Appeals from final probate court decisions

MCL 600.308 (part of the Revised Judicature Act, governing courts) and MCL 700.1303 (part of the Estates and Protected Individuals Code, governing procedure in the probate court) have been amended by Public Acts 186 and 287. The two are tie-barred but have different effective dates (9-27-16 and 12-26-16, respectively). 

This changes the former fractured practice, under which some decisions of the probate court were appealed to circuit court and others to the Court of Appeals. Final decisions of the probate court are now appealable by right to the Court of Appeals, as is the case with Circuit Court decisions.

What is the personal representative?

The personal representative is the person who is named by the probate court to act on behalf of the estate after it is opened to carry out at least the following duties: 

• marshal the assets of the estate 
• notify creditors and review their claims 
• pay estate expenses 
• pay allowances to family members 
• pay creditors 
• distribute the remaining property to the beneficiaries 

In other states, this person is known as the executor (if there is a will) or the administrator (if not). 

The person nominated in the decedent’s will is ordinarily chosen to carry out these functions. 

A point that is often not appreciated by family members after a death occurs is that the person designated in the decedent’s will as personal representative does not automatically take on that role. That person does not have any authority to act until he has presented the will to the probate court, filed an application or petition to open the estate, given notice to or secured waivers from other family members, and obtained Letters of Authority to prove to interested persons that he has the authority to act. Until then, he has no legal authority to do any of the things that are listed above or to take control of any property belonging to the decedent. 

Recently encountered

How to Help When It's Not Your Money
The Washington Post's Color of Money Book Club introduces the series of informational booklets published by the Consumer Financial Protection Bureau to assist fiduciaries in managing money for another. There are four, for the assistance of trustees, court-appointed conservators, agents under a power of attorney, and representative payees / VA fiduciaries.

Compassionate Allowances
The Social Security Administration's guide to the medical conditions that permit a disabled person to quickly qualify for SSDI benefits. Provides links to the full list of diagnoses and contact for the Compassionate Allowances Team.

The Underwriting Library
published by First American Title Insurance Company

An online compilation of forms, rates, standards and guidelines, etc. for real estate title insurance.

Discussing Death over Dinner
The Atlantic

Discussing a new organization and its website, which is aimed at encouraging frank talk about death - and life. Somewhat like the Conversation Project, also briefly mentioned in the article, but with a twist.

Good point

Seen on a lawyer's e-mail tagline:

"Just because you can't take it with you is no excuse to leave it in such a mess."

Pending case: In re Cliffman estate

John Gordon Cliffman died in an automobile accident in 2012. He had no surviving spouse or children. The parties to this case were his two sisters, on one side, and the four sons of his wife Betty, who had died in 1996, on the other.

The claim of the estate against the driver at fault was settled for $300,000 without the filing of a lawsuit. This settlement and the initial allocation of the proceeds were approved by the probate court in December 2013. The sisters later filed a petition to set aside the order of allocation, arguing that Betty's sons were not proper recipients because they could not assert a claim under the Wrongful Death Act. The probate court agreed and granted the petition.

The Wrongful Death Act is codified as part of the Revised Judicature Act, MCL 600.2922. The provisions of section 2922-3 include the following:

(3) Subject to sections 2802 to 2805 of the estates and protected individuals code, 1998 PA 386, MCL 700.2802 to 700.2805, the person or persons who may be entitled to damages under this section shall be limited to any of the following who suffer damages and survive the deceased:
(a) The deceased's spouse, children, descendants, parents, grandparents, brothers and sisters, and, if none of these persons survive the deceased, then those persons to whom the estate of the deceased would pass under the laws of intestate succession determined as of the date of death of the deceased.
(b) The children of the deceased's spouse.
(c) Those persons who are devisees under the will of the deceased, except those whose relationship with the decedent violated Michigan law, including beneficiaries of a trust under the will, those persons who are designated in the will as persons who may be entitled to damages under this section, and the beneficiaries of a living trust of the deceased if there is a devise to that trust in the will of the deceased.

