SB-0387, As Passed House, June 3, 2009
March 17, 2009, Introduced by Senator CROPSEY and referred to the Committee on Judiciary.
A bill to amend 1998 PA 386, entitled
"Estates and protected individuals code,"
by amending sections 1103, 1104, 1105, 1106, 1107, 1201, 1209,
1210, 1212, 1214, 1308, 1403, 1507, 2501, 2504, 2511, 2519, 2705,
2722, 2901, 2904, 2907, 3104, 3403, 3703, 3705, 3713, 3715, 3801,
3803, 3805, 3914, 3915, 5407, 5421, 6101, 7101, 7102, 7103, 7104,
7105, 7201, 7202, 7203, 7204, 7205, 7206, 7207, 7301, 7302, 7303,
7304, 7305, 7401, 7402, 7403, 7404, 7405, 7406, 7407, 7410, 7501,
7502, 7503, 7504, 7505, 7506, 7507, and 7508 (MCL 700.1103,
700.1104, 700.1105, 700.1106, 700.1107, 700.1201, 700.1209,
700.1210, 700.1212, 700.1214, 700.1308, 700.1403, 700.1507,
700.2501, 700.2504, 700.2511, 700.2519, 700.2705, 700.2722,
700.2901, 700.2904, 700.2907, 700.3104, 700.3403, 700.3703,
700.3705, 700.3713, 700.3715, 700.3801, 700.3803, 700.3805,
700.3914, 700.3915, 700.5407, 700.5421, 700.6101, 700.7101,
700.7102, 700.7103, 700.7104, 700.7105, 700.7201, 700.7202,
700.7203, 700.7204, 700.7205, 700.7206, 700.7207, 700.7301,
700.7302, 700.7303, 700.7304, 700.7305, 700.7401, 700.7402,
700.7403, 700.7404, 700.7405, 700.7406, 700.7407, 700.7410,
700.7501, 700.7502, 700.7503, 700.7504, 700.7505, 700.7506,
700.7507, and 700.7508), sections 1103 and 7503 as amended by
2000 PA 177, section 1104 as amended by 2006 PA 299, sections
1105, 3803, 7303, and 7406 as amended and section 7410 as added
by 2004 PA 314, section 1106 as amended by 2004 PA 532, sections
1107, 1214, 2504, 7206, 7501, and 7507 as amended by 2000 PA 54,
sections 2519, 3715, 7401, 7502, and 7508 as amended by 2005 PA
204, section 3705 as amended by 2004 PA 481, and section 3805 as
amended by 2007 PA 73, by amending the heading of article VII and
the headings of parts 1, 2, 3, 4, and 5 of article VII, by adding
sections 7107, 7108, 7109, 7110, 7111, 7112, 7113, 7208, 7209,
7210, 7211, 7411, 7412, 7413, 7414, 7415, 7416, 7417, 8201, 8202,
8204, and 8206, and by adding parts 6, 7, 8, and 9 to article
VII; and to repeal acts and parts of acts.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
1 Sec. 1103. As used in this act:
2 (a) "Agent" includes, but is not limited to, an attorney-in-
3 fact under a durable or nondurable power of attorney and an
4 individual authorized to make decisions as a patient advocate
5 concerning another's health care.
6 (b) "Application" means a written request to the probate
7 register for an order of informal probate or informal appointment
1 under part 3 of article III.
2 (c) "Attorney" means, if appointed to represent a child
3 under the provisions referenced in section 5213, an attorney
4 serving as the child's legal advocate in the manner defined and
5 described in section 13a of chapter XIIA of the probate code of
6 1939, 1939 PA 288, MCL 712A.13a.
7 (d) "Beneficiary" includes, but is not limited to, the
8 following:
9 (i) In relation to a trust, beneficiary,
a person that is an
10 interested a trust beneficiary as defined in section 7103.
11 (ii) In relation to a charitable trust, a person that is
12 entitled to enforce the trust.
13 (iii) In relation to a beneficiary of a beneficiary
14 designation, a person that is a beneficiary of an insurance or
15 annuity policy, of an account with POD designation, of a security
16 registered in beneficiary form (TOD), of a pension, profit-
17 sharing, retirement, or similar benefit plan, or of another
18 nonprobate transfer at death.
19 (iv) In relation to a beneficiary designated in a governing
20 instrument, a person that is a grantee of a deed, devisee, trust
21 beneficiary, beneficiary of a beneficiary designation, donee,
22 appointee, taker in default of a power of appointment, or person
23 in whose favor a power of attorney or power held in an
24 individual, fiduciary, or representative capacity is exercised.
