When a loved one passes away, their assets must go through probate, a legal process that oversees the distribution of the estate. However, not all assets are subject to probate. In Michigan, certain assets are exempt, meaning they can be transferred directly to heirs or beneficiaries without court involvement. Understanding these probate exclusions can help families avoid delays, reduce legal costs, and ensure a smoother transition of wealth.
At the Law Office of Julie A. Paquette, we have a team of legal professionals ready to help individuals and families navigate estate planning and probate matters with clarity and confidence. Below, our trusted estate planning attorneys outline the types of assets that bypass probate in Michigan and how proper planning with the help of a reliable probate attorney can protect your estate.
Types of Assets That Are Exempt from Probate in Michigan
1. Jointly Owned Property with Rights of Survivorship
When a property is owned jointly with rights of survivorship, it automatically transfers to the surviving owner upon one owner’s passing. This commonly applies to:
- Real estate titled as “joint tenants with right of survivorship”
- Joint bank accounts
- Vehicles or other assets owned jointly with survivorship rights
Since ownership passes by law, these assets do not need to go through probate.
2. Assets with Named Beneficiaries
Some assets allow the owner to designate beneficiaries, ensuring direct transfer upon death. These include:
- Life insurance policies
- Retirement accounts (401(k)s, IRAs, pensions)
- Payable-on-death (POD) bank accounts
- Transfer-on-death (TOD) investment accounts and securities
Because these assets have pre-determined beneficiaries, they bypass probate and go directly to the named individuals.
3. Revocable and Irrevocable Trusts
Assets placed in a revocable living trust or irrevocable trust are not subject to probate. Trusts allow individuals to:
- Avoid court involvement in asset distribution
- Maintain privacy (as probate proceedings are public)
- Control how and when beneficiaries receive assets
By transferring property into a trust, owners can ensure a smooth transition while avoiding the delays and expenses of probate.
4. Exempt Property for Surviving Spouses and Dependents
Under Michigan law (MCL § 700.2404), a surviving spouse and minor children are entitled to receive certain exempt property from the estate before creditors are paid. This typically includes:
- Household furnishings
- Appliances
- Personal effects
- Vehicles (up to a certain value limit)
These items are protected from creditors and do not have to go through the probate process.
5. Small Estates Under Michigan’s “Simplified Probate” Process
Michigan law provides a simplified probate option for small estates. If the total estate value is below a certain threshold ($15,000, adjusted annually for inflation) and does not include real estate, heirs may be able to claim assets through an affidavit process instead of formal probate.
Additionally, if the estate’s value is less than the sum of funeral expenses and the family allowance (set by law), it may be exempt from standard probate proceedings.
How to Ensure Your Assets Avoid Probate in Michigan
While certain assets automatically bypass probate, proper estate planning ensures your loved ones receive their inheritance without unnecessary legal complications. Consider these strategies:
- Establish a Revocable Living Trust: This allows you to maintain control over your assets while ensuring they are distributed according to your wishes without probate.
- Name Beneficiaries on Financial Accounts: Ensure that all retirement accounts, life insurance policies, and bank accounts have up-to-date beneficiary designations.
- Own Property Jointly: If you own real estate, consider joint ownership with survivorship rights to allow seamless transfer upon death.
- Use Transfer-on-Death (TOD) or Payable-on-Death (POD) Designations: Many financial institutions offer these options for bank accounts, securities, and vehicle titles to avoid probate delays.
Working with an experienced probate lawyer with years of proven results can help you create a legally sound estate plan, ensure your assets are properly designated to avoid probate and provide guidance on the best strategies to protect your legacy.
Contact Our Michigan Probate Attorneys at the Law Office of Julie A. Paquette Today
Understanding probate as a whole and which assets are exempt from probate can save your family time, stress, and legal expenses. Whether you need help structuring your estate to avoid probate or navigating Michigan’s probate laws, the Law Office of Julie A. Paquette is here to assist you.
Contact us today at (248) 648-1148 or schedule a consultation online to learn more about protecting your assets and ensuring a smooth estate transition. Let us help you create a plan that secures your legacy and provides peace of mind for your loved ones.
