When a loved one passes away, dealing with the administrative matters of an estate can be a big job. But when someone entrusted as the estate's executor or personal representative fails to administer it according to the law and the deceased's wishes, the experience can become frustrating for everyone involved. Thankfully, Michigan law protects the heirs and devisees of an estate from the mismanagement or negligence of the executor.
What is a Personal Representative?
A personal representative, commonly referred to as an executor, is the individual someone chooses to serve as their estate's representative after death. The personal representative carries out the terms of the will, securing the estate's assets and distributing them according to the decedent's written wishes.
Duties of a Personal Representative
The role of a personal representative can vary depending on how large or complex an estate is, but in any situation, that person is the primary administrator for someone's estate after they die. The personal representative can be named in a will or selected by the court, but they won't assume the role officially until they apply to the Michigan court for appointment.
After the court appoints a personal representative, they have a fiduciary duty to act in the best interests of the heirs, devisees and the decedent's estate. If the personal representative breaches their fiduciary duties, they can be held personally liable for any losses to the estate.
The personal representative's responsibilities to the estate can include:
- Initiating probate for the estate
- Creating an inventory of the estate's assets and collecting the assets
- Notifying all heirs, devisees and creditors of the estate
- Collecting and paying the estate's debts
- Contacting government agencies on behalf of the estate
- Handling tax matters for the estate
- Distributing the estate assets according to the terms of a will
Closing the estate
What is Probate?
If someone dies in Michigan with assets in their name alone over $25,000 (value in the year 2022) in value, the estate must typically pass through a court process known as probate. Assets held jointly, such as in joint tenancy or a joint bank account, don't need to pass through probate. Insurance policy proceeds and other accounts with a designated beneficiary, such as an IRA or retirement account, can also avoid probate. If some or all of the deceased assets are in a trust, those assets can avoid probate as well.
If the deceased names a personal representative in their will, the court can appoint them as the estate's personal representative after an application for probate is filed. However, if the deceased didn't name an executor in their will, an interested party can petition the court to be named the personal representative. This will require a court hearing to appoint a personal representative.
Michigan law provides a few simplified probate processes for smaller estates, though these short-cuts often are unknown outside hiring an experienced probate attorney.
Eligibility to be a Personal Representative
In Michigan, anyone over 18 is eligible to be a personal representative, even if they live outside the state. However, they must have no prior felony convictions.
What are fiduciary duties?
In Michigan, a personal representative is a “fiduciary.” The deceased may have appointed several fiduciaries, including the personal representative, the trustee named to administer a trust, and any agents named in powers of attorney. The role of agent under a power of attorney, however, ceases at death. The personal representative, as fiduciary, has a legal obligation to act in the best interests of the estate.
Under Michigan law, the estate's personal representative fiduciary must use the “standard of care applicable to a trustee.” This standard of care, as well as the Michigan prudent investor rule, requires the personal representative to act as a prudent person would when dealing with someone else's property. If the personal representative has a special applicable skill, they also have a duty to exercise that skill. The personal representative also has the duty to:
- Settle and distribute the decedent's estate according to the terms of the will.
- Act “expeditiously and efficiently” in the best interest of the estate.
Use the authority of Michigan law, the terms of the will, and any court orders for the best interests of the “claimants whose claims have been allowed and of successors to the estate.”
Remedies for Breach of Fiduciary Duties
If the personal representative isn't managing the estate or is potentially mismanaging the estate, Michigan law provides some remedies. If the personal representative is breaching their fiduciary duties, you can petition the court to:
- Compel the personal representative to perform their duties.
- Enjoin the personal representative from breaching their duties.
- Compel the personal representative to remedy a breach of duty by paying money, restoring the property, or another means.
- Order an accounting of the estate.
- Appoint a special fiduciary to take possession of the estate or administer the property.
- Suspend the personal representative.
- Remove the personal representative.
- Reduce or deny the personal representative's compensation if they were entitled to it.
- Void an act of the personal representative.
- Protect people dealing with the personal representative.
