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Fraud leads to probate law changes

Michigan's estate administration law was intended to assure transfer of property from testators and heirs through probate. However, misappropriation of funds sparked change to this law.

In 2016, media exposed the actions of real estate brokers and Attorney-General lawyers, known as public administrators, to open probate estates after the death of a family member. A Macomb County real estate broker and his company used that authority to sell homes and steal thousands of dollars from the probate estates. The broker and his company often took 33 percent of the estate's total value, four percent in real estate commissions and other charges billed to the broker's other companies.

The Attorney General ultimately ended these activities once they were uncovered. The Oakland County Sheriff's office is investigating these practices.

Based upon this and other complaints, Public Act 13 of 2018 was introduced and signed into law on Feb. 6. It will take effect in 90 days.

It has several elements intended to add more transparency and regularity to the probate process. To address the fees appropriated by this broker, in part, the new law caps real estate fees and other fees for identifying estates to 10 percent of the net proceeds from the sales of property.

The period for heirs to open a probate estate will increase from 42 to 63 days before a public administrator can open the estate. A formal hearing is required before a public administrator is appointed.

Public administrators must post a notice of a court hearing if the estate contains property in tax or mortgage foreclosure and prove that they conducted a diligent search for heirs. Failure to provide this notice will be a 90-day misdemeanor.

Public administrators are also required to give written notice to a county treasurer if the estate has property with delinquent taxes so that the treasurer can assure heirs on tax payment plans are notified about the opening of the estate. They must also provide courts with copies of the settlement statements from the real estate sale.

Court approval is necessary before the sale of property represented by the public administrator. Notification to the state public administrator must be provided if an heir lives on the property.

Other steps can help assure that the probate process and estate transfer is valid and relatively expeditious. An attorney can provide advice and draft documents to help achieve these goals.

Source: WXYZ Detroit, "7 Action News investigation prompts probate law change, protect heirs," By Heather Catallo, Feb. 9, 2018

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