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On-Demand Seminars | Recorded 01/30/25
Fundamentals of Estate Administration

Small Estate Proceedings

Wendy Zimmer Cox
Greenleaf Trust
Birmingham
>> This next session is small estate proceedings presented by Wendy Zemer Cox from Greenleaf Trust in Birmingham. She's a pro. She's done this a lot of times. She knows what she's talking about. Wendy, I'm going to turn it all over to you. >> Max, good morning, everyone. We are here to talk about small estates. So we're going to talk about small estate procedures. For the most part, when we talk about a small estate, we're talking about an estate that is under $50,000. So there are a variety of procedures that we can use. The $50,000 small state procedure, the affidavit procedure, total allowances or summary proceedings. Same thing. There are paycheck-only procedures. There are automobile-only procedures. And then we're going to talk for a second at the end about personal property. I should note that although you can use these procedures, occasionally, when you are dealing with a bank or other financial institution, if it's not something that's on their checklist that they are used to seeing that will trouble them and they will force you to use probably the summary proceeding process. The numbers in my presentation are as of 2024. The 2025 numbers will be released next week, those that are adjusted percola. And I did note in preparing that I missed changing the date in one spot in my presentation, but these are the 2024 numbers. So the small estate procedure. So if the net estate after the payment of funeral expenses and any other expenses is 50,000 or less, you may use this procedure. It can be used for real or personal property. When valuing real property, you are using the net value, that is the appraised value minus any mortgages. You can use it for testacy or intestacy. There's a $25 filing fee and an inventory fee, and this is SCAO Form 556, which is included in your packet. Those forms are now fillable online, which is really nice. And they're pretty straightforward and easy. You file it in the county of residence of the decedent, or if the decedent did not live in Michigan, then in the county in which the property is located. So you don't have to appoint a fiduciary. There's no notice to creditors. As I mentioned, you use the equity value of the real estate. You need to attach a copy of the paid funeral bill. This is really important piece. They will not accept it without that proof that the funeral bill has been paid because the funeral bill has the highest priority always, including with this process. So you want to make sure you have that to attach. And then you complete the order of assignment, which is in Section 6. And so the estate is assigned in the following order, the person who paid for the funeral and burial expenses, if they need to be reimbursed, the surviving spouse, and if no spouse, the descent heirs at law. The certified order that the court will issue is what you can use to take to the bank or wherever to transfer the assets. Well, as I said, bank may give you a hard time depending. If someone other than the surviving spouse receives the assets, the decedent's heirs here are the ones who are receiving the assets. They are liable to creditors for 63 days following the entry of the order for any unpaid bills. So even though you're not filing the notice to creditors, there may be some residual liability to any creditors. So that's the small estate procedure works really well for lots of circumstances. We use it in the circumstance where maybe there was a trust and everything was in trust except one bank account. I got a phone call from my husband the other day, and he said, hey, my mother just got notice of a bank account that was in my dad's name. His father died a couple years ago. Apparently, we didn't know it existed, and I said, great. I know how to do this. We're going to use the small estate procedure. So it can be used for situations where everything else has been handled, and there's just this one asset in the descendant's name floating out there. Even if the estate, "May be larger overall." So the affidavit procedure is used when you have an estate of 50,000 or less consisting entirely of personal property. So this one, you only have to wait 28 days after the decedent's death, then you can fill out the affidavit, which is a CAO Form 498 in your packet. Again, really straightforward form, pretty self-explanatory. You have to attest that the estate consists solely of personal property. You want to attach a certified copy of the death certificate, list the heirs or devisees of the estates and their shares. And this form has to be notarized. And again, non-spousal heirs are liable for 63 days to any creditors. I don't actually see this used terribly often, but it can be used. Most people use the small estate procedure because of the certified order. So I mentioned that you might be forced to use summary administration by the institution. And so what does that mean? And I think some of the other speakers are going to talk in more depth on summary administration. But basically, it's the short version of a full per rate. So what we say is, look, you have all these statutory exemptions. So spouse minor children, you get 28,000 for the homestead, 19,000 for personal property, and up to 34,000 for the family allowance. Plus you have funeral and burial expenses with priority, the costs of administration, and expenses of the last illness. So all of these things take priority over any creditor claims or any other points. So when you add up those exemption limits, it totals 81,000. So a lot of attorneys say, essentially, if the estate minus expenses is worth less than $81,000, we can use summary administration because there is no more money for creditors or anybody else. And so this procedure is really helpful in that situation. And again, these numbers will go up when the new numbers are released next week. So if the total value of the estate reduced by the liabilities is 81,000 or less, summary administration may be used. So you start this estate just like any other estate with a petition for probate and the appointment of a personal representative. And so then, of course, the court issues the letters of authority, and those letters of authority are what the other financial institutions sometimes require in order to proceed with the estate. After the usual notices and preparation of inventory, if the estate qualifies, the estate may be disbursed immediately. And so when we say the usual notices, we are not giving notice to creditors under this procedure because it doesn't matter because there's not enough money to pay them anyway. So if your estate happened to be exactly the right amount, you could pay everybody on this list. But generally speaking, the issue here is that the estate is insufficient to pay everyone on the list. And so then distribution is made in the following order. So the cost and expense of administration. So this is the inventory fee, the cost to the core, and