HB-4822, As Passed House, January 30, 2018

HB-4822, As Passed Senate, January 23, 2018

SENATE SUBSTITUTE FOR

HOUSE BILL NO. 4822

<<A bill to amend 1998 PA 386, entitled

"Estates and protected individuals code,"

by amending sections 3705 and 3715 (MCL 700.3705 and 700.3715), as

amended by 2009 PA 46.>>

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

Sec. 3705. (1) Not later than 28 days after a personal

representative's appointment or other time specified by court rule,

the personal representative, except a special personal

representative, shall give notice of the appointment to the

decedent's heirs and devisees, except those who have executed a

written waiver of notice, including, if there has been no formal

testacy proceeding and if the personal representative is appointed

on the assumption that the decedent died intestate, the devisees in

a will mentioned in the application for appointment of a personal

representative and to the trustee of a trust described in section

7605(1) as to which the decedent was settlor. The personal

representative shall give the notice by personal service or by

ordinary first-class mail to each person required to receive notice

under this subsection whose address is reasonably available to the

personal representative. However, the personal representative is

not required to notify a person who was adjudicated in a prior

formal testacy proceeding to have no interest in the estate. The

notice required under this subsection must be in a form approved by

the supreme court and must include all of the following

information:

(a) That the court will not supervise the personal

representative. This statement ~~shall~~ must not be included if the

appointment is made in a supervised proceeding under part 5 of this

article.

(b) That, unless a person files a written objection to the

appointment of the person named as personal representative in the

notice or files a demand that bond or higher bond be posted, the

person named in the notice is the personal representative without

bond or with bond in the amount shown in the notice. This statement

~~shall~~ must not be included if the personal representative is

appointed in a formal appointment proceeding.

estate's personal representative.

(d) That, during the course of administering the estate, the

personal representative must provide all interested persons with

all of the following:

(i) A copy of the petition for the personal representative's

appointment and a copy of the will, if any, with the notice.

(ii) A copy of the inventory.

(iii) A copy of the settlement petition or of the closing

statement.

(iv) Unless waived, a copy of the account, including, but not

limited to, fiduciary fees and attorney fees charged to the estate.

(v) If the personal representative is the state or county

public administrator, a copy of any settlement statements from the

sale of real property.

(e) That an interested person may petition the court for a

court hearing on any matter at any time during the estate's

administration, including, but not limited to, distribution of

assets and expenses of administration.

(f) That federal and Michigan estate taxes, if any, must be

paid within 9 months after the date of the decedent's death or

another time period specified by law, to avoid penalties.

(g) That, if the estate is not settled within 1 year after the

personal representative's appointment, within 28 days after the

anniversary of the appointment, the personal representative must

file with the court and send to each interested person a notice

that the estate remains under administration and must specify the

reason for the continuation of settlement proceedings. If such a

notice is not received, an interested person may petition the court

for a hearing on the necessity for continued administration or for

closure of the estate.

(h) The identity and location of the court where papers

relating to the estate are on file.

(2) The personal representative's failure to give the

information required by subsection (1) is a breach of the personal

representative's duty to the persons concerned, but does not affect

the validity of the personal representative's appointment, powers,

or other duties. A personal representative may inform other persons

of the appointment by delivery or ordinary first-class mail.

(3) A personal representative shall also give notice that

includes the information described in subsection (1) to the

attorney general, public administration division, under any of the

following circumstances:

(a) It appears from the petition that the decedent died

intestate without leaving a known heir.

(b) In the administration of an intestate estate, it appears

that the decedent did not leave a known heir.

devisees of the purported will would not be entitled to share in

the estate but for the terms of the will and that the decedent died

without leaving a known heir.

(4) If notice is required to be given to the attorney general

under subsection (3), the attorney general, representing this

state, has all the rights of an heir to be heard and to contest the

validity of a claim, the appointment of a personal representative,

an action of the personal representative, an order, an appointment,

or an instrument purporting to be a decedent's contract or will,

and has all the rights granted or accruing to an heir,

representative, or creditor by a law relating to the settlement of

a testate or intestate estate in court, or by way of rehearing or

appeal.

(5) Within 28 days after the personal representative's

appointment or another time specified by court rule, the personal

representative, except a special personal representative, shall

notify the decedent's surviving spouse, if any, of the spouse's

right to election under part 2 of article II and of the time within

which the election must be exercised.

(6) Except as otherwise provided in this subsection, at the

same time the notice required by subsection (1) is given, the

personal representative shall give notice to the friend of the

court for the county in which the estate is being administered,

which notice identifies the decedent's surviving spouse and the

individuals who are, for a testate estate, the devisees or, for an

intestate estate, the heirs. The personal representative is not

required to notify the friend of the court of a devise to a trustee

of an existing trust or to a trustee under the will. A personal

representative incurs no obligation or liability to the friend of

the court or to another person for an error or omission made in

good faith compliance with this subsection.

