House bill would curtail 'exempt allowance' claims

By Lee Dryden
BridgeTower Media Newswires
DETROIT — Under current law, adults who are disinherited by their parents don’t always end up emptyhanded.

A bill under consideration by state lawmakers aims to ensure that decedents’ wishes are met.

House Bill 4410, recently approved by the House Judiciary Committee, would “allow a person to exclude, in a will or written instrument, an adult child who is not a dependent from making a claim to receive property from the person’s estate after death under the ‘exempt allowance’ provision,” according to a legislative analysis by the House Fiscal Agency.

If there is no surviving spouse, a decedent’s children currently have a statutory right to exempt property.

“This is in addition to any property bequeathed in a will or that the heirs are entitled to under the state’s intestate laws if the person did not leave a will,” according to the analysis. “Exempt property refers to property such as jewelry, cars, or cash that is protected from creditors; the amount that may be protected is established in statute and currently is about $15,000.”

The bill, sponsored by Rep. Peter J. Lucido, R-Shelby Township, is under consideration by the full House of Representatives after clearing the committee on Oct. 3.

Lucido, who is a lawyer, presented his bill on Sept. 26 to committee members. He explained a scenario where a parent wants to exclude an adult son or daughter when dispersing funds, but current law interferes with that intent.

“All of a sudden the statute says ‘well, you really didn’t mean it’ because the child said ‘I’m going to go to the probate court and I’m going to make my election for the exempt property.’”

Lucido said the Michigan Court of Appeals has weighed in and questioned if there was a legislative mistake.

“In my opinion, based on the law, there is a mistake under the statute. If somebody wants to disinherit a child or children, they should have that right,” he said. “If a child truly believes that they weren’t going to get anything but finds that there’s a device under a section of the law that will allow them to make the exemption and the claim, they’re going to end up with money where the mother and father or the parent wished not to.

“I think this (bill) is necessary. I think you’re going to find a lot of support, even from probate section and whatnot because they too want certainty for their clients as well as settlement and finality of estates.”

In 2015, the Court of Appeals ruled in In re Estate of Jajuga. Chelenyak v. Veith agreed with a lower court that a disinherited child retains the right to claim exempt property when there is no surviving spouse.

Judge Michael J. Riordan wrote that the Legislature could have written the statute to prevent a disinherited child from taking exempt property.

But “courts cannot insert a provision simply because it would have been wise of the Legislature to do so to effect the statute’s purpose,” wrote Riordan, citing Book-Gilbert v. Greenleaf (2013).

Katie Lynwood presented testimony in support of the bill on behalf of the Probate and Estate Planning Section of the State Bar of Michigan.

The section’s testimony highlighted two public policies behind the exempt property allowance. First is that “even if an estate is insolvent, the deceased person’s spouse or children should not lose the modest property in their home to the deceased person’s creditors.” Second is “even if the deceased person disinherits their spouse or children, they would at least receive some modest property to support them.”

“It is this second policy that can cause mischief. Sometimes there are good reasons to completely disinherit a person,” according to the section’s testimony.

Such reasons include the person having severe creditor or substance abuse problems, or that they may have been provided for by the decedent outside of the estate such as through beneficiary designations, trusts or lifetime gifts. Also, some beneficiaries have special needs or severe disabilities.

“If they receive this allowance, it might eliminate their access to vitally-important Supplemental Security Income, Medicaid, and mental health services,” according to the section’s testimony.


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