your family’s future. Contact us today at (734) 995-2383 so that you can meet with us and learn how we can help you.