ESTATE ADMINISTRATION FEE

House Bill 4752 as introduced

Sponsor:  Rep. Klint Kesto

Committee:  Law and Justice

Complete to 10-23-17

REVISED SUMMARY:

The bill would remove several sunsets on provisions pertaining to probate court administration fees and make permanent a provision requiring the amount of indebtedness of real property included in an estate to be deducted from the value of the real property when calculating the estate administration fee.

The Revised Judicature Act (RJA) requires that, in all decedents' estates in which proceedings are instituted for probate, the probate court charge and collect administration fees based on the value of the estate’s assets, as of the date of the decedent's death.  The fees equate to a dollar amount plus a percentage of an amount over a certain level and are rounded to the whole dollar.  The fees are due and payable to the probate court before the filing of the final account or within one year after the beginning of probate proceedings, whichever occurs first.

Public Act 596 of 2012 revised the formula for distribution of the fees received by the probate court.  Instead of 40% of each fee directed to a county's general fund and 60% to the state General Fund, PA 596 increased the county share to 47.5% and decreased the state’s share to 52.5%; this formula will sunset December 31, 2017.  Beginning January 1, 2018, the distribution formula is scheduled to reset to the 40/60 split in place prior to enactment of PA 596.  House Bill 4752 would amend the RJA to eliminate the sunset and keep the current formula with a 47.5% county/52.5% state split. 

Further, PA 596 amended the RJA so that, if real property included in the estate being probated is encumbered by or used as security for a debt, the amount of the indebtedness must be deducted from the value of the real property before the estate administration fee is calculated.  This provision is scheduled to expire December 31, 2017.  The bill would remove the sunset, thus making the provision permanent.

In addition, PA 596 required the probate court, by March 31 in each of calendar years 2015-2018, to report to the State Court Administrative Office the value of all assets in each estate in the previous calendar year, the reduction in the asset values because real property included in the estate is encumbered by or used as security for an indebtedness, and the total amount of all administration fees collected in the previous calendar year.

The bill would eliminate these reporting requirements.

MCL 600.871 and 600.877

REVISED FISCAL IMPACT:

           

By eliminating the sunset of the existing distribution formula for estate administration fees, the bill would reduce future state revenues and increase future county revenues compared to the distribution that otherwise would go into effect beginning in FY 2018-19 under current law.  However, anticipated revenues would continue in line with those being currently collected.  According to the State Court Administrative Office (SCAO), the difference between the two distribution formulas was $234,558 in 2015 and $205,051 in 2016.  Please note, the 2016 figure is slightly lower because SCAO is missing data from 13 counties.

                                                                                        Legislative Analyst:   Susan Stutzky

                                                                                                Fiscal Analyst:   Robin Risko

■ This analysis was prepared by nonpartisan House Fiscal Agency staff for use by House members in their deliberations, and does not constitute an official statement of legislative intent.