Considering the statutory language, one might think that the result is clear. Betty's sons were of course "the children of the deceased's spouse," weren't they? But the Michigan Court of Appeals, in the case of In re Combs Estate, 257 Mich App 622, 669 NW2d 313  (2003), had held that once the spouse is deceased, she is no longer the spouse, and that the language of section 2922-3-b should be limited to the children of a spouse who survived the deceased. The Court in Cliffman described the Combs rule as follows:

Given that death terminates a marriage, upon one party’s death, the individuals are no longer married and the surviving individual no longer has a “spouse” within the meaning of MCL 600.2922(3)(b).

The sons had to acknowledge that the Combs decision precluded their claim to participate in the distribution, but they argued that that case had been wrongly decided. The Court of Appeals, of course, was bound by Combs, and affirmed the decision of the probate court.

The case is now before the Michigan Supreme Court. On March 23, 2016, it issued an order directing the Clerk to set the application for leave to appeal for oral argument. The Order included this direction:

The parties shall file supplemental briefs within 42 days of the date of this order addressing whether MCL 600.2922(3)(b) allows stepchildren of a decedent to make a claim for damages where the natural parent predeceased the decedent, and if so, whether this Court should overrule In re Combs Estate, 257 Mich App 622 (2003). 

The State Bar Probate and Estate Planning Section has filed an amicus brief on the case.

New case: Koehler Estate

In re Estate of Koehler, decided in late March, is a case in which the Michigan Court of Appeals dealt with a very rare scenario: the application of the principles of "upward inheritance" to a violent death that occurred in Colorado in the 1930s. By "upward inheritance," we mean inheritance by a parent or grandparent from the deceased. This usually arises in a litigation context, where a child or an unborn child is killed and family members seek damages under the Wrongful Death Act.

A rule was adopted in section 2114-4 of the Estates and Protected Individuals Code (EPIC) that precludes a father from inheriting in this manner if he has failed to acknowledge the child as his and has failed to provide support for his child. Perhaps because of the inartful wording of the statute, however, this section was used to try to preclude one Ernest Lee Umble from inheriting one-half of a $500,000 estate from the estate of his deceased great-nephew, Kenneth Koehler.

The background to the case included:

1. The common ancestor was Carl Cedrick Umble, Ernest's father and Kenneth's grandfather
2. Kenneth had a group of cousins and other relatives on his mother's side (the "maternal relatives")
3. Kenneth died leaving no spouse, no children, and no siblings
4. Under EPIC, therefore, his estate was to be divided equally between relatives on his mother's side and relatives on his father's side
5. Ernest was the sole relative on Kenneth's father's side

Carl Cedrick Umble was married to Lydia Hackett and lived in Colorado in the 1930s. Ernest was their son. Carl was apparently separated from Lydia and entered into a relationship with Florence Koehler, who became pregnant. During the pregnancy, Carl physically attacked a man who had kissed Florence; this led to a knife fight in which Carl was killed. When his son, Carl Koehler, was born, he was thus an "afterborn" or "posthumous" child.

As a result of the rule in point 4 above, it was necessary to trace Kenneth's lineage upward two generations, to Carl Umble. The maternal relatives, however, argued that the probate court could not regard Carl Koehler as the son of Carl Umble given the language of section 2114-4.

In previous years, many states distinguished between legitimate and illegitimate children. That distinction has been abolished nearly everywhere. Michigan's current statute, under EPIC, makes no such distinction. 

There was no evidence that Carl Umble had ever denied that the baby Florence was carrying was his. It appears, although both the majority opinion and dissenting opinion of the Court of Appeals danced around the issue a bit, that the maternal relatives were relying on what appears to be a negative presumption in the language of section 2114-4.

This issue demonstrates a reality that affects the judicial interpretation of statutory language: the Legislature is not perfect. The language that it uses in the drafting of statutes is often inartful, clumsy, or sloppy.

Section 2114-4 says: "[i]nheritance from or through a child by either natural parent or his or her kindred is precluded unless that natural parent has openly treated the child as his or hers, and has not refused to support the child." One approach, taking a plain-meaning approach to this language, would interpret it to mean:

• Normally, a parent or someone taking "upward" through a parent may not inherit (regardless of legitimacy). That is the apparent statutory presumption.
• The presumption can be overcome by evidence that the natural parent "openly" treated the child as his or her child, and that he or she had not refused to provide support to the child. Normally, we would think, this first leg would apply only to the father, but it could also be read to apply to a woman who has surrendered a child to be raised by another, without a formal guardianship in place.
• If either of these is not established, the presumption is overcome.

