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Probate Court Practice Outline

Overview: 1. What is Probate? a. Probate is a legal process, which is undertaken after a person's death. This process of designed to settle the decedent's last will and testament: If there is a will, the validity is assessed through probate. If there is no will, an executor is appointed to oversee disbursement of assets 2. What sort of cases does the probate court handle? a. estates, i. When a person dies with assets that do not pass by survivorship to another person or by other means, such as a trust, that person's estate must be "probated", a process clearing title of assets for the persons entitled to them. b. guardianships of adults (legally incapacitated individuals), i. who is alleged to be legally incapacitated or developmentally disabled. In addition, an adult person might need a conservator to handle their financial affairs if they are unable to do so because of mental illness, mental incompetency, physical illness or disability, or some other reason that would cause their property to be wasted or dissipated without proper management. c. guardianships of minors, (different standard than adults) i. The custodial parent or parents can consent to the appointment of a limited guardian of a minor. Or, a guardian may be appointed for a minor if the parent or parents have permitted the minor to reside with another person without providing that person with legal authority for the care and maintenance of the minor. A guardian may also be appointed for a minor whose parents have disappeared, are deceased or are confined in a place of detention. If a minor has property, such as a settlement of a personal injury case or as a beneficiary of an estate or insurance policy, a conservator must be appointed to administer this estate until the minor reaches the age of 18. d. guardianships of developmentally disabled persons, e. conservatorships (financial) of minors, f. conservatorships of adults, g. trust proceedings, h. mentally ill proceedings, i. The basis for the ability of the Court to order treatment is outlined in the Mental Health Code which, along with the court rules, outlines the procedure leading up to the decision of the Court. The treatment of the person could take place in a public institution or private hospital or in the community in an alternative treatment program. i. adoptions, j. name changes, k. emancipations, and l. wills for safekeeping. 3. Were does the Probate Court get its jurisdiction? a. The court has limited jurisdiction in that it comes from statute

Probate Court Practice Outline


b. The Constitution of Michigan provides that "The jurisdiction, powers and duties of the Probate Court and of the Judges thereof shall be provided by law". The legislature, through the enactment of various statutes, has defined the specific work of the Probate Court. c. Issues to think about with the Probate Court: i. It is a dumping ground 1. Limited jurisdiction limited by statute 2. There are statutory citations for the forms a. Ex. Form 706 Gross estate 3. There must be statutory authority for the court to act Wealth Transfer 1. What is a Will? a. Document that outlines your assets and who you want them to go to once you die. b. Requirements: i. Over 18 ii. Sound Mind iii. Witnessed 2. What happens if the personal representative cannot act? a. The Probate Court will appoint an Executor b. This will generally go according to the following hierarchy: i. Highest Priority person named in the Will (or alternate if named) ii. Next Spouse (if any any listed under the Will) iii. Next Any beneficiary under the Will with the most to receive iv. Next Any Heir at law v. Then A creditor 3. In General: When someone dies, they die with stuff a. What is the Gross estate? i. Everything that has value (ABC) b. What are the three methods of wealth transfer? i. By Joint title (A) ii. By Beneficiary designation (B) iii. Everything else (C) 1. Passes along in the will as long as beneficiary did not cause the death of the decedent; or 2. Retitles the wealth c. The Probate Court does not have jurisdiction over ERISA statute actions Employer contributions on 401ks 4. Hypo: How do certain assets pass? Through the estate or not? a. John Doe Dies Married Children Gives everything to his oldest son: b. Assets: i. Car 1. Can go through will ii. Golf Clubs/Cart 1. Will iii. House 1. Depends on the deed iv. Certificates of Deposit

Probate Court Practice Outline


1. Beneficiary v. Compact discs 1. Will vi. Boat 1. Depends on the title 2. Will vii. Checking - $5k 1. POD or 2. JT viii. 10 acres of land 1. Depends on Deed 2. JT ix. Life insurance 1. Beneficiary x. Personal effects 1. Will xi. Collectables 1. Will xii. Stock received through another individuals estate xiii. US Savings Bonds 1. If Joint, passes through property law 2. Otherwise, can designate beneficiary xiv. 401K 1. Beneficiary xv. IRA 1. Beneficiary c. The estate can also manage claims like wrongful death (Probate assets): i. Loss of consortium to compensate for a loss 1. Ex. Lost income ii. Pain and suffering 1. To compensate the victim for what they went through