this includes attorney fees because when the attorneys wrote the law, they were smart enough to include payment of themselves as the top priority. So if you have the situation, you will get paid for your time as a cost and expense of administration, assuming of course that it's reasonable. Then funeral and burial expenses are second. Again, we want to make sure that is taken care of. Then the 81,000 in allowances come next. Homestead, family-exempt personal property. Then taxes and debts under federal law. So any back taxes, final tax return, those types of things get paid next. And then finally, any last illness and hospital expenses. And so you just go through the funds until you run out, and that's how they get paid. The personal representative then files a sworn closing statement, Form 590. And if no objection is filed within 28 days, the court will issue a certificate of completion, Form 592. And then once you have that, the estate is complete and you're done. Paycheck-only procedure. If the employer has a written contract about how the final payment gets paid upon an employee's death, it gets paid pursuant to that plan. If they do not have a plan, that final paycheck and any benefits that need to be paid out are paid out in the following order, the order in which all things get paid in intestate, spouse, children, parents, and then siblings. The Michigan Secretary of State is very lovely and easy to deal with. When all that you need to do is transfer a vehicle that was held in the decedent's name. Typically, as attorneys, we do not recommend joint titling of vehicles or titling vehicle in a trust because of the liability concerns. And so most of the time the vehicle is in sole name of the individual who drove it. So if the vehicle is worth less than $100,000 for 2024 and starting in 2026, that number will also be adjusted, but this year it's 100,000. So if that vehicle is worth less than 100,000, it can be transferred at the Secretary of State using Form TR-29. The form is, again, pretty straightforward and easy to use. If you have the title to the vehicle, you attach it. And if the vehicle is being transferred to a non-spouse, the spouse must certify that the title is free of liens. The spouse can sign off on the title to the next person if it's going to a child instead. But the process is pretty easy. You take everything to the Secretary of State and they will transfer the vehicle and issue a new title for you. We've used this procedure many times. As I said, it's pretty straightforward. Obviously, if you have a classic car or another type of vehicle, you're going to need to use other methods to transfer it. Personal effects and money less than $1,500 held by a hospital, nursing home or law enforcement agency may just be handed over to the heirs upon signing an affidavit stating, I'm the heir, no petition for administration is pending, and they will just hand that over. So obviously, if it's really small amounts held by a nursing home, for example, that's where you typically see it, you can just use this instead of dealing with the small estate procedures. So a word about handling personal property because it doesn't come up in any of the other presentations. So in a previous life, I did a lot of probate litigation. And the amount of time that I spent fighting over the China was ungodly, a huge waste of time and money, and emotions, especially for lawyers, and to pay attorney fees to deal with this issue. I didn't ever need to get paid for this. It was more annoying than anything else. So, of course, there is all this emotion attached to the personal property. That's what's going on. The money's easy to divide up. The precious items that people attach emotion to are not. And so it's just an area that I highly recommend getting in front of if there is any way possible. Whatever those family issues are that remain unresolved, come to the fore with regard to this. My favorite story on personal property is when I was called out of a meeting because the police were on the phone with myself and opposing counsel. Because my client and her sister each had a hold of the mother's purse and would not let go of it. And the police were like, what do you want us to do? And so the other attorney was closer, and so he was dispatched to take possession of the purse, pending review. So encourage your clients prior to their death to address this issue, have items of praise, so we know what they're really worth because everyone will tell you that their parents' house is full of valuable antiques. Most of the time, it's estate sale value. But it's always good to know for sure what things are worth. If you are serving as trustee or personal representative, have the locks changed. If there's any hint of a dispute, some families, they can just handle this, and that's fine. And if it's all very amicable, we will let them do that. But any hint of a dispute, we will have the locks changed so that things do not disappear. Encourage clients to make lifetime gifts of the property if they're going to make a list reference in the will, identify the items with specificity, so it's clear what's what. If everybody in the family's named John Smith, it's helpful to identify which John Smith we are talking about. And also potentially have a method for marking items ahead of time. This, I find saves family relationships and a lot of time and aggravation post-death. And with that, I believe that my 20 minutes are up, and so I will stop screen sharing and kick it back to Max. >> Wendy, there is one question. Previously, the value did not exceed $60,000. Can you confirm that it changed for 2025 to $100,000? And I don't quite know what the context is for that question. >> That would be the automobile? Yes. I did double check that, and so I do believe that it has been increased, and then will be cost of living adjusted going forward. >> Chris has a question. It is my understanding that the nominated personal representative can not change locks on the decedent's house until the PR has letters. By then, the house may have been ransacked by grabby relatives. I like that word grabby. Any advice? >> That's one reason to use a trust to have the house in trust so that you can act immediately. But, yeah. And most of the time it's the in-laws, not the children, I find. And so the best you can do is give them a stern talking to try and collect the decedents, see if you can collect the keys ahead of time so that nobody can get in the house. Or if you know it's coming and you can work with the decedent perhaps using a power of attorney to go ahead and change the locks if you have the power of attorney to try and get in front of it. And then the problem is, of course, when stuff disappears, you can argue about it, but the courts like, what do you want me to do? I can't make it reappear. I one time had gentlemen almost come to blows in my office over a missing canister set. >> Wendy, again, thank you so very much. We always appreciate you coming in to teach us. Everybody, please, take care. >> Thank you. Everyone, have a great day. >> Thank you.