The maternal relatives appear to have argued that a father of an unborn child cannot openly treat the child as his own, and has no opportunity to provide support until he is born. Thus, the argument would go, the presumption cannot be overcome under any circumstances as it pertains to an afterborn child.

The majority opinion of the Court of Appeals, quite naturally, rejected this conclusion as inconsistent with the apparent legislative intent. Despite the sloppy wording of the subsection, the Court concluded that the Legislature intended to disqualify only a parent who has refused to acknowledge his child, or who has refused to provide support to his child. Further, it concluded, this can by definition only occur after the child is born.

Judge Peter O'Connell submitted what is called a "dissent." He did not disagree with the majority's ultimate conclusion, and he also did not mention the apparent presumption argument. He believed, however, that the case should be remanded to the probate court to take further evidence. Where he differed from the majority was on the assumption that a refusal to acknowledge a child is logically impossible before the child is born. Citing and quoting from two decisions by courts in other states, he concluded that it is possible that a married man, faced with the news that a woman he had been intimate with was now pregnant, might try to claim that the child was not his, and was fathered by another man. He cited no evidence of such a statement under the facts of the case, but did note that it would, if established, constitute a refusal to acknowledge paternity.

(Note: Neither of the opinions addressed the question of whether Colorado law rather than Michigan law should apply to the issue of inheritance by Carl Koehner from Carl Umber at the time of the latter's death.)

The new "funeral representative" law

The Michigan legislature has passed, and the governor has signed, Public Act 57 (2016), which includes amendments to section 3206 of the Estates and Protected Individuals Code (EPIC) governing the disposition of the remains of deceased persons. 

The previous list of priorities for making determinations was discussed in our April 2012 posting. A brief recap of those provisions:

• The decedent could not control this issue, by will or otherwise.
• The personal representative had no say, either, if he was not a family member. 
• The determination would be made by the surviving spouse or, if none, a majority of the nearest relatives.
• If they could not agree, the probate court could be asked to resolve the dispute.

The revised section 2306 adds a new "funeral representative" at the top of the list. The previous listed priority remains, but the first in line (absent a DOD designation as noted below) to make the decision about disposition, including cremation, is the decedent's designated "funeral representative."

How is that person named? The section provides

• the funeral representative must be age 18 or old and of sound mind
• the designation is to be made in writing, dated, and signed
• the writing must be signed before two witnesses or a notary
• the designation may be made as part of the person's will or Patient Advocate Designation, or it may be a self-standing writing

The following should also be noted.

If the designation of the funeral representative is made in the decedent's will, it does not have to be submitted to probate for the designation to be effective.

The previous provisions (discussed here previously) giving the very first priority to the person designated in Form DD-93, promulgated by the U.S. Department of Defense, for a decedent who was "a service member" at the time of his death will continue, with the subsections and their language reorganized to make the order of priority clearer. Deferral to the DOD form was necessary since that is a matter of Federal law.

A new provision is included as subsection 3-e:

"If an individual [designated in Form DD-93] had the right to dispose of the decedent’s body under subsection (1), but affirmatively declined to exercise his or her right or failed to exercise his or her right within 48 hours after receiving notification of the decedent’s death, the individual does not have the right to make a [later] decision about the disinterment of the decedent’s body or possession of the decedent’s cremated remains."

Two estate recovery decisions

In In re Estate of Keyes, 310 Mich App 266; 871 NW2d 388 (2015), lv den, ____ Mich ____ (2016), the Court of Appeals held that estate recovery could proceed for the expenses paid for a nursing home admission which began in April 2010, even though the Medicaid beneficiary did not receive the notice required under MCL 400.112g-7 at that time. It was noted that the required information had been included in a May 2012 application. (The court did not specifically note the fact, but MDCH, the agency then administering the Medicaid program, required reapplication every year in order to continue Medicaid coverage. The notice was contained in the reapplication form beginning in 2012, it appears.) 

Last month, the Michigan Supreme Court denied leave to appeal, leaving this decision as established law in Michigan. 

In In re Estate of Gorney, ____ Mich App ____ (2016), issued as a published opinion by the Court of Appeals on February 4, 2016, the court addressed the question of whether the Department of Health and Human Services (which has been administering the Medicaid program since last year's reorganization) could properly assert estate recovery retroactive to July 2010. Gorney was the first named plaintiff in a consolidated appeal involving four different estates opened in four different counties. 

