What Is “Exempt Property” in Michigan Probate Law?

A family member’s death can have significant effects aside from your pain and grief. For example, if you have debts and no longer have your deceased family member’s income, how do you pay those debts? This is a significant concern, especially if you have funeral and burial expenses to pay or your family member had outstanding medical bills.

Fortunately, Michigan law includes protections for families in the wake of someone’s death. These protections include classifying specific property as exempt from claims by creditors as part of the probate process. The probate lawyers at Bingham Legal Group can help you with Michigan probate proceedings, including understanding which property is exempt.

What Is Probate?

Probate is the legal process by which a person’s assets are transferred after their death. It involves verifying the authenticity of the will (if there is one), appointing an executor to manage the estate, paying any debts and taxes, and distributing the remaining assets to the beneficiaries. This process ensures that the deceased’s financial affairs are settled properly under the supervision of a court.

How Michigan Defines Exempt Property

During the probate process, the court works with the personal representative of an estate to pay off outstanding debts and distribute assets according to the decedent’s wishes and Michigan law. The probate process applies to assets held in the decedent’s name, as well as to any debts owed to them.

Exempt property is property that’s allowed to pass to the decedent’s heirs, even if the decedent has outstanding debt. This means that even if the estate has financial obligations to creditors, the estate cannot be forced to sell off those assets to satisfy those debts.

What Property Is Exempt from Probate in Michigan?

Michigan law lists household furniture, automobiles, furnishings, appliances, and personal effects as exempt property, up to a certain dollar threshold. The amount is adjusted on an annual basis to account for changes in the cost of living.

If the value of these exempt items, after accounting for any security interests or encumbrances, falls short of the established threshold, the heirs can claim other assets to make up the difference. However, this right to additional assets is subject to the estate’s ability to cover estate administration costs, reasonable funeral and burial expenses, the homestead allowance, and the family allowance, in that order.

Exempt property stands apart from any inheritance the surviving spouse or children might receive through the decedent’s will, intestate succession (the default inheritance laws when there’s no will), or elective share.

What Assets Don’t Go Through Probate at All?

Although an estate can’t be forced to sell exempt property to satisfy debts, that property still goes through probate. Some property, however, doesn’t go through probate at all. Assets that pass directly to beneficiaries without having to go through probate include:

  • Any property jointly owned by the decedent and a survivor
  • Any property held in a trust
  • Life insurance policies with named beneficiaries
  • Retirement accounts with named beneficiaries
  • Bank accounts with named beneficiaries

Estates valued at less than $15,000 also do not go through probate if they don’t include any real estate.

How Our Attorneys Can Help You Make the Most of Michigan’s Exempt Property Rules

At Bingham Legal Group, our experienced attorneys have a deep understanding of Michigan’s complex probate laws, including those applying to exempt property. We can guide you through every step of the probate process to ensure your rights are upheld and your property is protected.

Dealing with creditors and the probate process following the death of a loved one can be overwhelming and confusing. Let Bingham Legal Group will help you through this chaotic time. 

Call us today or complete our contact form for a consultation.