Bulletin: MI000016

Dear Associates:

The Estates and Protected Individuals Code (EPIC) is a comprehensive new collection of statutes dealing with, among other things, the administration of trusts and decedent's estates and those of protected individuals. While EPIC repeals the Michigan Revised Probate Code (the RPC), it is very similar to current law with few substantive changes. Those changes made are intended to combine the best provisions of the RPC with modern provisions of estate administration statutes including the Uniform Probate Code (UPC). This should empower Michigan Courts, attorneys and citizens with a consistent, national group of substantive laws and procedures. Law regarding guardianship and conservators are largely untouched. EPIC took effect on April 1, 2000.

An Overview

EPIC sets forth three approaches to probating a decedent's estate -- informal, formal, and supervised. Unsupervised administration -- either informal or formal -- is the default procedure. While supervision can be requested at any time, the statute is designed to avoid Court administration unless there is a dispute. The powers granted to the Personal Representative, unless specifically limited by the Court, are the same regardless of which procedure is utilized -- the only exception being that a Personal Representative under a supervised estate may not distribute assets without a court order. Finally, regardless of which type of proceeding is utilized, the following steps will always take place: appointment of a personal representative; notice to creditors and the payment of all valid claims; payment of administration expenses; preparation and the appropriate service of an inventory; and distribution of the estate to the parties entitled to the estate.

EPIC also provides for self-proving wills, permits a personal representative to exclude environmentally contaminated real property from an estate, and deals directly with the property and debts of nonresident descendants. It also increases the share of a surviving spouse of a person who dies intestate and includes comprehensive "disclaimer of property interests law" which replaces the Disclaimer of Property Interests Act.

Probate of Wills and Administration of Decedent Estates

"Informal proceedings" can be instituted to probate a will or appoint a Personal Representative. They can also be utilized for intestate estates. They are similar to RPC independent proceedings. There is however an important difference -- an informal proceeding is conducted by the probate register rather than by the Court. An "application" is made with the probate register. However, no notice is given to interested persons. Unlike the RPC, under EPIC there is no time limit for contesting a will which has been admitted for probate in an informal proceeding. As such, informal proceedings are subject to greater risk of attack. Thankfully, our experience with similar statues in other jurisdictions reveal no real increase in fiduciary error or fraud. Informal proceedings can be closed either by filing a sworn statement or by obtaining from the Court an "Order of Complete Estate Settlement in a Formal Proceeding." The later will avail the estate of greater finality.

"Formal proceedings" are conducted before a judge with notice to interested persons. They are commenced by filing a petition which must request probate of a will or a determination of intestacy and a judicial determination of heirs. Formal proceedings are closed by obtaining the Order for Complete Settlement described above.

It is expected that many practitioners will utilize an informal proceeding to quickly admit a will and appoint a Personal Representative but then avail the estate of greater finality by later petitioning the Court for an order confirming admission of the will and the appointment of the Personal Representative. Likewise, is expected that many practitioners will close an informal estate by utilizing the Order for Complete Settlement.

"Supervised administration" is a single proceeding before the Court to secure complete administration and settlement of a decedent's estate. The Court has continuing authority which extends throughout the proceeding until the distribution is complete and the Personal Representative is discharged.

Underwriting Considerations

Informal Procedure:

The Company requires that an indemnity be obtained from the Personal Representative. For intestate informal proceedings, an affidavit of heirship of two disinterested parties should be obtained. For testate proceedings, the will should be reviewed to confirm that the decedent's intent is carried out. The proceeding should be closed by obtaining an Order for Complete Estate Settlement.

Formal Proceeding:

Use current requirements.

Supervised Administration:

Use current requirements.

Please note that current underwriting policies remain for instances of fiduciary self-dealing.

Please contact Company counsel with any questions.