House approves legislation to curb fraud in public administrator system

Legislation introduced by state Reps. Jim Runestad and Jim Ellison to prevent fraud in Michigan’s public administrator system received unanimous bipartisan support today in the Michigan House of Representatives.

The public administrator system is in place to provide representation for estates where a deceased person has no known heirs. However, a scheme was recently uncovered in which corrupt administrators were using their positions to charge excessive fees while taking homes and inheritances from estates that had legitimate heirs.

“Families have lost their rights to property without recourse through this fraud scheme and we have no way of identifying how pervasive the abuses have been,” Runestad said. “These critical reforms close loopholes and create new safeguards to ensure people inherit the assets and property that is rightfully theirs.”

Runestad (R-White Lake) and Ellison (D-Royal Oak) worked with State Public Administrator Michael Moody, Attorney General Bill Schuette, Oakland County Treasurer Andy Meisner and Oakland County Clerk Lisa Brown to develop the reforms.

“This fraud scheme targeted residents at their most vulnerable time – when they are grieving the loss of a family member,” said Ellison. “The stories of families who were impacted are deeply troubling, which is why we have acted very swiftly to put protections in place to ensure bad actors can’t defraud residents of their inheritances. I’m very proud of the coalition of local and state officials that came together to advance these protections for our residents.”

The bills:

• Extend the timeframe for heirs to take action on an estate from 42 days to 91 days.
• Require the appointment process for public administrators be through a formal, rather than an informal, proceeding.
• Require public administrators to give notice to heirs and inform them of their rights.
• Require public administrators to provide a description of their search for heirs, which must now include an electronic searching service.
• Establish a line of communication between county treasurers and public administrators when property is subject to a tax foreclosure.
• Prohibit public administrators from selling property without court approval.
• Require local public administrators to get authorization from the state public administrator before selling property occupied by an heir of the deceased.
• Prevent real estate or asset recovery fees from exceeding 10 percent of the net proceeds when property is sold.

House Bills 4821-22 advance to the Senate for consideration.