Supervised administration is defined in the Estates and Protected Individuals Code (EPIC) at MCL 700.3501(1):
As a single in rem proceeding to secure complete administration and settlement of a decedent's estate under the court's continuing authority that extends until entry of an order approving estate distribution and discharging the personal representative or other order terminating the proceedings.
There are two major parts which define supervised administration. The statutory requirement are found in Article III, Part 5 of EPIC. Michigan Court Rule 5.310 also controls how to proceed with supervised administration. Anyone using supervised administration should be familiar with both the statute and the rule. In its simplest form, supervised administration is begun by a formal proceeding and ends with an order of complete estate settlement which approves estate distribution. Between beginning and end we have "unsupervised administration." A supervised personal representative is responsible to the court and the court may direct the personal representative concerning the estate. However, except as otherwise ordered by the Court, a supervised personal representative has the same powers as a personal representative who is not supervised. The one notable exception to this is that a supervised personal representative shall not make a distribution of the estate without prior court order. This would include any partial distributions.
Supervised administration is commenced by filing a petition rather than an application. Such a petition may be joined with a petition in a formal testacy or formal appointment proceeding. Such a petition may be filed at any time during estate administration. When supervised administration is requested after adjudication, an interested person files a Petition for Supervised Administration After Previous Adjudication (PC 560). After a petition for supervised administration, even if denied, the court must decide:
- Whether the decedent left a will and its validity.
- The personal representative's priority and qualifications to serve.
- A determination of heirs is required as a part of this process by MCL 700.3402.
Supervised administration is not a favored form of estate administration under EPIC. It may only be ordered under most circumstances upon a showing of necessity. Just because an interested person requests it should not be enough. MCL 700.3502(3) states the circumstance under which supervised administration may be ordered:
- If the decedent's will directs supervised administration, the court shall order supervised administration unless the court finds that circumstances bearing on the need for supervised administration have changed since the execution of the will and that supervised administration is not necessary.
- If the decedent's will directs unsupervised administration, the court shall only order supervised administration on a finding that it is necessary for protection of persons interested in the estate.
- In other cases, the court shall order supervised administration if the court finds that supervised administration is necessary under the circumstances.
The filing of a petition for supervised administration has the effect on other proceedings as described in MCL 700.3503:
- The pendency of a proceeding for supervised administration of a decedent's estate stays action on a pending informal application or an informal application filed after commencement of the proceedings for supervised administration.
- If a will has been previously probated in informal proceedings, the filing of a petition for supervised administration has the same effect as a formal testacy proceeding pursuant to MCL 700.3401.
- After receipt of notice of the filing of a supervised administration petition, a personal representative who has been previously appointed shall not exercise the power to distribute the estate. The filing of such a petition does not affect the personal representative's other powers and duties unless the court restricts the exercise of any of those powers and duties pending full hearing on the petition.
Pursuant to Michigan Court Rule 5.310 the personal representative must file the following additional papers with the court and serve copies on the interested persons:
- Inventory - If supervised administration is ordered at the commencement of estate administration, the inventory must be filed within 91 days of the date of the letters of authority. If supervised administration is ordered after a personal representative has been appointed, the court must set time for filing.
- Accounting - Must be filed within 56 days after the end of accounting period unless a shorter period is ordered by the court. The accounting period ends on the anniversary date of the issuance of letters of authority. The personal representative may elect that it end on a different date. The first accounting thereafter shall not be more than one year.
- Notice of appointment.
- Fee notice pursuant to MCR 8.303
- Notice to spouse.
- Notice of continued administration.
- Affidavit of any required publication.
- Michigan estate or inheritance tax information.
- Such other papers as are ordered by the court.
Pursuant to MCR 5.310(F) at any time during supervised administration, any interested person or the personal representative may petition the court to terminate supervised administration. If the personal representative does not complete estate administration within one year after the original appointment, a Notice of Continued Administration (PC 587) pursuant to MCL 700.3951 must be filed. A supervised administration must be closed by an Order of Complete Estate Settlement (PC 595) pursuant to MCL 700.3952. Pursuant to MCR 5.312, if an estate was terminated in supervised administration, it may only be reopened by petition and order of the court.
By choosing supervised administration, personal representatives lose a lot of flexibility and subject themselves to additional filing and notice requirements. It is unclear what advantage is to be gained since the same conclusiveness gained by court orders can be obtained by selectively using formal proceedings. Personal representatives can still file papers such as proof of service with the court even though not required to be filed since the court rules now allow such filing within the discretion of the court. An estate can be closed by an order of complete estate settlement under section 3952 the same as for supervised administration. Supervised administration does force the personal representative to operate within a formal structure and it may give heirs and devisees some comfort to know that the personal representative is responsible to the court. The advantages and disadvantages should be discussed with an attorney and the choice should be made based upon the circumstances of each estate.