Your dad passed away ten years ago. Mom wanted to stay in their home, so all the kids pitched in as best they could to help her out. It was difficult, because not all of you live in town, plus you were busy with your own families and work. But the important things got done; mom made it to all her doctor appointments, she got to the grocery store, and you visited her as much as possible.
Once mom went into assisted living, the house took a back seat. And now that she’s gone, you have to make some decisions about what to do with the house. What is in the best interest of all the heirs of your mom’s estate? Now you have to figure out what is probate and how to sell a house in probate in Michigan.
What is Probate?
Probate is the legal process of managing and transferring assets after a person dies. Their will is presented in court to be validated. The court supervises the disbursement of the assets per the will and state law.
Commonly, assets that go into probate include:
- Property owned solely in the decedent’s name
- Shared property held as “tenants in common”
Assets that have a payable upon death clause don’t become part of the probate. These assets include life insurance proceeds, retirement plans with a designated beneficiary, securities registered as transfer-on-death, and bank accounts with a payable-upon-death clause, and personal property. Real estate owned as joint tenants with survivorship will not become part of the probate and instead transfer directly to the beneficiary.
Do I Need to Open a Probate?
Most often, the answer to the question is yes.
If the decedent left a will, probate would be necessary to comply with the provisions of the will. If they died without a will (intestate), probate is required to ensure the disposition of the assets to the person(s) legally entitled to them.
Probate ensures the legal and court-supervised disposition of all a person’s assets after they die. If the will did not designate an executor or that person is unable or unwilling to serve, the court will usually appoint a family member or close friend of the decedent as the estate’s representative.
What Are the Steps Involved in the Michigan Probate Process?
Each state has it’s own legal requirements for probate. If you are responsible for an estate, you need to know the laws and time frames required for compliance with the court. Steps involved in the Michigan probate process include:
- Obtain certified death certificates. You will need plenty of copies for the court, creditors, insurance companies, etc.
- Locate the original will. If the decedent died intestate, Michigan laws would determine the disbursement of the assets.
- File the Application for Informal Probate and/or Appointment of Personal Representative in the county court where the decedent lived to start the probate process.
- Pay the probate filing fee. File the certified death certificate and original will.
- Issuance of Letters of Authority for Personal Representative and/or Acceptance of Appointment to the personal representative appointed for the estate. In Michigan, calls executors or administrators of an estate the “personal representative”.
- Hire a probate attorney. The attorney will file documents and appear in court on behalf of the estate and advise the estate representative on the legal procedures.
- Serve notice to others who have a right to represent the estate.
- Notify beneficiaries by mail of probate.
- Post a bond that protects the estate.
- Notify creditors of the probate.
- Inventory the assets of the estate within 90 days of appointment.
- Serve all interested parties with the relevant notices.
- Open an estate bank account.
- Pay court costs, attorney fees, debts, taxes, and ongoing expenses of the estate.
- Sell real estate and other assets per the will or court requirements.
- Complete and file income tax returns if required.
- Make a final accounting as required by the court.
- Distribute the remaining property per the will and court direction.
- Attend the final hearing
Michigan Legal Help can guide you on the process and help you to find a probate attorney or connect you to other resources.
How Do You Sell a House in Probate in Michigan?
As you know, a home is usually the biggest asset you own. Selling a house in probate will often be the most complicated, time-consuming, and essential activity of the personal representative of the estate.
Sometimes, heirs would like to keep the home in the family, but it might not be possible. It may be necessary to sell the house to comply with the will or the court. The personal representative may have to sell the home to pay debts of the estate, like credit cards or medical bills.
Here are the procedures to sell a house in probate in Michigan:
- Get a real estate appraisal
- Place property for sale
- Secure a purchase offer
- File the Petition For Approval of Sale of Real Estate in Michigan
- Obtain a surety bond to sell real estate to protect the estate
- Secure court confirmation
- Advertise the sale in a local paper
If a real estate agent is involved, the process will further include:
- Listing the property in MLS
- Showing the property
- Negotiating an offer and concessions
- Opening escrow
- Real estate appraisal
- Property inspection
- Repairs as required by the lender
- Attending the closing at the title company
How Long Does the Probate Process In Michigan Take?
The probate must remain open a minimum of five months in Michigan to give creditors time to file claims against the estate. It’s not uncommon for an estate to stay open for several years. Complications arise when beneficiaries do not agree on the dissolution of the assets, or unforeseen creditors make claims against the estate.
Selling a house, especially one in need of updating or repairs will take at least several months. Most buyers aren’t interested in buying a home that needs fixing up. This significantly limits the pool of potential buyers.
How Much Does Probate Cost In Michigan?
The filing fee for probate in Michigan is $175 in 2020. However, there will be additional costs involved in the probate process, including:
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- Attorneys fees
- Court costs
- Executor’s commission
- Property appraisal
- Property inspection
- Real estate commissions
- Home maintenance
- Repairs to the home
- Utilities
- Taxes
Who Pays For The Probate Costs In Michigan?
Estate assets cover probate expenses and management. Sometimes, an estate has limited liquid assets. Typically, the representative will have to sell the house in probate to cover expenses. The probate court will decide which creditors to pay and how much.
Once the representative liquidates or sell the assets, the court orders outstanding bills paid in the following order:
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- Administration fees, including attorneys
- Funeral expenses
- Taxes
- Creditors
- Beneficiaries
Beneficiaries or heirs get paid last, receiving what is leftover.
How Can You Go About Avoiding Probate in Michigan?
Probate is a stressful process for a family during a time of loss. It can take years to resolve an estate, especially if complications arise.
The longer the probate is open, the more money goes to expenses of the home and professional fees. These mounting expenses reduce assets that could have gone to the heirs of the estate, instead.
Is it possible to avoid the probate process in Michigan?
Well, yes, it is possible. But you have to take steps before someone passes away to avoid probate. You can do by:
- Naming beneficiaries for your assets such as retirement accounts, stocks and bonds, and insurance policies
- Joint ownership of real estate so ownership transfers to the surviving owner
- Transferring ownership of the property before death through a living trust
- Creating a Lady Bird Deed, which transfers ownership of the property at the owner’s death, but they retain control of the property during their life
Is there a Simpler Way to Sell a House in Probate?
As you can see, selling a house in probate can be a long, expensive process. By now, you probably wonder if there is a simpler way to sell a house in probate. As the personal representative, you want to ensure the heirs receive their fair share of their inheritance. It is heartbreaking to see assets intended to go to loved ones frittered away on their management instead.
Selling a home in probate is easy when you make a cash sale directly with the buyer. There is no mortgage approval, appraisal, or inspection with a cash sale.
A cash sale is cheaper. You don’t have to shell out thousands of dollars for real estate commissions, professional fees, closing costs, buyer’s concessions, or lender-required repairs.
Alleviate stress when you sell your house in probate to 810 Home Buyers, “The Real Estate Problem Solvers”. We buy houses for cash in any condition. When you sell for cash, you can close the probate faster, and more money ends up in the pockets of the heirs sooner.
810 Home Buyers is a private real estate investment firm located in Southeast Michigan. Our experienced management team will solve your unique probate problems. Find out more about the cash buying process works here.