Aunt Bessie died and all she left was a bank account in her own name with about $18,000 in it. Her will said that you were to get everything. So you take the will to the bank to get the cash, but the bank will not give you the money. They tell you that you need to get letters testamentary or probate court papers to access the account.
Or maybe Aunt Bessie died leaving a $16,000 life insurance policy and named her sister, your Mom as the only beneficiary. However, Mom died several years ago. Since Aunt Bessie did not name any successor or contingent beneficiary, it goes to her estate. The insurance company representative says they will not release the life insurance proceeds without letters testamentary or probate court papers.
When banks or insurance companies ask for letters testamentary or probate court papers, what they are really looking for in Michigan are the letters of authority issued by the probate court. Letters of authority give evidence to the world that the court appointed personal representative (formerly executor) can act on behalf of the estate. Letters of authority are actually a single page document which usually has two raised seals upon it and has duties of the personal representative attached.
You have already processed Mom or Dad’s estate through the probate court process. You had to pay thousands of dollars in legal fees and court costs. That seems like an awful expensive procedure for $16,000 or 18,000. Is there a way to avoid the probate court process for that bank account or life insurance policy? Absolutely.
Starting in 2000 when the Michigan Estates and Protected Individuals Code was enacted, you do not have to go through the probate court process for these small estates. All you need to do is present to the bank or life insurance company a death certificate and sworn statement which complies with the statute. (MCL 700.3983) The sworn statement should state the following:
The estate does not contain real property and the value of the net estate does not exceed $20,000, as adjusted by inflation. $20,000 is the 2011 amount. As of the day I wrote this column, the 2012 amounts had not been posted on the State of Michigan website.
It has been at least 28 days since the death.
No probate proceeding has been started for the estate.
The person signing the sworn statement is entitled to the property.
The name and address of each other person entitled to a share of the property.
Once the sworn statement is presented to the bank or life insurance company, the statute provides that they have to deal with the signer of the sworn statement to the same extent as a personal representative of an estate. And they can not inquire into the truth of the statements made or require any evidence of the statements.
The statute is not limited to banks or life insurance companies. It applies to just about anyone who is holding property of the deceased. This includes stockbroker accounts, loans made, bonds, mutual funds, stocks, nursing home patient accounts, IRAs, 401(k)s, retirement plans, annuities, etc. So long as the property is in the deceased’s sole name and there is no designation of beneficiary or transfer or payable on death designation, these rules apply.
The thing with sworn statements is that they have to be in a certain format, be notarized and sworn under the penalty of perjury. How are you going to draft this document? The statute contemplates this, and required the state court administrative office (“scao”) to develop the form.
The form is called Affidavit of Decedent’s Successor for Delivery of Certain Assets Owned by Decedent and is Michigan court form PC598. You can find the form online by Googling “scao affidavit of decedent’s successor” or going to the state website at: HYPERLINK “http://courts.michigan.gov/scao/courtforms/estatestrusts/pc598.pdf” http://courts.michigan.gov/scao/courtforms/estatestrusts/pc598.pdf.
Do you have to hire a lawyer to fill out the form? Not necessarily. I have had a number of clients who wanted to pay me to prepare the form so that they could be assured it was completed properly. On the other hand, I had clients who wanted to do it themselves. If the property is only worth $1,000, paying a lawyer $300 or $400 to complete the form would take a big chunk out of it. However, it would be done right.
If the deceased’s property includes real estate and the value of the net estate does not exceed the $20,000, you still can avoid the full blown probate proceeding. There is an abbreviated procedure requiring the completion of one form called Petition and Order for Assignment, court form PC556. The form is filed with the probate court along with the death certificate, the paid funeral bill and appropriate filing fee. Based upon the representations in the petition, the court would enter an order assigning the deceased’s assets to the person who paid the funeral bill and the surviving spouse or other heirs.
If there is no real estate, there is no need to go the probate court to have an order entered. The sworn statement in the Affidavit of Decedent’s Successor should be sufficient. So the next time some financial institution requests for letters testamentary or probate papers for an estate not more than $20,000, you do not need to provide it to them. All you need to do is to present a properly completed sworn statement along with the death certificate. You then would be legally entitled to the property.
By: Matthew M. Wallace, CPA, JD
Published edited January 15, 2012 in The Times Herald newspaer, Port Huron, Michigan as: Small estates can sidestep probate