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Supervised and Unsupervised Probate Administration

Contents

    When a person dies, they are called a decedent. A decedent leaves property behind. That property needs to be passed on to those who will inherit it. The law spells out how a person’s property must be distributed when that person dies. In Michigan, the probate courts are in charge of making sure a decedent’s estate is distributed correctly. This is called probate administration. There are different types of probate administration—formal and informal. To learn about these proceedings, read An Overview of Informal Probate and An Overview of Formal Probate.

    With both formal and informal probate, the administration can be supervised or unsupervised. Supervised administration involves more steps and limits the power of the personal representative, if one is appointed.

    An interested party can ask for supervision at any time and for any part of the proceedings. You can also ask to end supervision at any time. Regardless of the type of administration, there are three main steps when dealing with a decedent’s estate—opening, administering, and closing the estate. This article describes some of the differences between supervised and unsupervised administration.

    Opening the Estate

    The first step in the probate process is to open the estate. You or another interested party does this by filing a petition with the probate court. You can ask for supervised or unsupervised administration in the petition.

    Supervised Probate

    Supervised probate administration requires a probate judge to oversee activities of the decedent’s estate. Any interested party can ask for supervision. An interested party is any person who has an interest in, property right in, or claim against the estate. It can include the decedent’s:

    At the beginning of the estate administration, you can use the Petition for Probate and/or Appointment of Personal Representative to ask for supervision, formal probate, and to appoint a personal representative.

    If estate administration has already started and a will has been found valid, you can ask for supervision by filing a Petition for Supervised Administration after Previous Adjudication.

    When Is Supervision Granted?

    When deciding whether to grant supervised administration, a judge will first look to the decedent’s will. The will can do any of the following:

    • Ask for supervised administration

    • Ask for unsupervised administration

    • Not mention supervision

    Regardless of what the will says, a judge will look at the circumstances to decide whether supervision is needed. Even if the will asks for supervision, the judge can find the need for supervision has changed. The same can be said if the will calls for unsupervised administration. Usually, if there is an interested party who may need protecting (like a devisee or heir with a disability) the judge will order supervision.

    Unsupervised Probate

    A probate judge will not oversee unsupervised probate administration. You can have unsupervised administration with either formal or informal probate. You can use the Petition for Probate and/or Appointment of Personal Representative to open the estate without supervision.

    You, another interested party, or the estate’s personal representative can ask to end supervision at any time during the administration. A judge will grant the request and allow unsupervised administration if there is no reason for supervision.

    Administering the Estate

    Unsupervised and supervised administration follow many of the same steps. There are more steps for supervised administration, including longer notice periods. Many of the extra steps have to do with the supervision process, like asking to begin or end supervision.

    For all estates being administered, a personal representative may be appointed to distribute property. The personal representative must sign and file an Acceptance of Appointment before getting the authority to act on behalf of the estate. However, when an estate’s administration is supervised, the personal representative cannot distribute property without a court order. If a personal representative needs to distribute property during supervised administration, he or she can ask the court for permission to do so. If the judge approves it, he or she will sign an order for (partial) distribution.

    Notice for different actions must be given throughout the administration of an estate, regardless of whether it is supervised. There are specific timelines for notices depending on certain circumstances. You may want to talk to a lawyer to help you with this process. Use Find a Lawyer to find lawyers and legal services in your area.

    At the initial hearing, the probate judge will determine the decedent’s domicile, the decedent’s heirs, and whether there is a valid will. The length and number of hearings largely depend on whether your petition is contested. An interested party can contest (object to) the will being probated or the legitimacy of the will. Contesting or defending a will makes the estate complicated. You may want to talk to a lawyer if you are in this situation. Use Find a Lawyer to find lawyers and legal services in your area.

    If your petition is not contested, or if the judge decides to go ahead with formal probate, the judge will enter an Order of Formal Proceedings.

    The personal representative has to handle paperwork and payments. An inventory of the estate must be made and given to all interested parties. Then, the following tax documents must be prepared and filed:

    • Decedent’s final income tax returns (IRS Form 1040)

    • Application for federal employer identification number (IRS Form SS-4) for the estate

    • Notice Concerning Fiduciary Relationship (IRS Form 56)

    • The estate’s income tax returns (IRS Form 1041) and Michigan Treasury Department Form MI-1041

    • Federal and Michigan estate tax returns (IRS Form 706) and Michigan Treasury Department Form MI-706 (if required)

    The following expenses must be paid:

    • administration expenses

    • funeral and burial expenses

    • homestead allowance

    • family allowance

    • exempt property

    • debts and taxes with priority under federal law

    • medical expenses of last illness

    • debts and taxes with priority under Michigan law

    • other claims that are properly presented and allowed

    Closing the Estate

    Before an estate can be closed, the following must happen regardless of whether the administration is supervised:

    • The estate must be open for at least five months

    • Required notice to creditors must be published at least four months before closing

    • The inventory fee must be paid

    • Any estate/inheritance taxes must be paid (proof of payment required)

    Supervised Probate

    When an estate is under supervised administration, it must be closed with a Petition to Order for Complete Estate Settlement. You can use the Petition for Adjudication of Testacy and Complete Estate Settlement if the estate was not previously adjudicated (if there was no hearing). If the estate was previously adjudicated, you can use the Petition for Complete Estate Settlement, Testacy Previously Adjudicated.

    Final distributions are generally made after the order is entered. The personal representative should submit proof of final distributions to the court, such as receipts. In some counties, the personal representatives must file an Order of Discharge. Contact your county’s probate court to find out if you need to file this order. Use Court Information to find the probate court’s contact information in your county.

    Unsupervised Probate

    When an estate is under unsupervised administration, it can be closed with a Petition for Complete Estate Settlement or a Sworn Statement. You can use the Petition for Adjudication of Testacy and Complete Estate Settlement if the estate was not previously adjudicated. If the estate was previously adjudicated, you can use the Petition for Complete Estate Settlement, Testacy Previously Adjudicated.

    Or you can use the Sworn Statement to Close Unsupervised Administration to close the estate. But you will also need to file a Certificate of Completion. If the estate is small, you can use the Sworn Closing Statement, Summary Proceeding—Small Estates along with the certificate. Whether an estate is small depends on the value of the property in it. The dollar limit can change each year. If a person died in 2014-2017, their estate must be valued at $22,000.00 or less to be small. To learn more, visit Small Estates: Transferring Property When Someone Dies.