When administering an estate, the personal representative must be aware of a number of spousal and minor rights belonging to the surviving spouse and minor children of the decedent. This note will deal with priority allowances to which the surviving spouse, minor children and dependent children are entitled. The amounts which are specified are effective for individuals who died after March 31, 2000 which is the effective date of the Estates and Protected Individuals Code. For individuals who died before this time, reference needs to be made to the smaller amounts set by the Revised Probate Code which was in effect at such time. The allowances and exempt property are available for a decedent who dies domiciled in Michigan. For a decedent who dies domiciled outside of Michigan, rights to homestead allowance, family allowance, and exempt property are governed by the law of the decedent's domicile at death. A subsequent note will deal with elections which the surviving spouse may make.
Pursuant to MCL 700.2402 the surviving spouse of a decedent who was domiciled in this state is entitled to receive a homestead allowance of $15,000. This amount shall be adjusted annually for inflation beginning January 1, 2001. If there is no surviving spouse, each minor child and each dependent child of the decedent is entitled to a homestead allowance equal to $15,000, as adjusted annually for inflation, divided by the number of the decedent's minor and dependent children. It should be noted that a dependent child means an adult child who was dependent upon the decedent. The homestead allowance is exempt from and has priority over all claims against the estate, except administrative costs and expenses and reasonable funeral and burial expense. A homestead allowance is in addition to any share passing to the surviving spouse or minor or dependent child by the will of the decedent, unless otherwise provided, by intestate succession, or by elective share. How the determination of what assets are to be used to make this disbursement will be discussed later in this note.
Pursuant to MCL 700.2403 a reasonable family allowance is payable to the decedent's surviving spouse and minor children whom the decedent was obligated to support, and children of the decedent or another who were in fact being supported by the decedent. The purpose of this family allowance is to provide support for such persons during administration of the estate. The allowance shall not continue for a period longer than 1 year if the estate is inadequate to discharge allowed claims. It should be noted that the family allowance may be payable to adult children if supported by the decedent or to other persons who were being supported by the decedent at the time of death. There is no set amount established for a family allowance. The only requirement is that it be "reasonable".
The family allowance is payable to the surviving spouse, if living, for the use of the surviving spouse and minor and dependent children. If a minor child or dependent child is not living with the surviving spouse, the family allowance may be paid partially to the child or to a fiduciary or other person having the child's care and custody, and partially to the spouse, as their needs may appear. A person having the care and custody of a child could be custodial parents, guardians or those granted custody through a court custody order. If the spouse is not living, the family allowance is payable to the children or persons having their care and custody.
The family allowance may be paid in a lump sum or in periodic installments. The personal representative may determine the family allowance in a lump sum not exceeding $18,000 or periodic installments not exceeding 1/12 of that amount per month for 1 year. The $18,000 amount will be adjusted annually for inflation beginning on January 1, 2001. The personal representative may disburse the funds of the estate to pay the family allowance in that amount or lesser amount without court order. The death of an individual entitled to family allowance terminates the right to allowances not yet paid. The spouse and minor children may receive a family allowance greater than $18,000, but the amount must be approved by the court.
The family allowance is exempt from and has priority over all claims except administrative costs and expenses, reasonable funeral and burial expenses and the homestead allowance. The family allowance is not chargeable against a benefit or share passing to the surviving spouse or children by the will of the decedent, unless otherwise provided, by intestate succession, or by way of elective share.
Pursuant to MCL 700.2404 the decedent's surviving spouse is also entitled to household furniture, automobiles, furnishings, appliances, and personal effects from the estate up to a value not to exceed $10.000 more than the amount of any security interests to which the property is subject. The $10,000 amount will be adjusted annually for inflation beginning January 1, 2001. If there is no surviving spouse, the decedent's children are entitled jointly to the same value. It should be noted that all children are allowed to receive this allowance and not just minor children.
If encumbered assets are selected and the value in excess of security interests, plus that of other exempt property, is less than $10,000, or if there is not $10,000 worth of exempt assets in the estate, the spouse or children are entitled to other assets of the estate, if any necessary to make up the $10,000 value. Rights to exempt property and assets needed to make up a deficiency of exempt property abates as necessary to permit payment of homestead allowances and family allowance..
The rights to exempt property are in addition to a benefit or share passing to the surviving spouse or children by the decedent's will, unless otherwise provided, by intestate succession, or by elective share. A specific devise of personal property to the spouse or children without a further indication that it replaces this exemption should not be interpreted as within the phrase "unless otherwise provided."
Source and determination of assets used to satisfy
If the estate is otherwise sufficient, property specifically devised shall not be used to satisfy rights to homestead allowance or exempt property. Subject to this restriction, the surviving spouse, fiduciaries or others that have the care and custody of minor children, or children who are adults may select property of the estate as homestead allowance and exempt property. Selection can be made using Selection of Homestead Allowance and Exempt Property, and Petition and Order for Family Allowance (PC 582). The personal representative may make those selections if the surviving spouse, the adult children, or those acting for the minor children are unable or fail to do so within a reasonable time. The personal representative may execute a deed of distribution or other instrument to establish the ownership of property taken as homestead allowance or exempt property.
Objections to determination or selection
The personal representative or an interested person aggrieved by a selection, determination, payment, proposed payment, or failure to act may petition the court for appropriate relief, which may include a family allowance other than that which the personal representative determined or could have determined. This would be done in a formal proceeding. It would appear that pursuant to MCR 5.125(C)(12) the interested persons who should receive notice of such a formal proceeding would be:
1. Personal representative, and
2. Other persons who will be affected by the adjudication. The next note will discuss additional rights which the surviving spouse and children may have such as a spouse's right to make certain elections, the rights of a spouse who was omitted in a premarital will and the rights of children omitted in a parent's will. (Continued, see Part 2)