Inheritance & Estate Law in Michigan

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The death of a loved one is heartbreaking. Family members barely have time to cope with their emotions before they find themselves confronted by a labyrinth of laws, rules and requirements for settling the estate. And these are state laws so what happens across the border in Ohio might not hold true in Michigan. It can all be very confusing and intimidating. Can you go to probate without a lawyer? Yes, but should you? You'll likely need some assistance to tackle the probate process, but you’ll still want an understanding of the legal terms and Michigan's laws even if you retain the help of an attorney.

Michigan Inheritance Laws and Terms

First, an inheritance is not the same as an estate. An inheritance is a gift made to one or more individuals. An estate is the totality of everything the deceased owned or had an ownership interest in when he died. Inheritances come from the estate. But how? That depends on whether the decedent left a will and if so, what were its terms. This is where you’ll most likely encounter some confusing terms, such as per stirpes and per capita:

  • Per stirpes means "by the root" in Latin. It’s an order of descent. If your loved one dies and leaves you $90,000, but you’ve already predeceased him, per stirpes means that your children will inherit your gift in equal shares – it passes down to them. If you have three children, they’d each receive $30,000 of your gift because you’re no longer alive to accept it. 
  • Per capita is more of a lateral bequest. The term means that a group of people inherit equally. In the case of you and your three children, you might leave them your entire estate per capita. They would each inherit one third. Per capita translates to "per head."

A distinction should also be made between heirs and beneficiaries:

  • A beneficiary is someone who receives property from the estate under the terms of a will and might or might not be related to the deceased. 
  • An heir is someone who is related to the deceased and would have a right to inherit by law if the deceased didn’t leave a will. 

Some states allow a testator – the person who makes the will – to include terms in the will that strip a beneficiary or heir of his inheritance if he contests the terms of the will. This is commonly known as a no-contest clause. Michigan law won’t enforce such a clause if the court finds that the beneficiary or heir has probable cause for contesting the will.

What Happens if a Family Member Dies Without a Will?

The existence of a will or the lack of one has no bearing on whether an estate must be probated in Michigan. In either case, property and assets owned by the deceased need a legal process to pass property to living beneficiaries, and that process is probate. For the most part, the steps of probate are the same in Michigan with or without a will, but there are some fundamental differences. If there’s no will, the deceased has not named anyone to guide his estate through the probate process – an executor, sometimes called a personal representative. The court must therefore appoint someone.

Michigan courts will typically appoint the surviving spouse or an adult child to be executor if the deceased did not leave a will. But if the decedent didn’t leave a surviving spouse or children, or if the probate court judge doesn’t believe that these people are suitable or capable, things can get more complicated. The judge might look to siblings or more distant relatives or even to one of the deceased’s creditors as a last resort. A creditor can nominate its own representative under Michigan law if no one else has yet been appointed as personal representative, and probate hasn’t opened after 42 days have passed since the date of death. This rule is provided because creditors have a stake in the estate due to an outstanding debt – probate is also the process by which a decedent’s creditors get paid.

Read More: How Can I Get a Copy of a Deceased Family Member's Will?

Michigan Next of Kin Order

Another major difference when someone dies without a will involves who gets his assets. Without a will, the deceased hasn’t made his wishes known, so the probate court must distribute inheritances according to Michigan’s intestacy laws. These laws set out a next-of-kin order based on how closely related an individual is to the deceased. Michigan’s next of kin order begins with the surviving spouse, if any, and the deceased’s children.

In cases where there is no surviving spouse, and the deceased didn’t have children, inheritances move on to more distant family members in a prescribed order set by law: Parents, then siblings, then nieces and nephews, then grandparents, and finally aunts, uncles and cousins. The next in line to inherit cannot inherit if anyone ahead of him on this list is still living.

A surviving spouse receives the entire estate if the decedent leaves no living parents or descendants – children, grandchildren or great-grandchildren. Should he leave a spouse and at least one parent but no descendants, his spouse would receive the first $150,000 off the top of his estate and three-quarters of the balance with his parent or parents receiving the remainder.

