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Anyone Successful in Disputing the $27,000 Statutory Michigan Probate Family Allowance paid to spouse?

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Linky

Member
What is the name of your state?Michigan
Kent County

My father passed away. He had a pour-over will and trust. Unfortunately, he had some bank accounts titled in his name only, not in the name of the trust, so they had to go through probate. The Personal Representative, who is also his spouse (2nd wife, younger, opportunist), took the opportunity to then take all the probate allowances, including the Homestead Allowance, Exempt Property Allowance, and Michigan $27,000 Family Allowance. We doubt my dad intended that. We are trying to dispute that statutory Family Allowance as it must be "reasonable" and "necessary" and she must consider factors such as other assets available to her, or other allowances. We wanted to see if anyone else has been successful in disputing the statutory amount, or lowering it, or whether the local judges are just approving it because it's the statutory amount?

The spouse was provided for in the trust. She got an immediate cash payout on death, and a house, and the most valuable of her husband's tangible personal property (artwork, collectibles, etc) worth a substantial amount. The spouse and my dad both had separate and individual trusts, and both had children from previous marriages, but none together. Their trusts do not name each other's kids as beneficiaries. They also kept their finances separate, and even had a prenup, that later became my dad's trust. Her trust has substantial assets. My dad's trust had well over $1 million in value in it at his death, about 33% in real estate, and the remainder in low rate CD's.

The spouse/PR did not even take the Family Allowance until 13 months after my father's death, and she took it as a lump sum, and she didn't take it in cash. She had the trustee invest it in mutual funds, and then had the mutual funds transferred over 5 months later.

The spouse/PR had almost no expenses, as she got the house transferred free and clear, but delayed the transfer for 11 months, during which time she charged her living expenses (HOA fees, taxes, maintenance, assessments) to the Estate account. It was a trust asset, but she charged the house costs to the Estate account personally. They owned vehicles outright, she got his social security, they didn't have hired help, and didn't live extravagantly (no country clubs, etc).

I'm asking about this on its own, but also because the spouse has charged over $100,000 in fees and allowances to the Estate and she's not done. She is milking it for all its worth, and it all comes out of the shares that my siblings and I would have split.
 


Just Blue

Senior Member
What is the name of your state?Michigan
Kent County

My father passed away. He had a pour-over will and trust. Unfortunately, he had some bank accounts titled in his name only, not in the name of the trust, so they had to go through probate. The Personal Representative, who is also his spouse (2nd wife, younger, opportunist), took the opportunity to then take all the probate allowances, including the Homestead Allowance, Exempt Property Allowance, and Michigan $27,000 Family Allowance. We doubt my dad intended that. We are trying to dispute that statutory Family Allowance as it must be "reasonable" and "necessary" and she must consider factors such as other assets available to her, or other allowances. We wanted to see if anyone else has been successful in disputing the statutory amount, or lowering it, or whether the local judges are just approving it because it's the statutory amount?

The spouse was provided for in the trust. She got an immediate cash payout on death, and a house, and the most valuable of her husband's tangible personal property (artwork, collectibles, etc) worth a substantial amount. The spouse and my dad both had separate and individual trusts, and both had children from previous marriages, but none together. Their trusts do not name each other's kids as beneficiaries. They also kept their finances separate, and even had a prenup, that later became my dad's trust. Her trust has substantial assets. My dad's trust had well over $1 million in value in it at his death, about 33% in real estate, and the remainder in low rate CD's.

The spouse/PR did not even take the Family Allowance until 13 months after my father's death, and she took it as a lump sum, and she didn't take it in cash. She had the trustee invest it in mutual funds, and then had the mutual funds transferred over 5 months later.

The spouse/PR had almost no expenses, as she got the house transferred free and clear, but delayed the transfer for 11 months, during which time she charged her living expenses (HOA fees, taxes, maintenance, assessments) to the Estate account. It was a trust asset, but she charged the house costs to the Estate account personally. They owned vehicles outright, she got his social security, they didn't have hired help, and didn't live extravagantly (no country clubs, etc).

I'm asking about this on its own, but also because the spouse has charged over $100,000 in fees and allowances to the Estate and she's not done. She is milking it for all its worth, and it all comes out of the shares that my siblings and I would have split.
I suggest you take all the paperwork to an attorney.
 

Linky

Member
Thank you for your responses, but why would I have to have an attorney? Why can't I petition the court to ask for a lower family allowance? Isn't that commonly done? What pitfalls could I have by trying it myself?
 

quincy

Senior Member
Are you a minor child of the deceased or a dependent? Are there any minor children of the deceased or dependents?

Here is a link to MCL 700.2403:
 
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Zigner

Senior Member, Non-Attorney
Thank you for your responses, but why would I have to have an attorney? Why can't I petition the court to ask for a lower family allowance? Isn't that commonly done? What pitfalls could I have by trying it myself?
Because you don't know how to ask. The "pitfalls" are that you would spend money and screw things up.
 

