Public administrator reform bills signed into law

Categories: Runestad News

AG Schuette commends passage of Runestad’s legislation

Michigan Attorney General Bill Schuette today applauded the Legislature for the passage of two bills that were signed into law. Now Public Acts 13 and 14 of 2018, the bills seek to make critical and necessary changes to the state public administrator system. The changes are aimed at combatting probate abuse by requiring a more thorough search for heirs and sets up a clearer path of action for public administrators.

The Attorney General’s Office appoints county public administrators, who primarily serve as representatives for estates in which a deceased person has no known heirs.

“Actions that came to light last year made it clear that now is the time to make changes to the public administration system,” said Schuette. “What has happened in the system is unacceptable and these changes to an almost 40-year-old law will help ensure this never happens again. By creating a clear, current and direct path for public administrators to follow in the probate process we can better protect Michigan citizens and weed out any bad actors.”

The legislation was introduced in September 2017, after the questionable practice of a small number of public administrators was discovered. The questionable practices involved properties in tax and mortgage foreclosure, where no heirs opened the estate. Public Administrators who violated the high standards of their office have been terminated. The Department of Attorney General worked with the legislators to ensure the legislation brings the 1947 (significantly amended in 1976) statute up to date, and sets criminal penalties for those that don’t follow procedures.

“Establishing a more transparent process for the appointment of a personal representative when no heir can be located will prevent future fraud schemes in probate,” said Jim Runestad, R-White Lake. “Public administrators do good work to help our citizens and these reforms provide further safeguards when families are grieving.”

“We want to make sure residents are protected when they are grieving the loss of a loved one and every reasonable measure is taken to find rightful heirs before estates are opened in probate,” said Rep. Jim Ellison, D-Royal Oak. “I’m very troubled that rightful heirs have had their relatives homes sold out from under them and these estates are being charged such excessive fees. These reforms will make sure the heir’s interests are protected.”

House Bills Reform PA System
The original bills were introduced by Reps. Ellison and Runestad who worked with Schuette and officials with the Oakland County Treasurer’ Office and County Clerk/Register of Deeds to develop the legislation to remedy a solution.  Input from other stakeholders, such as the probate judges association and state bar probate and estate planning council, was also considered.

House Bill 4821 – (Public Act 13 of 2018), Introduced by Rep. Runestad:

  • The current law provides that a county public administrator cannot be appointed to represent an estate for 42 days from the time of the decedent’s death, the bills extend that time frame to 63 days unless the court finds exigent circumstances;
  • Requires a formal proceeding for a county public administrator to be appointed;
  • When opening an estate that is subject to tax or mortgage foreclosure, county public administrators must:
    • Post the notice of hearing on the real property explaining why the heir is receiving notice, that the heir may object to the appointment of the public administrator, that the heir may petition for removal of the public administrator, and that the heir may seek to be appointed the personal representative;
    • Post the court form to challenge the public administrator’s petition;
    • Provide a statement that details the search for any heirs which must include, but not be limited to, an internet search;

    Any public administrator who intentionally fails to provide the required notices is guilty of a misdemeanor, punishable by up to 90 days in jail and/or a $1,000 fine.

    House Bill 4822 – (Public Act 14), Introduced by Rep. Ellison

    • Requires public administrators to submit a written notice to the county treasurer’s office, if the decedent’s real property has delinquent property taxes, and allows the treasurer to submit information to the probate court on the status of the real property, thus ensuring that heirs who are making tax payments are protected;
    • Requires public administrator to provide to the court a copy of the settlement statements from the sale of the real property;
    • Requires public administrators to get court approval before selling a property they are representing and if the property is occupied by an heir of the deceased then the state public administrator must be notified;
    • Requires the public administrator to advance all court filing fees associated with the administration of the estate unless waived by the court;

    Finally, the bills cap real estate fees and fees related to identifying real property to 10% of the net proceeds from the sale of the real property.  If the net proceeds are less than $30,000, then the court must determine the reasonableness of the fees.