Materials by
Wendy Zimmer Cox

I. Shortcuts to Probate Proceeds

Before beginning a traditional probate administration, consider the applicability of five small estate “shortcut” procedures that are permitted under the Estates and Protected Individuals Code.

Any of the shortcut procedures discussed below may be employed by small estates, or in substantial estates, where most of the decedent’s property passes outside of probate. It is also possible to use more than one of these procedures when the primary goal is to retitle assets without the expense and delay of traditional probate proceedings.

II. $50,000 Small Estate Procedure Deaths After 2/21/2024)

A. Court Procedure

A small estate may qualify for distribution under MCLA 700.3982, MSA 27.13982. The $50,000 small estate value limitation is adjusted annually for inflation.

This procedure may be used for real property or personal property, and whether the decedent died testate or intestate. There is a $25 court filing fee for the petition, and the assets of the estate are subject to an inventory fee.

Begin by filing a Petition and Order for Assignment with the probate court (SCAO PC 556m) (Form 1).

If the balance of a decedent’s gross estate after payment of funeral and burial expenses is $50,000 or less, the probate court may order that the remaining property be assigned to the surviving spouse, or if there is no surviving spouse, to the decedent’s heirs.

If the funeral and burial expenses are unpaid, the probate court will order that the property be used first to pay funeral and burial expenses or to reimburse the person paying those expenses, and then that the balance be assigned to the surviving spouse, or if there is no surviving spouse, to the decedent’s heirs. MCLA 700.3982(2), MSA 27.13982(2).

