How to Distinguish Assets in a Deceased Person’s Estate from Corporate Assets in Michigan
Detailed Answer
Under Michigan law, a deceased person’s estate is a legal entity that holds assets owned individually by the decedent at death. A corporation, by contrast, is an independent legal entity that holds assets in its own right. Recognizing which assets belong to the estate versus the corporation can prevent disputes, ensure proper distribution, and preserve creditors’ rights.
1. Review Title Documents and Account Records
Begin by examining deeds, titles, and account statements. If the decedent’s name alone appears on a deed or the account is titled in the decedent’s name (e.g., “John Doe, deceased”), those assets typically fall into the probate estate under the Michigan Estates and Protected Individuals Code (EPIC), MCL 700.1101 et seq. If the asset is held in the corporation’s name—e.g., “Acme Holdings, Inc.”—the asset belongs to that corporation.
2. Check Incorporation Documents and Bylaws
Obtain the corporation’s Articles of Incorporation and bylaws filed with the Michigan Department of Licensing and Regulatory Affairs (LARA). These documents confirm the corporation’s existence, registered agent, and purpose. Corporate minutes or resolutions may also record asset purchases or transfers.
3. Examine Bank and Tax Records
Review bank statements and tax filings. Corporate assets appear on corporate bank statements and corporate income tax returns (federal Form 1120 or 1120S). Personal assets appear on the decedent’s final individual income tax return and within the probate schedule of assets filed with the probate court under MCL 700.3704.
4. Understand Transfer-on-Death and Joint Ownership Instruments
Michigan allows Transfer on Death Deeds (TODD) under MCL 700.7304. If the decedent executed a valid TODD, those assets pass outside probate directly to the designated beneficiary. Joint tenancy with right of survivorship also moves assets outside probate. Corporate shares, unless held personally, reside in the corporate treasury.
5. Observe the Corporate Veil and Separate Entity Rule
Michigan courts treat a corporation as separate from its shareholders. Unless a court pierces the corporate veil for fraud or commingling of funds, corporate assets remain corporate. See Michigan Business Corporation Act, MCL 450.1495. Proper bookkeeping and separate bank accounts help maintain this distinction.
Helpful Hints
- Confirm title ownership: Always check the exact name on deeds, titles, and account registrations.
- Obtain probate asset inventory: File an inventory under EPIC, MCL 700.3704, listing all estate assets.
- Request corporate records: Ask the registered agent or the Michigan LARA for certified copies of corporate filings.
- Watch for intermingled funds: If corporate and personal funds mix, seek legal advice on potential veil piercing issues.
- Consult a probate attorney: Early legal guidance can prevent disputes over asset classification.