Rights of Surviving Spouse and Children
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. 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 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 the interested persons who should receive notice of such a formal proceeding would be:
- Personal representative, and
- Other persons who will be affected by the adjudication.
Pursuant to MCL 700.2202 the surviving spouse of a decedent who was domiciled in Michigan and who dies testate (with a will) may file with the court an election in writing that the spouse elects 1 of the following:
- That the spouse will abide by the terms of the will.
- That the spouse will take 1/2 of the sum or share that
would have passed to the spouse had the decedent died
intestate (without a will), reduced by 1/2 of the value of
all property derived from decedent by any other means other
than testate or intestate succession upon decedent's death.
The property derived by the surviving spouse includes the
- A transfer made within 2 years before the decedent's death to the extent that the transfer is subject to federal gift or estate tax.
- A transfer made before the date of death subject to a power retained by the decedent that would make the property, or a portion of the property, subject to federal estate tax.
- A transfer effectuated by the decedent's death through joint ownership, tenancy by the entireties, insurance beneficiary, or similar means.
If a widow, that she will take her dower right as provided by law. Dower entitles the widow to the use during her natural life, of 1/3 part of all the lands in which her husband was seized of an estate of inheritance at any time during the marriage. It would be rare for this election to be made.
In an intestate estate (without a will) if the surviving spouse is a widow, she may elect to take her intestate share or her dower rights. It should be noted that this election only applies to a widow and not a widower.
Within 28 days after the personal representative's appointment, the personal representative must give notice of the rights of election, allowances and exempt property to the surviving spouse. This may be accomplished by using Notice to Spouse of Rights of Election and Allowances, Proof of Service, and Election ( PC 581). MCR 5.305(B) provides the proof of service of the notice does not need to be filed with the court. MCR 5.305(A) provides that no notice need be given in the following situations:
- The right of election is made before notice is given.
- The spouse is the personal representative or one of the personal representatives.
- There is a waiver of the rights and allowances.
Pursuant to MCR 5.305(C) if the spouse exercises the right of election, the spouse must serve a copy of the election on the personal representative personally or by mail. The election may be made on the same form used to notify the spouse of her rights of election, ( PC 581). The election must be made within 63 days after the date for presentment of claims or within 63 days after the service of the inventory upon the surviving spouse, whichever is later. The election may be filed with the court but such filing is not required unless there is supervised administration. The election must be made during the surviving spouse's lifetime. Pursuant to MCL 700.2202(4) if the surviving spouse is an incapacitated individual, the right of election may be exercised only by order of the court in which a proceeding as to that person's property is pending, after finding that exercise in necessary to provide adequate support for the incapacitated individual during that person's life expectancy. If the surviving spouse fails to make an election within the time specified, it is conclusively presumed that the surviving spouse elects to abide by the terms or the will or to accept his or her intestate share, except:
- After the estate has been closed, there are after discovered assets.
- During the administration of the estate and upon petition of the spouse, the court determines to permit the spouse to make an election because of estate litigation, allowance of additional claims against the estate, or for other good cause.
In rare situations where there may be an election of dower, MCR 5.305(D) provides that that if there is a minor or other person under legal disability having no legal guardian or conservator other than the widow, there may not be a hearing on the petition until after the appointment of a guardian ad litem for such person. A petition for the assignment of dower must include:
- A full and accurate description of the land in Michigan owned by a deceased husband and of which he died seized, from which the petitioner asks to have the dower assigned.
- The name, age, and address of the widow and the name and addresses of the other heirs.
- 'The date on which the husband died and his domicile on the date of his death.
- The fact that the widow's right to dower has not been barred and that she or some other person interested in the land wishes it set apart.
Pursuant to MCL 700.2301 if a surviving spouse marries the testator (individual making a will) after the testator executes his or her will, the surviving spouse is entitled to receive, as an intestate share, not less than the value of the share of the estate the surviving spouse would have received if the testator had died intestate. The surviving spouse does not have a right to receive such a share if :
- From the will or other evidence, it appears that the will was made in contemplation of the testator's marriage to the surviving spouse.
- The will expresses the intention that it is to be effective notwithstanding a subsequent marriage.
- The testator provided for the spouse by transfer outside the will, and the intent that the transfers be a substitute for a testamentary provision is shown by the testator's statements or is reasonably inferred from the amount of the transfer or other evidence.
In calculating the intestate share that the surviving spouse may receive, the value of the decedent's estate is reduced by any portion that is devised to a child or other descendent of the decedent, born prior to the marriage, and who is also not a child of the surviving spouse. This would significantly limit this provision since most testators would presumably leave most of their estate to descendants. However, the surviving spouse can elect to take an elective share which was described in the first part of this note. If the intestate share is less than the spouse's elective share, it is part of (counts against) the elective share. If this intestate share is greater than the elective share, the spouse will receive this intestate share if the spouse elects to abide by the terms of the will.
Pursuant to MCL 700.2302 if a testator (individual making a will) fails to provide in his or her will for a child of the testator born or adopted after the execution of the will, the omitted after-born or after-adopted child is entitled to a share of the estate unless:
- The omission was intentional.
- The parent provided for the omitted child by a transfer outside of the will and the parent's intent for a substitute transfer can be established.
- The will devised substantially all of the estate to the other parent of the omitted child.
The share of an omitted child will be either:
- An intestate share, if the parent had no other living children
- A share equal to that devised to other children.
If at the time of execution of the will the testator fails to provide in his or her will for a living child solely because he or she believes the child to be dead, the child is entitled to share in the estate as if the child were an omitted after-born or after-adopted child.