A surviving spouse receives $150,000 and half the balance of the estate if she and the decedent had any children together; the children receive the other half of the estate. But she inherits only the first $100,000 and half the remainder of the estate if the decedent also had children from another relationship. All his children inherit the other half per capita. When there’s no surviving spouse, the estate passes first to the decedent’s children and their descendants, then to his parent or parents if there are no descendants, then come grandparents and then more distant relatives.

When someone dies without any living relatives or none can be located, her estate is said to escheat to the state – meaning Michigan inherits her assets. Stepchildren are not considered children unless they were legally adopted by the decedent, but a child born outside of marriage would be an heir. In some cases, this may mean legally proving paternity.

These rules only hold true for property located in Michigan. For example, if the decedent owned a vacation home in Florida, that state’s intestacy laws would take over, although just for that one item of property. This order of intestate succession also takes over in the event of a challenge to a will that successfully invalidates it. In this case, probate proceeds just as though the deceased had never left a will at all if any earlier version of a valid will can’t be located.

What About Automobiles?

Given that Michigan is home to Detroit, it should come as no surprise that the state has some inheritance laws designed specifically for automobiles. Assuming that the decedent died without a will so his estate wasn’t probated – or even if he left a will but his estate wasn’t probated for some reason – his vehicle passes to his spouse. She has some legal latitude when it comes to titling it. If she wants to pass it to someone else, such as her child, she can do so without first putting title in her own name.

If the decedent wasn’t married at the time of his death, the vehicle would go to his children and they would all own it in equal shares. If he had no children, it would go to his parents, again in equal percentages. And if his parents predeceased him, it would go to his siblings in equal measure, then to more distant relatives. Immediate relatives don’t have to pay a Michigan tax on the vehicle transfer. Note that a probated will can supersede all this.

Do You Have to Pay Taxes on an Inheritance in Michigan?

Two death taxes come into play when someone dies, but Michigan only imposes one of them – an inheritance tax – and only in isolated circumstances. An estate tax is levied against an estate based on its net value after the deceased’s debts and expenses of probate have been paid. An inheritance tax is levied against an individual beneficiary or heir who inherits from the deceased and it's based on the value of the gift.

Michigan does not have an estate tax. It does have an inheritance tax, but only for bequests made by decedents who died on or before September 30, 1993. A beneficiary or heir could conceivably be taxed if an asset is discovered years later, but the decedent died on or before this date.

The Probate Process in Michigan

Michigan recognizes four types of probate proceedings: informal, unsupervised formal, supervised formal and summary probate. Most probates are informal. They take place under the supervision of a probate register rather than a probate court judge. Probate court judges are elected officials in Michigan.

Michigan Informal Probate

First, an executor or personal representative is appointed – either according to the terms of the will or by the court if there is no will or the testator didn’t name anyone. She’s given legal authority to act on behalf of the estate. In an informal probate, she must send notice of the death to all beneficiaries named in the will, if there is one, as well as to heirs – those who would inherit by intestate succession if there no valid will. She must also send notice to any of the deceased’s creditors that she’s aware of and post a notice in the newspaper for any creditors she might not know about. The executor must provide proof of these notices to the court and create and file an inventory of all the deceased’s assets. Some assets might have to be appraised to set their values. Finally, after paying any and all creditors who have made claims for debts owed to them, as well as any taxes owed by the estate and/or the decedent, she can submit a final accounting and closing statement to the court and transfer the estate’s property to its beneficiaries.

Michigan Formal Probates

An unsupervised formal proceeding follows the same path as an informal probate, but the executor or personal representative must first get a probate judge’s permission before taking certain actions, including paying debts or selling estate property to raise cash to pay debts. This means that an actual probate case must be opened and docketed with the court. This type of proceeding generally occurs when there are disputes among beneficiaries and/or heirs. The court is involved in every step of the process in a supervised formal proceeding. Literally nothing can happen, and the executor can’t take any actions, without first securing a judge’s approval.

Michigan Small Estates

Some very small estates valued at less than $22,000 as of 2018 don't require much in the way of court supervision or involvement at all in Michigan. The amount is adjusted upward every few years to accommodate inflation. These estates qualify for a summary probate proceeding. A family member can file a couple of forms with the court, wait a prescribed period of time, then distribute the assets to heirs or beneficiaries by affidavit. The estate cannot include any real estate. Property can be passed by affidavit in Michigan after 28 days.