Inventory - Decedent's Estate
Inventory & Service
Pursuant to MCL 700.3706 the personal representative is responsible for the preparation of the Inventory and service on all presumptive distributees and interested persons within 91 days after the personal representative's appointment. Use the Inventory form (PC 577) and follow the instructions on the second page of the form.
Filing of Inventory
The Inventory should be completed using the form entitled Inventory (PC 577). There is no requirement that the personal representative file the Inventory with the court except in supervised administration. However, pursuant to MCR 5.307(A) the personal representative must submit to the court information sufficient to compute the inventory fee within 91 days of appointment. Even though the filing of the Inventory may not be required in most cases, the Court strongly recommends that you do file it. We have had many instances where years after an estate is closed, additional property is discovered, or it is discovered that a deed was never delivered in satisfaction of a land contract, or there is some other reason for reopening the closed estate. By that time, often the personal representative (and the attorney, if there was one) no longer have copies of the original Inventory. If they can’t produce it and it was not filed with the Court, there will be needless cost and expense. File the Inventory with the Court so there will be a permanent record.
Due Date of Inventory Fee
The inventory Fee must be paid before closing the estate or within one year after appointment of the personal representative, whichever is earlier.
Valuation & Description of Property on Inventory
The purpose of the inventory is to let all distributees and interested persons know the assets of the estate and their approximate fair market value. The property must be listed with reasonable detail along with its fair market value as of the date of death and the type and amount of any lien, mortgage or security interest. Use the Inventory form (PC 577) and follow the instructions on the second page of the form. The personal representative may employ qualified and disinterested appraisers. The name and address of each appraiser and the item the appraiser valued must be indicated on the inventory. The Inventory allows the personal representative to list both the personal property and real estate and their corresponding fair market value. If the value of property can not be determined at the time the inventory is due, the value should be listed as "unknown." When the value becomes known, an Amended Inventory must be filed reflecting the fair market value. If property is discovered after the Inventory has been filed, an Amended Inventory reflecting the newly discovered property must be filed and served upon the persons initially entitled to a copy.
Personal property is often lumped together with an estimated value. This is permissible except when there are unique valuable items, individual valuable items or where it is anticipated that the interested persons will contest the inclusion or value of items. Thus, the entry may appear as "household goods - $5,000." If the estate has a unique valuable item, it should be listed separately with its fair market value. Thus, the entry may appear as "antique desk - $2,000." Valuable items should also be listed separately with their fair market value. Items such as automobiles, valuable jewelry, boats, collections, and valuable works of art would fall within this category. Whenever the estate consists of many item of valuable personal property or where it is anticipated that a contest may develop over the inclusion or value of items, it may be prudent for the personal representative to have all personal property appraised by a disinterested appraiser. Pursuant to MCL 700.3707 the personal representative may employ a qualified and disinterested appraiser to assist in ascertaining the fair market value as of the date of the decedent's death of property, the value of which may be subject to reasonable doubt. Different persons may be employed to appraise different kinds of property included in the estate. Each appraiser's name and address shall be indicated on the inventory with the item or items he or she appraised.
When listing real estate, the personal representative should include the street address, PPN, and complete legal description of the property. The fair market value is often arrived at by doubling the state equalized value (SEV) for the property. If the personal representative wishes to use another value, he or she may have the real estate appraised. Out-of-state real estate need not be included on the inventory. However, if the personal representative wishes to make interested persons aware of out-of-state property, the personal representative may list and value such property, but not include its value as part of the Michigan estate. This would be accomplished on the form by describing and valuing the property to the left of the vertical line used on the form. Many attorneys simply do not list out-of-state property so as to make it clear that it is not a part of the Michigan estate. However, if proceeds from such property are paid into the estate, the proceeds must be accounted for latter as a part of the Michigan estate, and an Inventory Fee paid.
Note that although you must show the type and amount of any lien, mortgage or security interest, you may not subtract the amount of any lien, mortgage or security interest from the value of the property on the Inventory. Wolfe-Haddad v Oakland County, 272 Mich App 323, 725 NW2d 80 (2006).
Effective for decedent’s dying on or after March 28, 2013 and before January 1, 2018, if real property that is included in the estate is encumbered by or used as security for an indebtedness, the amount of the indebtedness shall be deducted from the value of the real property. MCLA 600.871. The deduction only relates to that particular real property. No parcel of real estate can have a value of less than zero, and there is no carryover to other estate assets. So, for example, if there is a parcel of real estate worth $100,000 with a mortgage of $120,000 and other estate property worth $50,000, the total value of the estate would be $50,000. The extra $20,000 of indebtedness on the mortgage cannot be used to offset the value of the other property in the estate.
Objections or Disagreements
If an interested person disagrees with the items listed or the values given in the inventory, he or she may file a formal proceeding with the court challenging such aspect of the inventory. The ability to challenge the inventory may be lost after an order is entered allowing the personal representative's first accounting.