By: Marty Bodnar, estate planning attorney
Setting up a trust does not automatically avoid probate. Instead, if you want to make sure your assets pass to your beneficiaries without getting stuck in the courts, you must title them into your trust and name primary and secondary beneficiaries to your retirement accounts, life insurance, and annuity policies.
Due to the complexities of one’s financial affairs, clients often fail to get all their assets into trust. In this case, probate is required after they pass away. We call this “oops” because their intent is to avoid probate but human error makes it necessary. For example, we’ve experienced the following “oops” situations:
1. A client opened an investment account for $15,000 in her name alone after her trust was set up. She forgot to title it into her trust. Under Michigan law, a short probate proceeding (2-page application with a court order) was opened to distribute this account to the heir because the value of the account was under $25,000.
2. A successor trustee found a $40,000 bank account in his father’s name alone while administering the trust. The father forgot to title the bank account into his trust, so we had to open up a full probate estate and spend over $1,500 in attorney fees because the value of the bank account was over $25,000.
3. Before covid, a deceased mother forgot to name her children on an annuity. She remembered to do so on the other 6 annuities but forgot on the 7th one. We had to open a full probate proceeding in Wayne County Probate Court to distribute this $40,000 annuity to her children because, again, the value of the annuity was over $25,000.
As you can see, an “oops” situations happen, so it’s important to double check the titling of your assets throughout your entire financial life.
In the meantime, under a new Michigan law, the scenarios in #2 and #3 above would be easier. Previously, you could pass up to about $25,000 in 2022 and $27,000 in 2023 to your heirs after deducting unpaid funeral expenses and the value of a lien against real estate using a short probate proceeding. However, this amount has been increased to $50,000. So, if scenarios #2 and #3 above occur in 2024 and beyond, a full probate estate would not have to be opened.
Also, a new Michigan law makes it easier to transfer motor vehicles outside of the probate process. Your heirs can transfer up to $100,000 worth of motor vehicles ($60,000 previously) and $300,000 ($100,000 previously) of watercraft using Secretary of State Certification from Heir to a Vehicle form. Beginning in 2026, the total value of vehicles will be adjusted by a cost-of-living adjustment certified by the State.
Unfortunately, due to human oversight, some of a deceased person’s assets sometimes have to be probated. Fortunately, the new Michigan law makes such “oops” situations easier to deal with.
The most effective way to take advantage of probate resources and tools is to seek representation and work with an experienced attorney. When you work with Pear Sperling Eggan & Daniels, P.C., you’ll be in great hands. With over seven decades of combined experience, you’ll be guided through the complex probate process by someone who has seen it all and can help you make the best decisions as the personal representative. We understand the many facets of probate and have practiced in probate courts throughout the State of Michigan. Let us help you take the right steps to avoid family problems in the probate process..
At Pear Sperling Eggan & Daniels, P.C. , we always strive for the best verdicts, judgments, settlements, and outcomes for our clients, and we’ve succeeded in thousands of cases. Contact us online or call us at (734) 665-4441 for a consultation.
Resource: Ryan T. Webster
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