Taxing Matters

Overtaxed Member
We wanted to see if anyone else has been successful in disputing the statutory amount, or lowering it, or whether the local judges are just approving it because it's the statutory amount?
As I read the statutes and the Michigan case law, it appears that the personal representative (PR) is entitled to make a family allowance of up to the amount specified in the statute (which gets adjusted periodically for inflation) on his or her own. The particular statute says:

The personal representative may determine the family allowance in a lump sum not exceeding $18,000.00, adjusted as provided in section 1210, or periodic installments not exceeding 1/12 of that amount per month for 1 year, and may disburse funds of the estate in payment of the family allowance and any part of the homestead allowance payable in cash.
MCL § 700.2405. The limit now currently stands at $27,000.

The statute seemingly gives the power to the PR to make that disbursement as he or she deems fit. The main statute for the family allowance, MCL § 700.2403, allows for a family allowance of any amount, so long as it is "reasonable." But to give a family allowance greater than the statutory amount it must be approved by the probate court. Thus, in a 2003 case Michigan Court of appeals held that the probate court erred in only considering the widow’s expenses and not considering the widow's other available resources to pay those expenses when it approved a request for a family allowance of $20,000/month.


Accordingly, the probate court erred in failing to consider all relevant facts and circumstances in determining the need for a family allowance by merely reviewing petitioner's requested expenses. The probate court precluded consideration of whether petitioner was generating income from other marital property, and of other discovery regarding the “needs” of petitioner.
In re Estate of Seymour, 258 Mich. App. 249, 258, 671 N.W.2d 109, 115 (2003). This arrangement of allowing the PR the power to determine fairly small family allowance amounts at his her discretion would make sense as a way to avoid the probate court having to settle fights over these smaller sums. So instead the reasonable allowance provision for family allowances would come into play for requests greater than that, as those are the ones that the probate court must approve.

Again, though, you'd want to check with a Michigan probate attorney on that. While I didn't see any cases that challenged the PRs decision to grant up to the statutory amount, there may be some authority out there that would allow for it that I did not see.
 

Linky

Member
Are you a minor child of the deceased or a dependent? Are there any minor children of the deceased or dependents?

Here is a link to MCL 700.2403:
No, the deceased had no minor children, and no dependents. He just had the spouse, who herself has no dependents or minor children. So the support is just for the spouse. She and my father had separate trusts, and she received all of her distributions from his trusts upon his death, nothing she inherited had to go through probate.
 

Linky

Member
Because you don't know how to ask. The "pitfalls" are that you would spend money and screw things up.
Thank you, that is what I am afraid of. I have never been to court before, and is it true to say even if I can make a good written argument for a petition, that I would still likely fail in court on a procedural issue? The spouse's attorney is considered an expert in the field.
 

Linky

Member
As I read the statutes and the Michigan case law, it appears that the personal representative (PR) is entitled to make a family allowance of up to the amount specified in the statute (which gets adjusted periodically for inflation) on his or her own. The particular statute says:

The personal representative may determine the family allowance in a lump sum not exceeding $18,000.00, adjusted as provided in section 1210, or periodic installments not exceeding 1/12 of that amount per month for 1 year, and may disburse funds of the estate in payment of the family allowance and any part of the homestead allowance payable in cash.
MCL § 700.2405. The limit now currently stands at $27,000.

The statute seemingly gives the power to the PR to make that disbursement as he or she deems fit. The main statute for the family allowance, MCL § 700.2403, allows for a family allowance of any amount, so long as it is "reasonable." But to give a family allowance greater than the statutory amount it must be approved by the probate court. Thus, in a 2003 case Michigan Court of appeals held that the probate court erred in only considering the widow’s expenses and not considering the widow's other available resources to pay those expenses when it approved a request for a family allowance of $20,000/month.


Accordingly, the probate court erred in failing to consider all relevant facts and circumstances in determining the need for a family allowance by merely reviewing petitioner's requested expenses. The probate court precluded consideration of whether petitioner was generating income from other marital property, and of other discovery regarding the “needs” of petitioner.
In re Estate of Seymour, 258 Mich. App. 249, 258, 671 N.W.2d 109, 115 (2003). This arrangement of allowing the PR the power to determine fairly small family allowance amounts at his her discretion would make sense as a way to avoid the probate court having to settle fights over these smaller sums. So instead the reasonable allowance provision for family allowances would come into play for requests greater than that, as those are the ones that the probate court must approve.

Again, though, you'd want to check with a Michigan probate attorney on that. While I didn't see any cases that challenged the PRs decision to grant up to the statutory amount, there may be some authority out there that would allow for it that I did not see.
Thank you very much for all of the detailed information. I really appreciate it! I was looking at the Seymour case, and I see what you mean. It talks about reasonable, and considering other resources etc available to the spouse, but in that case the PR awarded a much larger monthly payment, not the statutory amount.

I don't know if the "period of estate administration" is a factor as well? Or "to meet immediate needs"? Or "for their maintenance"? Oddly, in this estate/trust, everything the spouse was to inherit was already in the trust at the time of death, and available at my father's death. The assets that had to go through probate, were not the assets the spouse was to inherit, so the "period of administration" for her inheritance was effectively 0 days. My father had only a small credit card bill, no other debts (other than funeral expenses), so the trustee would have been able to distribute immediately. He didn't because she didn't need the money, and was flush with her own cash.

How did you search for legal cases? Through Lexis? Or Westlaw? I don't have access to either, so am stuck....
 

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