- Impose a lien or a constructive trust on the property.
Trace property wrongfully disposed of to recover the property or its proceeds.
Mismanagement of the Estate
Mismanagement of an estate can happen in many ways:
1. Not Administering the Estate in a Timely Manner
Under Michigan law, the personal representative must complete the administration of the estate within one year of their original appointment by the court. If they are unable to do so, the executor must notify the court that the estate is still in administration within 28 days of the one-year anniversary of their appointment. The personal representative must notify all interested persons as well.
If the personal representative fails to file a Notice of Continued Administration, an interested person can petition the court for a settlement order or a hearing on the necessity of continued administration of the estate. The court will then hear the petition and grant relief to ensure prompt administration of the estate. If, after that time, the personal representative still hasn't filed a Notice of Continued Administration, the court can notify the executor and all interested persons that it intends to close the estate administration and terminate the personal representative's authority within 60 days.
2. Administratively Closed Estate
In some cases, an estate the probate court administratively closed may need to be reopened to resolve matters. Michigan Court Rules do allow for this possibility:
Upon petition by an interested person, with or without notice as the court directs, the court may order an administratively closed estate reopened. The court may appoint the previously appointed fiduciary, a successor fiduciary, a special fiduciary, or a special personal representative, or the court may order completion of the administration without appointing a fiduciary. In a decedent estate, the court may order supervised administration if it finds that supervised administration is necessary under the circumstances.
If the probate court reopens an estate, it can appoint the previous personal representative, a new one, or a special fiduciary or personal representative. The court can also decline to name a new personal representative and simply supervise the administration of the estate if needed. If the court supervises the estate administration, devisees and heirs can't receive any distributions and attorneys and other expenses cannot be paid without the court's permission.
3. Misconduct or Breaching Fiduciary Duties
A personal representative has a fiduciary duty to the estate and the devisees and heirs of the estate. This means that they must act in the best interests of the estate and in accordance with the decedent's will. If they fail to do so, they can be subject to liability.
If the exercise or failure to exercise a power concerning the estate is improper, the personal representative is liable to interested persons for damage or loss resulting from breach of fiduciary duty to the same extent as a trustee of an express trust. The right of purchasers and others dealing with a personal representative shall be determined as provided in sections 3713 and 3714.
Under Michigan law, an “interested person” can petition the probate court for a court order restraining certain conduct. The probate court can also issue a temporary order restraining conduct or ordering performance of conduct on its own motion:
On petition of a person who appears to be an interested person or acting on the court's own motion, the court, by temporary order, may restrain a personal representative from performing a specified act of administration, disbursement, or distribution, or from exercising a power or discharging a duty of the personal representative's office, or may make another order to secure proper performance of the personal representative's duty, if it appears to the court that the personal representative otherwise may take some action that would jeopardize unreasonably the interest of the petitioner or of some other interested person. A person with whom the personal representative may transact business may be made a party.
After issuing a temporary order, the court will set a hearing date within 14 days. The court will notify the personal representative and any interested parties.
4. Terminating a Personal Representative
Your remedies for improper conduct of a personal representative aren't limited to simply asking a court to issue an order. You can also petition to have the court remove the personal representative. The probate court can remove the personal representative if:
- It's in the best interests of the estate.
- The personal representative or the person requesting the personal representative's appointment “intentionally misrepresented material facts in a proceeding leading to the appointment.”
The personal representative disregarded a court order, is incapable of discharging their duties, mismanaged the estate, or failed to perform a duty required of the executor.
The court can also order an accounting of the estate.
Hire an Experienced Trusts and Estates Lawyer
If you're having issues with an estate or a personal representative and you're concerned that the estate is being properly administered, it may be time to talk to an experienced Michigan trusts and estates lawyer. For years, the skilled attorneys at Great Lakes Family Probate & Estates PLLC have guided clients through Michigan probate and estate administration matters. Find out how we can help you through complex estate administration, estate planning, or seeking redress in Michigan probate courts. Contact us online, or call us at 888-554-5373.