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The Probate Estate 1. What is a Probate asset? a. Anything that is an asset and does not go through a contract b. If contract law or property law is involved, it is not a probate asset 2. What is not a probate asset? a. Examples: i. Assets you own jointly with rights of survivorship; ii. Assets with rights of survivorship iii. Assets owned by a receivable living trust iv. Assets in which a life estate is retained and the remainder passes to a non-charitable beneficiary including: 1. POD accounts 2. Life insurance policies 3. Retirement accounts annuities, investments 4. Health or medical savings accounts

Probate Court Practice Outline


b. All true, unless the beneficiary predeceases the testator then they will go through probate 3. Steps of administering the Probate Estate (4 big steps appointment administration accounting (30): BOILS DOWN TO NOTICE Main idea dispose assets to beneficiaries from selling and giving i. Main Steps overview of objectives main objectivenotice & take assets to disperse 1. Appoint PR / Will admitted 2. Inventory of assets to be admitted 3. Selling of assets to pay expenses 4. Accounting for the assets that came through the decadents estate b. Death c. File a petition for probate to open the probate estate (no worries about supervised or unsupervised) i. Who can do this? 1. Anyone 2. Generally someone who has an interest in the Will ii. Where to file? 1. In the county where the decedent lived or where the property is located iii. Three things that happen once filed: 1. Estate opens (creates a separate legal entity that the decedent) 2. Appoints a personal representative (formerly known as the executor) to stand in the decedents shoes 3. Seeks to have a Will (if one exists) administered to probate a. Will is meaningless unless administered to probate iv. PRs responsibility is: 1. To make sure that all parties of interest receive notice 2. Thy are a fiduciary 3. As the PRs lawyer, it is my fiduciary relationship is between the fiduciary and not the estate v. Interested parties are: 1. Heirs at law of the decided 2. All those affected by the will vi. IF objected to 1. Then it will be contested 2. Contested proceeding will be started (mostly they go uncontested) a. A general rule, Will will be admitted and PR selected vii. If not objected to 1. Then it will be admitted as long as (30) d. PR is appointed i. They accept the appointment ii. They receive letters of authority 1. These are the golden tickets 2. Empowers the PR to act as the PR 3. If copied they need to be certified copies

Probate Court Practice Outline


4. PR must be bonded or file an acceptance of appointment form a. Not generally bonded e. Inventory of Probate assets i. File one and file an accounting ii. This is a critical step if not inventoried properly, there is no way that the inventory will balance at the end iii. Have insurance iv. Open a brand new bank account for the estate v. Hold estate sales at a different property to avoid having the estate sued if someone gets hurt f. Give notice to creditors i. This is what the decedent owedcome get it if you can ii. generally, they have to be open for 4-5 months to give creditors time to gt what they want g. Take assets and convert them to cash to pa taxes, debts, and administrative expenses (AKA wind up the affairs) h. Account for estate assets i. Distribute the estate assets close the estate Tax issues for the probate estate a. Form 706 will help add the gross estate and give the date of death b. Hypo: Lets say Joe dies in November of 2011 i. The estate is opened but runs through and over onto the next year 1. Joes 1040 would get filed for 2011 AND we would file a federal tax return if he is over any exemptions 2. We would also need to file a tax return on the fiduciary income tax return a. This is because the estate is a separate entity from the decedent What is the most important component to the Probate process a. Notice i. Everything in the probate action is about giving affected parties notice 1. The application for probate will ask who the affected parties are a. Starts with the intestacy statute i. Heirs determined within 5 days ii. List them on the application iii. Then it lists anyone else who may be interested Special considerations when determining who is interested: a. It can be broader then heirs at law or parties listed under the Will i. For example if a charity is named, then they will have a special department and probably have to notice someone at the Attorney generals office as well b. Testimony may also be used to determine who the heirs at law are Giving notice a. For interested parties i. Must show proof of notice that all parties have received notice to the probate court

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Probate Court Practice Outline


b. For parties that have been disinherited i. They must each be personal served or served by certified mail c. DO NOT screw up on giving notice i. Think about denying parental rights without giving notice HUGE PROBLEM 8. ON EXEM Analysis for Administration a. Analyze what assets have to go through the probate process b. What are the steps of the administration Trust Administration 1. Primary objective living trust a. To avoid probate b. Probate court is involved in normal trusts in two ways: i. The Will that is going through the process may actually establish a trust 1. Testamentary trust 2. Where a Will creates a trust, it will go through court until the objects have been satisfied ii. Inter vivos trust 1. There is no active probate court administration, if there are ever any issues, the probate court will have jurisdiction 2. Any disputes or questions, the trust will be registered with the probate court and render a response on the issue (let my robe protect you) Guardianships 1. Defined The probate court appoints a fiduciary over someone who is incompetent and makes life decisions for that person a. This is an exception most people will never need a guardian in their lives b. Incompetence is two things: i. Under 18; or ii. Judicially declared to be incompetent 2. Jurisdiction for guardianship a. In personum where the person is 3. Judicial determinations of incompetency a. Legally incapacitated Person Guardianship (LIP) adult i. Typical Scenario: 1. The Ward was living as normal and then something happened to them that rendered them incompetent ii. Special consideration: there is nothing more invasive than an LIP Guardianship iii. Safeguards/ Standard 1. Test to determine if the LIP Guardianship should be imposed: a. Whether or not the adult can make informed decisions about his or her care and life; AND b. It is necessary to have the person declared judicially incompetent; AND c. Whether it can be demonstrated by clear and convincing evidence