In Gorney, each of the four decedents began receiving Medicaid benefits to pay for long-term care after the estate recovery statute was enacted in 2007. Each of them received, in 2012, an application form for requalification for benefits which included the mandated notice language. In each case, after the death of the beneficiary, the Department sought to pursue estate recovery for benefits paid on and after July 1, 2010. (It is not stated in the opinion why the Department chose that date.) 

As in Keyes, each personal representative sought to invalidate the estate recovery claim based on the failure to provide the required notice when the beneficiary first qualified for Medicaid. The court ruled that Keyes had resolved that issue and rejected the appeals on that point. 

The personal representatives also argued that it was a violation of due process for the state to include benefits paid from July 2010. The evidence showed that the Department had sought Federal approval for its estate recovery program, as required under the Federal Medicaid laws and under the 2007 estate recovery statute, and that that approval was granted in May 2011. On July 1, 2011, the Department "implemented" the program for the first time by instructing its personnel to begin operating the program. 

The court partially agreed with the personal representatives on due process grounds. It found that the estate recovery program could go back to benefits paid from and after July 1, 2011, but could not do so for the one additional year going back to July 1, 2010. 

Thus, we now know that the estate recovery program can seek reimbursement from the estate of a decedent for benefits paid for long-term care services after July 2011, but not before. 

As with Keyes, look for the estates to seek leave to appeal to the Supreme Court. 

In case of emergency

A family dealing with a sudden illness or injury sustained by a loved one will not be thinking of all of his or her details, but they should keep track of bills as they are received and come due. They should make sure that utility bills are paid, propane tanks remain full, etc.

In particular, they should make sure that premiums on health insurance, life insurance, disability insurance, auto insurance, and homeowner's insurance are paid and kept current. For some of these coverages, keeping them in force will be of crucial importance to the affected person and his or her family.We have seen numerous cases where life insurance benefits that the family expected, and depended on, are not paid because the insured, due to lengthy illness before he died, allowed the policy to lapse for non-payment of the premium.

Michigan estate recovery

The estate recovery program allows the State of Michigan, in some cases, to seek repayment of Medicaid benefits for nursing home care and home health care after the recipient has died.  Mandated by Federal law, estate recovery is essentially a tradeoff for the fact that the recipient's home is not included as a "countable asset" (if its value is under $500,000) when calculations are done to verify that the recipient has assets below the maximum allowed to qualify for Medicaid coverage.

In the majority of cases, for a couple of reasons, the only asset for which the estate recovery claim is asserted is the recipient's home.

Michigan's estate recovery statute, found at MCL 400.112g and 112h, allows for recovery only against "probate assets," that is, property owned by the decedent in his sole name which does not pass to others by operation of law, and for which it is necessary to open an estate in probate court. Property which passes under joint tenancy, for example, is not subject to estate recovery in Michigan. A home owned by husband and wife as tenants by the entirety is likewise not subject to estate recovery. (In other states, such as Wisconsin, jointly-held assets are also subject to the estate recovery laws.)

When the family home is included in the probate estate, there are several exemptions and limitations that are important. The first and most significant is that the home may not be subject to estate recovery if the surviving spouse is residing there. Further, there is a monetary limitation when that exemption does not apply. The home is subject to estate recovery only to the extent to which the price that it can be sold for by the personal representative exceeds

• "50% of the average price of a home" in the county, plus
• the costs of estate administration, funeral costs, etc., and
• all applicable statutory exemptions

The exemptions that are allowed under statute include the homestead allowance, the family allowance, and exempt property. If all three apply, when the decedent leaves a surviving spouse, the total amount can be as high as $64,000, given the current applicable figures.

An unpublished decision of the Michigan Court of Appeals issued in 2015 ruled that the person seeking to apply the 50% average price limitation must take steps to apply for it, and must do so within the time that the department specifies. It will not be automatically available.

Today, eight years after estate recovery was enacted, and five years after it went into effect, there is still some uncertainty as to how "the average price of a home" in a given county can be calculated. There are a couple of online sources that can provide assistance on this issue.

If you have received an estate recovery notice, be sure to consult with an experienced attorney to ensure that the needed steps can be taken.