As stated above, the current $50,000 eligibility limit is adjusted for inflation under MCLA 700.1210, MSA 27.11210 and is reviewed every February 1st.

This procedure does not require the appointment of a fiduciary, or any other court proceedings.

As a result, there is no duty to give notice, or provide inventories or accountings. There is no requirement to publish a notice to creditors. MCR 5.306(C)(2).

An heir receiving property under this procedure (other than a spouse who qualifies for allowances or minor children) is responsible for the decedent’s unsatisfied debts (up to the value assigned by the order) for 63 days after the order’s date. MCLA 700.3982(3), MSA 27.13982(3).

An original and one copy of the petition should be signed by the surviving spouse. If there is no surviving spouse, the petition may be signed by the person paying the funeral bill or by one of the decedent’s heirs.

Complete the Petition and Order for Assignment (SCAO PC 556) (Form 1) for the Small Estate Procedure as follows:

  • Determine that the total value of the decedent’s probate estate (real and personal property) is less than $50,000 (for deaths after 2/21/2024).
  • It is the decedent’s equity in real property, not the gross value, that is used in calculating this amount. For personal property, the gross value and the inventory value are the same.
  • Enter the name of the county in which the petition will be filed. This will be the county in which the decedent resided at the time of his/her death, MCLA 700.3201(1)(a), MSA 27.13201(1)(a), or, if the decedent was not a Michigan resident, the county in Michigan where the decedent left property to be administered, MCLA 700.3201(1)(b), MSA 27.13201(1)(b).
  • The file number will be assigned by the probate court.
  • Enter the decedent’s full name. If the decedent was known by more than one name, list all of the names.
  • Enter the name of the petitioner and the petitioner’s relationship to the decedent, if any.
  • Complete item 1: date of death.
  • Complete item 2: the decedent’s residence.
  • For item 3, describe the property and state its value. If it includes real estate, verify that the legal description is complete and correct. The total value must be under $50,000 (for deaths after 2/21/2024).
  • For item 4, state whether the funeral expenses have been paid. If they have been paid, provide a receipt. The probate court usually will not accept the petition without a paid receipt.
  • For item 5, list the names of the decedent’s heirs and their ages, relationships to the decedent, and addresses.
  • For item 6, request the assignment of the estate in the following order:
    1. to the person who paid or is owed for funeral, and burial expenses,
    2. the balance to the spouse, or
    3. if there is no spouse, to the decedent’s heirs.
  • Enter the name, address, bar number, and telephone number of the attorney representing the petitioner.
  • Enter the address of the petitioner.
  • Have the petitioner sign and date the petition.
  • Complete the Order Assigning Assets in accordance with item 6.
  • State the proportionate share of each heir if there is no surviving spouse.
  • A certified copy of the Order Assigning Assets will be used to transfer the assets of the estate. If real estate is included, record a certified copy of the order in the proper county.
  • File the petition with the court.

B. Affidavit Procedure

For an estate valued at $50,000 or less (for deaths after 2/20/2024) which consists entirely of personal property, the affidavit procedure may be used. See MCLA 700.3983, MSA 27.13983.

Beginning 28 days after the decedent’s death, the decedent’s surviving heir(s) may collect the personal property by presenting a death certificate and a sworn statement of the successor (subject to perjury) stating that:

  • the estate contains no real property,
  • 28 days have elapsed since the decedent’s death,
  • the gross value of the estate does not exceed $50,000 (for deaths after 2/20/2024),
  • no application or petition for appointment of a personal representative is pending,
  • the claiming successor is entitled to the property, and
  • any other entitled party’s name and address is disclosed.

MCLA 700.3983, MSA 27.13983. Use SCAO PC 598 (Form 2) and attach a copy of the decedent’s death certificate.

A person who transfers property pursuant to this procedure is discharged and released from liability to the same extent as if the person dealt with the decedent’s personal representative. MCLA 700.3984, MSA 27.13984.

