This is Don, YOUR Harvard Lawyer, expressing concern for you.
If you die with an estate that’s worth less than a certain amount, you can avoid going to court for an expensive formal probate proceeding.
It doesn’t matter if you have a will; the only thing that matters is the value of your assets. If the estate’s value is under Michigan’s “small-estates” limit, your heirs don’t need a court hearing — they only need to file simple forms and wait a certain amount of time.
To figure out your estate’s value, make list of your assets that will pass to heirs. But don’t count:
- assets held in joint-tenancy
- retirement plans
- payable-on-death bank accounts
- transfer-on-death real estate or brokerage accounts, or
- insurance proceeds with a named beneficiary.
These assets don’t count because they pass to the named beneficiary regardless of what a will or Michigan-law says.
For example, say Bob died in Michigan and owned these assets:
- A checking account with $2,000
- A savings account with $2,000
- A car with a blue book value of $6,000
- A $32,000 IRA that names his son as the beneficiary, and
- A $15,000 life-insurance policy that names his son as the beneficiary
You only count the bank accounts and car — $10,000 — to see if Bob is within Michigan’s small-estate limit. His IRA and the life-insurance proceeds don’t count, because they go to his son directly. The car is included because he doesn’t owe money on it.
The value of Bob’s estate is under the Michigan small-estates limit. His son, who inherits his assets, only has to file an Affidavit (i) if the estate doesn’t include real property, and (ii) the net value of the entire estate is less than $15,000.
There is also a summary-probate procedure for estates with a (i) value of $23,000 or less after paying funeral and burial costs, or (ii) a net value less than the homestead allowance computed with more detail than I include.
It’s really not that tough to avoid probate costs. Call or email me at [email protected] or (616) 389-4960.