Probate Court Practice Outline


i. (Closer to 75% or more in certainty) d. This is an objective standard i. IT is based upon age the age of competency is 18 e. The burden is on the petitioner 2. How long can it last? a. A guardianship can last a lifetime b. Reviews done at the close of year one; and c. Every three years thereafter b. Developmentally Disabled Person Guardianship adult i. This applies for someone who was born disabled likely a cognitive deficiency ii. It is assumed that they will be disabled their whole lifetime iii. This determination is generally made before the person turns 18 4. Steps of the guardianship process a. Petition for appointment of guardian filed with the court i. This often takes place without an attorney 1. The attorney generally has a role if it is contested as they will have to assist in showing the person is competent a. Presumption of competence if over 18 ii. Their often needs to be a relationship to the person that will be caring for the adult 1. It is in the best interest of the Ward iii. Must be served on all presumptive heirs iv. Can request a full or limited guardianship v. The alleged incapacitated person can nominate a guardian b. A hearing will be set i. The court will appoint a Guardian Ad litem 1. This is a neutral party to perform evaluations ii. The standard is heightened 1. It must be shown that the subject cannot make reasonable decisions; and 2. Is the guardianship necessary (r are there alternatives) iii. Notice for everyone about hearing must be served at least two weeks prior to the hearing 1. Service by mail for all except 2. The legally incapacitated person must be served in person 5. What are the rights of the allegedly incapacitated person? i. We want to give them every ability to protect themselves b. To have an attorney c. Right to appeal d. Right to a jury e. Right to present at their hearing f. Right to a medical evaluation i. Paid for by the public g. Right to nominate their own guardian h. Presumption of competency unless otherwise determined i. Right to periodic review j. Right to be cared for 6. Two different routs of the trial

Probate Court Practice Outline


a. If contested i. The burden is on the petitioner to establish the need for the guardianship b. If not contested i. Then it is a simple proceeding 7. What happens once the guardianship is granted? a. The guardian is granted a letter of guardianship b. They then have all of the powers for the ward that the ward would have had for himself c. The guardianship is only put in place as long as it is necessary 8. Guardianships for minors a. Threshold inquiry: i. When appointing a guardian for a minor, we are not asking if the guardianship is necessary rather, we are asking who the guardian will be b. Presumption Minors under the age of 18 are presumed to be incompetent i. Competency is not an issue with minors they are already incompetent c. So what is the issue: Is there a custodial parent or not? There always has to be custody i. Does the minor have a custodial parent? 1. What is a custodial parent? a. A parent who has lawful custody of the child b. Joint custody to a husband and a wife c. IF there is a birth mother that has custody presumed to be single custody ii. What if there is no custodial parent? 1. Then there will have to be a guardian to have custody over a minor a. If no custodial parent, a guardian will be appointed by the court 2. If the custodial parent relationship ends: it will be replaced by a court appointed guardian takes either a: a. Death of a custodial parent; or b. The custodial parent is incarcerated; or c. Declaration of incompetence of the custodial parent; or d. By court action i. Can be voluntary or involuntary ii. Ex. Parent releases their custodial parent rights 1. Can be done for many reasons school district changes (voluntary) from abandonment (involuntary) iii. The gray area: 1. Rarely will a full guardianship of a minor be granted if the minor is 17 because it takes about 6 months to attain the guardianship iv. Standards for minor guardianship 1. The test: who will act in the best interest of the child?