A person to whom property is transferred is accountable for the property to a personal representative of the estate or to another person having a superior right, such as another beneficiary.

If there is no surviving spouse and no minor or dependent children (i.e. no one is entitled to the homestead allowance or exempt property allowance), the recipients of property under this procedure may be liable to creditors and there is no 63-day limit on this liability.

Like the Small Estate Court Procedure, the current $50,000 eligibility limit for this procedure is adjusted annually for inflation under MCLA 700.1210, MSA 27.11210.

Complete the Affidavit of Decedent’s Successor for Delivery of Certain Assets Owned by Decedent (SCAO PC 598) (Form 2) as follows:

  • Determine that the probate estate of the decedent consists solely of personal property and that it has a date-of-death value of less than $50,000 (deaths after 2/20/2024).
  • Enter the decedent’s full name. If the decedent was known by more than one name, list all names.
  • Complete item 1 by checking the box indicating the successor’s relationship to the decedent and filling in any blanks associated with the option chosen.
  • Complete item 2, the decedent’s residence and date of death.
  • Complete item 7 by entering a description of the personal property in the estate.
  • Complete item 8 by listing any other heirs or devisees and their addresses, relationships to the decedent, and shares of the estate.
  • Attach a certified copy of the death certificate.
  • Enter the successor’s name and address.
  • Have the successor read the entire form and sign it in the presence of a notary public.

C. Total Allowances Small Estate Procedures (Summary Proceedings)

There is no specific dollar limitation for a small estate proceeding under MCLA 700.3987 and .3988, MSA 27.13987 and .13988, and this procedure may be used whether the decedent dies testate or intestate.

The 2020 or 2021 limit is determined by adding the statutory homestead allowance ($28,000) (MCLA 700.2402, MSA 27.12402), the exempt tangible property allowance ($19,000) (MCLA 700.2404, MSA 27.12404), and the family allowance (MCLA 700.2403, MSA 27.12403). The family allowance is not specified in the Estates and Protected Individuals Code, but MCLA 700.2405(2), MSA 27.12405(2) gives the personal representative the authority to pay a lump sum of $34,000 for the family allowance, plus administration costs and expenses, reasonable funeral expenses, and reasonable and necessary medical and hospital expenses of the decedent’s last illness.

As a result, many attorneys consider there to be an $81,000 floor (the total of the allowances) available for this type of procedure, when there is a surviving spouse or minor children.

The total allowances and costs listed above must equal or exceed the value of the decedent’s estate as reduced by outstanding liens, mortgages, and encumbrances for an estate to qualify for this small estate procedure.

The estate proceeding is started like any traditional estate, with an application or petition for probate and the appointment of a personal representative.

After sending out the usual notices and preparing the inventory, if it is determined that the estate qualifies for summary administration, the personal representative may immediately disburse and distribute the estate to the persons entitled to the estate. MCLA 700.3987, MSA 27.13987.

There is no notice given to creditors, and the property is not subject to creditors’ claims.

If there is insufficient property to satisfy all allowances, administration expenses, funeral expenses, and medical expenses of the decedent’s last illness, distribution should be made in the following order:

  1. costs and expenses of administration,
  2. funeral and burial expenses,
  3. the homestead allowance,
  4. the family allowance,
  5. exempt tangible property allowance,
  6. taxes and debts with priority under federal law, and
  7. medical and hospital expenses of the decedent’s last illness.

See MCLA 700.2402–.2404, .3805, MSA 27.12402–.12404, .13805.

The personal representative then files a Sworn Closing Statement, Summary Proceeding, Small Estates (SCAO PC 590) (Form 3) with the probate court register as required by MCLA 700.3988, MSA 27.13988 stating that the value of the total estate did not exceed the above allowances and expenses, the estate has been distributed, a full account has been furnished to the distributees, and a copy of the closing statement has been furnished to the distributees and creditors.