(7) If the personal representative is the state or county

public administrator, and if the decedent's real property has

delinquent property taxes, the personal representative shall also

give written notice that includes the information described in

subsection (1) to the treasurer of the county in which the real

property subject to the tax foreclosure is located. The county

treasurer may submit an affidavit to the court regarding the status

of the real property for the court to consider in making its

determination under section 3715(2)(a).

Sec. 3715. (1) Except as restricted or otherwise provided by

the will or by an order in a formal proceeding, and subject to

subsection (2) and to the priorities stated in section 3902, a

personal representative, acting reasonably for the benefit of

interested persons, may properly do any of the following:

(a) Retain property owned by the decedent pending distribution

or liquidation, including property in which the personal

representative is personally interested or that is otherwise

improper for trust investment.

(b) Receive property from a fiduciary or another source.

of the decedent that continues as an estate obligation, as the

personal representative determines under the circumstances. If the

contract is for a conveyance of land and requires the giving of

warranties, the personal representative shall include in the deed

or other instrument of conveyance the required warranties. The

warranties are binding on the estate as though the decedent made

them but do not bind the personal representative except in a

fiduciary capacity. In performing an enforceable contract by the

decedent to convey or lease land, the personal representative,

among other possible courses of action, may do any of the

following:

(i) Execute and deliver a deed of conveyance for cash payment

of the amount remaining due or for the purchaser's note for the

amount remaining due secured by a mortgage on the land.

(ii) Deliver a deed in escrow with directions that the

proceeds, when paid in accordance with the escrow agreement, be

paid to the decedent's successors, as designated in the escrow

agreement.

(d) If, in the judgment of the personal representative, the

decedent would have wanted the pledge satisfied under the

circumstances, satisfy a written charitable pledge of the decedent

irrespective of whether the pledge constitutes a binding obligation

of the decedent or is properly presented as a claim.

(e) If funds are not needed to meet a debt or expenses

currently payable and are not immediately distributable, deposit or

invest liquid assets of the estate, including funds received from

the sale of other property, in accordance with the Michigan prudent

investor rule.

(f) Acquire or dispose of property, including land in this or

another state, for cash or on credit, at public or private sale;

and manage, develop, improve, exchange, partition, change the

character of, or abandon estate property.

(g) Make an ordinary or extraordinary repair or alteration in

a building or other structure, demolish an improvement, or raze an

existing or erect a new party wall or building.

(h) Subdivide, develop, or dedicate land to public use, make

or obtain the vacation of a plat or adjust a boundary, adjust a

difference in valuation on exchange or partition by giving or

receiving consideration, or dedicate an easement to public use

without consideration.

(i) Enter into a lease as lessor or lessee for any purpose,

with or without an option to purchase or renew, for a term within

or extending beyond the period of administration.

(j) Enter into a lease or arrangement for exploration and

removal of minerals or another natural resource, or enter into a

pooling or unitization agreement.

(k) Abandon property when, in the opinion of the personal

representative, it is valueless, or is so encumbered or in such a

condition as to be of no benefit to the estate.

(l) Vote stocks or another security in person or by general or

limited proxy.

(m) Pay a call, assessment, or other amount chargeable or

accruing against or on account of a security, unless barred by a

provision relating to claims.

(n) Hold a security in the name of a nominee or in other form

without disclosure of the estate's interest. However, the personal

representative is liable for an act of the nominee in connection

with the security so held.

(o) Insure the estate property against damage, loss, and

liability and insure the personal representative against liability

as to third persons.

(p) Borrow property with or without security to be repaid from

the estate property or otherwise, and advance money for the

estate's protection.

(q) Effect a fair and reasonable compromise with a debtor or

obligor, or extend, renew, or in any manner modify the terms of an

obligation owing to the estate. If the personal representative

holds a mortgage, pledge, or other lien upon another person's

property, the personal representative may, in lieu of foreclosure,

accept a conveyance or transfer of encumbered property from the

property's owner in satisfaction of the indebtedness secured by

lien.

(r) Pay a tax, an assessment, the personal representative's

compensation, or another expense incident to the estate's

administration.

(s) Sell or exercise a stock subscription or conversion right.

(t) Consent, directly or through a committee or other agent,

to the reorganization, consolidation, merger, dissolution, or

liquidation of a corporation or other business enterprise.

(u) Allocate items of income or expense to either estate

income or principal, as permitted or provided by law.

(v) Employ, and pay reasonable compensation for reasonably

necessary services performed by, a person, including, but not

limited to, an auditor, investment advisor, or agent, even if the

person is associated with the personal representative, to advise or

assist the personal representative in the performance of

administrative duties; act on ~~such a~~ the person's recommendations

without independent investigation; and, instead of acting

personally, employ 1 or more agents to perform an act of

administration, whether or not discretionary.