Probate Court Practice Outline


a. The parents best interest matters as well v. What does this depend on? 1. Where the child attends school; and a. Will take place generally where the guardian resides b. More guardianships will be created in august and September because of school 2. Health issues vi. What role does a guardian play? 1. It is exactly the same as a custodial parent 2. Limitation: the guardian cannot consent to adoption 3. Distinction: a. A custodial parent has inheritance rights b. A Guardian does not vii. Can a custodial parent re-gain their parental rights 1. Yes viii. There are two types of guardianship for a minor: 1. Full guardianship and limited guardianship a. Different: i. Full guardianship is a loss of custodial parents rights ii. Limited guardianship is a willing suspension of custodial parent rights d. Who can petition the court for a minor guardianship? i. Anyone even the prospective ward ii. Once the child reaches the age of 7, they are considered an interested party and will be served papers and expected to be present in court to root out problems iii. Once the child reaches 14, they have the ability to nominate the guardian for themselves 1. The court will still apply the tests e. What is a limited guardianship? i. Actual parents have suspended their rights by will ii. What is limited is the amount of time that the guardianship will last 1. Limited guardianships have a set duration 2. They last for a year and can be renewed iii. They can only be requested by the custodial parent of the child iv. Generally will be granted with the assistance of a placement plan 1. Based on: a. How often the children see their custodial parents; and b. What the financial relationship is v. Typical scenario: 1. Changing guardianship for a school district f. What is the difference between full guardianship and limited guardianship? i. Limited guardianships will end g. Tax deductions for the child i. Only one person can take the deduction ii. Typically, it will be the person financially responsible for the child iii. In a divorce setting: parents with joint custody may rotate who gets the deduction each year

Probate Court Practice Outline

Conservatorships 1. How do they arise? a. When someone is unable to manage their finances i. They are not necessarily incompetent or disabled b. Another option: Sometime they go to a trust / sometimes not there are options 2. If the child has money a conservatorship will attach as well until minor hits 18 a. The funds will be used for the minor under active supervision through the probate court for the benefit of the minor 3. It is just an accounting of money 4. Any funds that a child is receiving in excess of 10k, then they are held for the child a. They are not needed in situations under 10k 5. The conservatorship ends by: a. The minor turning 18; or b. The death of the person subject to it 6. Good hypo at a. Jimmy is 14 years old and gets in a car accidentinsurance co pays him 120k and a conservator is appointed until jimmy hits age 18: i. The finds can be used for Jimmy during that time ii. But during the period before he hits 18 1. The conservator: a. Files an inventory; b. A year accounting of how the funds have been used c. The probate may require that the conservator be bonded 7. Steps of / requirements a. No different if minor and adult b. However: i. There is a difference in how they end ii. Adult conservator ship ends when the court says so or he dies 1. Though adult conservatorships can end by court order before they die, they never do iii. When funds held for a minor, courts will require that they are held in restricted accounts

Protective orders 1. Basically a power of attorney/conservatorship for the day a. Assets are being admitted for the benefit of another b. But if I am acting as an attorney in fact, the probate court does not have oversight c. If I am acting as a conservator, then the Probate Court does have oversight i. Inventory ii. Accounting 2. Conservatorship: Authority is granted to a fiduciary for a particular event

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Probate Court Practice Outline


3. Common Ex. Granting a person the authority to exercise a deed when another is not able to a. Selling property on a land contact but becomes incompetent without a DPOA i. Options, file for conservatorship 1. But if the only reason to do that is for the deed signing why do the whole thing? No, get a protective order Will/trust Contests 1. Remember: The Will is presumed to be vaild a. Presumption of competency b. Presumption of no undue influence 2. How does it come up? a. When someone is being adversely affected; i. In times where someone is being harmed 3. There is a presumption of a valid document a. Presumption of i. No undue influence 1. Can have a presumption created a. Requirements 2. How do you rebut the presumption ii. Competency 4. In general: A will has no legal consequences until it has been admitted to probate a. If no one objects, the will will be admitted and is effectual 5. Burdens: a. Burden is on anyone that is contesting the document to establish that the document is not valid i. Three arguments to show it was not valid 1. That the document does not meet the statutory requirements 2. No competency a. Did they know: i. Who they are ii. Where they are iii. Who their family is; and iv. What are they executing 1. That they are making a testamentary transfer rather than a donative 3. Undue influence a. Meaning: what purports to be their desires where actually the desires of some third party b. Burdon shifting (All three must be metnot hard): i. It is possible to create a presumption of undue influence if: 1. There was a fiduciary third party relationship 2. That the fiduciary or an interest of the fiduciary benefited; and 3. That there was the opportunity to have exerted undue influence

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Probate Court Practice Outline


c. Then the opponent has to show why there was no undue influence 6. Contests only arise where someone is adversely affected by the Will Be ready to argue on the exam Decedents estate 1. In general a. At the probate court, the decedent has already died you now play the cards that were dealt while the decadent was alive 2. How do contests arise? a. When someone objects to the contents of the will

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