Bloomfield Hills, MI asked in Estate Planning for Michigan

Q: What are some pros and cons of avoiding the probate process in Michigan?

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2 Lawyer Answers

Kenneth V Zichi

Answered
  • Estate Planning Lawyer
  • Howell, MI
  • Licensed in Michigan

A: That is an awfully broad question, and YOUR situation will probably be different, but ....

Probate

Pros: Relatively inexpensive (yes really -- the additional costs consist of a $200 ish filing fee and an 'inventory fee' which is a fraction of a percent of the total net estate value) and structured, will provide real protection from creditors and provide finality, and if there is a disagreement, a Judge can easily and quickly 'make the call' to shorten the dispute and control costs.

Cons: if you don't follow the rules precisely, the Court will become involved and it can get difficult, and often leads to disagreement among family members and distrust because of the court process.

Trusts

Pros: it is a PRIVATE settlement and the assets transferred remain private. You may avoid the probate fee costs (but see below).

Cons: It is a PRIVATE settlement and the assets can remain subject to creditors' claims if not done properly, and often leads to disagreement among family members and distrust, and if the disagreement leads to court, it tends to take longer and cost more than probate would. If transfers are not structured and completed properly there can be tax consequences that exceed the cost of probate.

Inter-vivos transfers

Pros: quick, inexpensive and (usually) final

Cons: the assets can be taken by the person transferred to without any legal requirement for that person to care for the donor, and if done improperly there can be tax consequences. If there is a disagreement or fraud it is VERY expensive and difficult to litigate to get to the bottom of things.

Lady-bird deeds

Pros: provides more control to donor but avoids probate if done right.

Cons: Can violate 'due on sale' clauses of mortgages causing financial hardship.

Other

Yes there are other options and every situation is different and would require further analysis.

BOTTOM LINE -- don't try to make this decision without discussing it with a licensed estate planning attorney as there are pitfalls for the unwary no matter HOW you decide to proceed.

You will especially note, disagreements and litigation can happen no matter which distribution method is chosen. If anyone says 'you can't challenge' a trust or suggests that EVERYONE should do 'x' run in the other direction. There is ALWAYS a litigation possibility, and NO one size plan fits all.

Seek a qualified local professional to guide you, and avoid the 'free dinner seminars' that are just trying to sell you something!

-- This answer is offered for informational purposes only and does not constitute legal advice or create an attorney/client relationship.

I am licensed to practice in Michigan only. Please seek competent local legal help if you feel you need legal advice

Brent T. Geers agrees with this answer

Nick Daniels

Answered
  • Estate Planning Lawyer
  • Clinton Township, MI
  • Licensed in Michigan

A: A primary goal of estate planning is to try and prevent loved ones from going to court.

Con: having to go to court. There are some court costs, and if you hire an attorney there will be attorney fees, then the time preparing for court and being in court.

Pro: trying to prevent your loved ones from going to court and avoiding the Cons!

-- This answer is offered for informational purposes only and does not constitute legal advice or create an attorney/client relationship.

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