Complete the Sworn Closing Statement, Summary Proceeding, Small Estates (SCAO PC 590) (Form 3) as follows:

  • Enter the name of the county where the estate is being probated, the file number assigned by the probate court, and the decedent’s full name.
  • For item 2, have the personal representative enter any changes in the interested persons or their addresses which occurred between the time the application or petition was filed and the date of the closing statement.
  • Be sure that the personal representative has carried out his or her duties as set forth in items 3 through 6 and have the personal representative sign the statement before a notary public.
  • Complete the remainder of the form by having the attorney sign the form and filling in the attorney’s and personal representative’s names and addresses.

If no objection is filed within 28 days after the closing statement is filed, the probate court register will issue a Certificate of Completion (SCAO PC 592) (Form 4). MCLA 700.3958, .3988, MSA 27.13958, .13988.

D. Paycheck-Only Procedure

If the only assets in the decedent’s estate are wages or fringe benefits, or both, payable by the decedent’s employer, the assets may be transferred without probate and without having a fiduciary appointed. MCLA 408.480, MSA 17.277(10).

Under the terms of the statute, if the employer has a written contract, policy, or plan that provides for the payment of fringe benefits on an employee’s death, these fringe benefits may be paid pursuant to the written contract, policy, or plan.

At least one court has held that if the written plan does not designate the payee, a probate procedure may be necessary to transfer wages and fringe benefits. See Carpenter v School Dist, 115 Mich App 683, 321 NW2d 772 (1982). However, MCLA 408.480(2), MSA 17.277(10)(2) appears to provide that in the absence of a written plan, the wages and fringe benefits are to be paid to the following people in the following order:

  1. the spouse,
  2. children,
  3. parents, and
  4. brothers and sisters.

Finally, even if the employer has no written contract, policy, or plan, the wages and fringe benefits of a deceased employee may nevertheless be paid without probate (if probate is not otherwise required) if the employee prior to death had designated the payee in a signed statement filed with the employer.

E. Automobile-Only Procedure

If a decedent leaves vehicles whose total value does not exceed $100,000 for 2024 and 2025 (cost of living adjusted starting 2026), the decedent’s heirs may obtain title by making an application to the Secretary of State and without obtaining letters of appointment, as long as there is no other property for which letters of appointment are necessary. MCLA 257.236, MSA 9.1936. Form TR-29, Certification from the Heir to a Vehicle (Form 5) is available at the Secretary of State’s office.

The person signing the form certifies that there is no probate proceeding pending for the decedent’s estate and that no probate proceeding will be started in the future.

If available, the vehicle title must be attached to this form.

The form requires that the year, make, body style, vehicle number, and title number be provided.

If the vehicle is being transferred to someone other than the surviving spouse, the surviving spouse must certify that the title is free of all liens.

F. Personal Effects and Small Monetary Amounts

Monetary amounts not exceeding $1500 and apparel held by a hospital, convalescent or nursing home, morgue, or law enforcement agency may be delivered to the decedent’s spouse, child, or parent on furnishing identification and on signing an affidavit stating the relationship and that no application or petition for administration is pending. MCLA 700.3981, MSA 27.13981.

No court order or appointment of a fiduciary is required. The recipient to whom delivery is made may be accountable to a personal representative of the decedent’s estate appointed after delivery.

G. Handling of Personal Property

The greatest number of disputes between heirs involve personal property. Heirs have unrealistic expectations about the value of the assets and often want to play out family history over who gets what. Some tips for preventing disputes include:

  • If your clients have items they believe to be valuable, have them appraised.
  • Encourage clients to deal with personal property by:
    • Making lifetime gifts,
    • Making a list referenced in a Will, or
    • A method for marking items ahead of time.

In the absence of advance planning, everyone will be unhappy.

Forms, Exhibits and Appendixes

Form 1
Petition and Order for Assignment (PC 556)

Form 2
Affidavit of Decedent’s Successor for Delivery of Certain Assets Owned by Decedent (PC 598)

Form 3
Sworn Closing Statement, Summary Proceeding, Small Estates (PC 590)

Form 4
Certificate of Completion (PC 592)

Form 5
Certification from the Heir to a Vehicle (TR-29)

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