(w) Employ an attorney to perform necessary legal services or

to advise or assist the personal representative in the performance

of the personal representative's administrative duties, even if the

attorney is associated with the personal representative, and act

without independent investigation upon the attorney's

recommendation. An attorney employed under this subdivision shall

receive reasonable compensation for his or her employment.

(x) Prosecute or defend a claim or proceeding in any

jurisdiction for the protection of the estate and of the personal

representative in the performance of the personal representative's

duties.

(y) Sell, mortgage, or lease estate property or an interest in

estate property for cash, credit, or part cash and part credit, and

with or without security for unpaid balances.

(z) Continue a business or venture in which the decedent was

engaged at the time of death as a sole proprietor or a general

partner, including continuation as a general partner by a personal

representative that is a corporation, in any of the following

manners:

(i) In the same business form for a period of not more than 4

months after the date of appointment of a general personal

representative if continuation is a reasonable means of preserving

the value of the business, including goodwill.

(ii) In the same business form for an additional period of

time if approved by court order in a formal proceeding to which the

persons interested in the estate are parties.

(iii) Throughout the period of administration if the personal

representative incorporates the business or converts the business

to a limited liability company and if none of the probable

distributees of the business who are competent adults object to its

incorporation or conversion and its retention in the estate.

(aa) Change the form of a business or venture in which the

decedent was engaged at the time of death through incorporation or

formation as a limited liability company or other entity offering

protection against or limiting exposure to liabilities.

(bb) Provide for the personal representative's exoneration

from personal liability in a contract entered into on the estate's

behalf.

(cc) Respond to an environmental concern or hazard affecting

estate property as provided in section 3722.

(dd) Satisfy and settle claims and distribute the estate as

provided in this act.

(ee) Make, revise, or revoke an available allocation, consent,

or election in connection with a tax matter as appropriate in order

to carry out the decedent's estate planning objectives and to

reduce the overall burden of taxation, both in the present and in

the future. This authority includes, but is not limited to, all of

the following:

(i) Electing to take expenses as estate tax or income tax

deductions.

(ii) Electing to allocate the exemption from the tax on

generation skipping transfers among transfers subject to estate or

gift tax.

(iii) Electing to have all or a portion of a transfer for a

spouse's benefit qualify for the marital deduction.

(iv) Electing the date of death or an alternate valuation date

for federal estate tax purposes.

(v) Excluding or including property from the gross estate for

federal estate tax purposes.

(vi) Valuing property for federal estate tax purposes.

(vii) Joining with the surviving spouse or the surviving

spouse's personal representative in the execution and filing of a

joint income tax return and consenting to a gift tax return filed

by the surviving spouse or the surviving spouse's personal

representative.

(ff) Divide portions of the estate, including portions to be

allocated into trust, into 2 or more separate portions or trusts

with substantially identical terms and conditions, and allocate

property between them, in order to simplify administration for

generation skipping transfer tax purposes, to segregate property

for management purposes, or to meet another estate or trust

objective.

(2) If the personal representative is the state or county

public administrator, all of the following apply:

(a) The personal representative shall not sell the decedent's

real property without approval of the court. The court shall only

approve the sale if, after a hearing with notice to interested

persons as specified in the Michigan court rules, the court

considers evidence of the value of the property and considers any

information submitted by the county treasurer under section 3705(7)

and otherwise determines that the sale is in the estate's best

interest. In determining whether to approve the sale of real

property under this subdivision, the court shall consider any

information submitted by the county treasurer under section

3705(7).

(b) If the personal representative is the county public

administrator, and if the decedent's real property is occupied by

an heir of the decedent, the county public administrator shall

provide the state public administrator with all pleadings filed in

the case.

shall advance any of the personal representative's court filing

fees associated with the administration of the estate.

(d) If the decedent's estate includes real property subject to

tax or mortgage foreclosure, for real estate fees or fees related

to identifying real property subject to foreclosure, or both,

payable to persons employed by the personal representative,

including an attorney, real estate agent, or asset recovery agent,

both of the following apply:

(i) Except as otherwise provided by the court, if the net

proceeds from the sale of the real property payable to the estate

exceed $30,000.00, the total fees described in this subsection must

not exceed 10% of the net proceeds from the sale of the real

property payable to the estate.

(ii) If the net proceeds from the sale of real property

payable to the estate are less than $30,000.00, the court shall

determine the reasonableness of the fees described in this

subsection.

(3) As used in subsection (2), "net proceeds from the sale of

the real property" means the sale price of the real property less

the amount paid to satisfy the tax or mortgage, or both.

Enacting section 1. This amendatory act takes effect 90 days

after the date it is enacted into law.