Passing Title to Michigan Real Estate without Probate

When an individual who owns real estate dies, many attorneys assume that it is necessary to open a probate estate to pass title to family members. However, title to Michigan real estate passes immediately on death and probate may not be necessary if the decedent died intestate. An individual entitled to property by intestacy may establish title to the property by proving the decedent’s ownership, the decedent’s death, and the individual’s relationship to the decedent, although the individual may be liable for costs of administration, creditors’ claims and the surviving spouse’s and dependent children’s allowances. MCLA 700.3901. That liability lasts for one year from the time of the property’s distribution. MCLA 700.3957.

These principles give rise to interesting repercussions related to liability for real estate taxes, property insurance and the claims of creditors, including Medicaid estate recovery. If property passes outside of probate and there is only one year to pursue a claim, that makes it difficult for claimants to pursue the property.

Where the intestate decedent owned a parcel of land and no other assets requiring probate, the execution of an affidavit may pass title to the heirs. The affidavit should set forth the decedent’s ownership, the legal description of the real estate, the date and place of the decedent’s death, and the identities and relationships of the heirs to the decedent. The affidavit should be executed by a disinterested third party with knowledge of the salient facts. A specimen affidavit follows:

AFFIDAVIT AS TO HEIRS

AFFIANT, JEREMIAH JOHNSON, Attorney, of 22312 Garrison Street, Dearborn, MI 48124, having made proper inquiry into the facts stated below, makes this statement under MCLA 700.3901 and says:

1. SAMUEL PRINCETON, died intestate on February 9, 2017, with a residence address of 448 Tannahill Street, Dearborn, MI 48124.
2. The death certificate of SAMUEL PRINCETON is attached as Exhibit A.
3. At the time of his death, SAMUEL PRINCETON was the owner in fee of the following-described real estate in City of Dearborn, Wayne County, Michigan:

Lot 67 Fort Dearborn Manor, L49, P67;

448 Tannahill Street;

82 09 154 67 035.

4. The heirs at law of SAMUEL PRINCETON, at the time of death were:
a. PERSEPHONE PRINCETON, of 13087 Agnes Street, Southgate, MI 48195, daughter,
b. GARFIELD PRINCETON, of 141 Harrison Street, Trenton, Mi 48183, son.

5.  SAMUEL PRINCETON was not survived by a spouse and there were no other intestate heirs.

6. PERSEPHONE PRINCETON and GARFIELD PRINCETON claim title to the real estate described in § 3, above, as of February 9, 2017.

Executed June 25, 2017 by:                                                                                        JEREMIAH JOHNSON

In Wayne County, Michigan, this instrument was acknowledged before me June 25, 2017, by JEREMIAH JOHNSON as a free act and deed.

My commission expires
May 18, 2019                                                                                                                 CAMELLIA MONTI, Notary Public

When recorded return to drafter. Send tax bills to PERSEPHONE PRINCETON, of 13087 Agnes Street, Southgate, MI 48195.

Drafted by JEREMIAH JOHNSON, Attorney, of 22312 Garrison Street, Dearborn, MI 48124.

In most cases, the affidavit will be recorded as an exhibit to a deed conveying all of the interests to one heir or to a third party, signed by all of the heirs.  However, recording the affidavit in the chain of title for the property should start the one year waiting period.

John B. Payne, Attorney
Garrison LawHouse, PC
Dearborn, Michigan 313.563.4900
Pittsburgh, Pennsylvania 800.220.7200
law-business.com

©2017 John B. Payne, Attorney

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Putting Your Piece of the Great White North in Your Trust

There are many advantages to putting one’s property in a revocable living trust. Families of trust clients have often told me that they were amazed at how easy the client’s estate was managed and settled when everything was in a trust. Probate avoidance can be faster, less expensive, and less public than opening a probate estate. The distribution provisions can be more complex if a trust is used and it is easier to create an effective plan to benefit disabled beneficiaries who depend on public benefits or who cannot manage their own affairs. This is very important when there are beneficiaries who are minors. Every single parent of a minor child should consider setting up a revocable living trust. The disadvantages are that setting up a trust-based estate plan and transferring all the assets into the trust may cost nearly as much as probating the estate on death and the expense is incurred when the estate plan is created, not when the client dies. Many clients decide that the advantages outweigh the effort and expense.

When U.S. estate-planning clients own real estate in Canada, trying to include the property in a trust presents special problems. According to a paper on the website of Miller Thompson, a multi-province Canadian law firm, revocable living trusts can be used in Canada in much the same way they are used in the U.S. However, there is a deemed disposition at the time property is transferred into the trust, with a resulting capital gains tax, and every 21 years thereafter, unless the trust qualifies for a statutory exception. There are certainly pitfalls that would require consultation with a Canadian lawyer. Also, income and gains retained in Canadian trusts are taxed at the highest rates.

Pour-over wills are commonly used in the U.S. to sweep property that was not placed in the trust during life out of the probate estate and into the trust. Where Canadian real estate passes under a pour-over will, there are several traps to avoid:

1) A pour-over will into a trust that did not exist at the time the will was signed is not valid.
2) A pour over into a trust that the testator may amend after the will is executed is invalid to the extent that amendments are made that affect the pour-over provision.
3) A pour over into a trust that a third party can amend is not invalid, provided that the amendments are not under the control of the testator.

A power to add or delete beneficiaries or a power of appointment causes a trust to be considered amendable. Because of these technicalities planning for inheritance of Canadian real estate using a U.S. pour-over will is problematic. When a U.S. estate plan is based on a revocable living trust, Canadian real estate may be included in the trust, but care should be taken and both Canadian and U.S. attorneys should review the documents.

 

John B. Payne, Attorney
Garrison LawHouse, PC
Dearborn, Michigan 313.563.4900
Pittsburgh, Pennsylvania 800.220.7200
law-business.com
 
©2014 John B. Payne, Attorney
 
 

Local Records Office Flim-Flam

Several clients have come to my office with a solicitation from a company that calls itself “Local Records Office,” 2843 E. Grand River Avenue, #253, East Lansing, MI  48823.  They receive a Local Records Office Form that appears to come from a government agency.  It does not come from any government office, as the form will tell you, if you look at it carefully.  This company gets the addresses of people who record deeds and sends them this offer to get them a copy of the deed the register of deeds will be sending them, anyway.

The form says, “Local Records Office provides a copy of the only document that identifies [the owner] as the property owner of [property address]” by a recently recorded transferred title on the property.”  In other words, Local Records Office will send a copy of the deed, that the property owner will receive from the Register of Deeds for free.

Local Records Office will also provide a “property report” that no one would need unless the property were being listed for sale.  In that case, a realtor would provide the report for free.  For that matter, most realtors would happily give a home owner the information in question any time the owner asks.

Local Records Office will provide the copy of the deed and a realty listing report for the low, low price of only $89, and enough innocent property owners will be fooled into thinking they need to purchase the deed and the “property report” to make this PFALTAT a very profitable bamboozle.  Don’t get taken in.  Toss the mailing in your recycling bin and be glad you read this blog post before you wasted $89.00.

A company called “Record Transfer Services,” 1000 N. West Street, Suite 1200, Wilmington, DE 19801 preys on property owners all over the country.  They provide the same services for only $83.00.

 

John B. Payne, Attorney
Garrison LawHouse, PC
Dearborn, Michigan 313.563.4900
Pittsburgh, Pennsylvania 800.220.7200
law-business.com
 
©2013 John B. Payne, Attorney