25 (e) "Beneficiary designation" means the naming in a
26 governing instrument of a beneficiary of an insurance or annuity
27 policy, of an account with POD designation, of a security
1 registered in beneficiary form (TOD), of a pension, profit-
2 sharing, retirement, or similar benefit plan, or of another
3 nonprobate transfer at death.
4 (f) "Child" includes, but is not limited to, an individual
5 entitled to take as a child under this act by intestate
6 succession from the parent whose relationship is involved. Child
7 does not include an individual who is only a stepchild, a foster
8 child, or a grandchild or more remote descendant.
9 (g) "Claim" includes, but is not limited to, in respect to a
10 decedent's or protected individual's estate, a liability of the
11 decedent or protected individual, whether arising in contract,
12 tort, or otherwise, and a liability of the estate that arises at
13 or after the decedent's death or after a conservator's
14 appointment, including funeral and burial expenses and costs and
15 expenses of administration. Claim does not include an estate or
16 inheritance tax, or a demand or dispute regarding a decedent's or
17 protected individual's title to specific property alleged to be
18 included in the estate.
19 (h) "Conservator" means a person appointed by a court to
20 manage a protected individual's estate.
21 (i) "Cost-of-living adjustment factor" means a fraction, the
22 numerator of which is the United States consumer price index for
23 the prior calendar year and the denominator of which is the
24 United States consumer price index for 1997. As used in this
25 subdivision, "United States consumer price index" means the
26 annual average of the United States consumer price index for all
27 urban consumers as defined and reported by the United States
1 department of labor, bureau of labor statistics, or its successor
2 agency, and as certified by the state treasurer.
3 (j) "Court" means the probate court or, when applicable, the
4 family division of circuit court.
5 (k) "Current trust beneficiary" means a beneficiary
about
6 which either of the following is true:
7 (i) The
beneficiary has a current right to receive all or a
8 portion of the income, if any, of the trust property.
9 (ii) The
beneficiary is currently eligible to receive all or
10 a portion of a mandatory or discretionary distribution of income
11 or principal.
12 (k) (l) "Descendant" means, in relation to an
individual, all
13 of his or her descendants of all generations, with the
14 relationship of parent and child at each generation being
15 determined by the definitions of child and parent contained in
16 this act.
17 (l) (m) "Devise" means, when used as a noun, a
testamentary
18 disposition of real or personal property and, when used as a
19 verb, to dispose of real or personal property by will.
20 (m) (n) "Devisee"
means a person designated in a will to
21 receive a devise. For the purposes of article II, for a devise to
22 a trustee of an existing trust or to a trustee under a will, the
23 trustee is a devisee and a beneficiary is not.
24 (n) (o) "Disability"
means cause for a protective order as
25 described in section 5401.
26 (o) (p) "Distributee"
means a person that receives a
27 decedent's property from the decedent's personal representative
1 or trust property from the trustee other than as a creditor or
2 purchaser. A testamentary trustee of a trust created by will is
a
3 distributee only to the extent that distributed property or an
4 increment of the distributed property remains in the trustee's
5 hands. A testamentary trust beneficiary of a trust created by
6 will to whom the trustee distributes property received from a
7 personal representative is a distributee of the personal
8 representative. For the purposes of this subdivision,
9 "testamentary trustee" "trustee of a trust created by will"
10 includes a trustee to whom property is transferred by will to the
11 extent of the devised property.
12 Sec. 1104. As used in this act:
13 (a) "Environmental law" means a federal, state, or local
14 law, rule, regulation, or ordinance that relates to the
15 protection of the environment or human health.
16 (b) "Estate" includes the property of the decedent, trust,
17 or other person whose affairs are subject to this act as the
18 property is originally constituted and as it exists throughout
19 administration. Estate also includes the rights described in
20 sections 3805, 3922, and 7502 7606 to collect from others
amounts
21 necessary to pay claims, allowances, and taxes.
22 (c) "Exempt property" means property of a decedent's estate
23 that is described in section 2404.
24 (d) "Family allowance" means the allowance prescribed in
25 section 2403.
26 (e) "Fiduciary" includes, but is not limited to, a personal
27 representative, guardian, conservator, trustee, plenary or
1
guardian, partial guardian, appointed
as provided in chapter 6 of
2 the mental health code, 1974 PA 258, MCL 330.1600 to 330.1644,
3 and successor fiduciary.
4 (f) "Financial institution" means an organization authorized
5 to do business under state or federal laws relating to a
6 financial institution and includes, but is not limited to, a
7 bank, trust company, savings bank, building and loan association,
8 savings and loan company or association, and credit union,
9 insurance company, and entity that offers mutual fund, securities
10 brokerage, money market, or retail investment accounts.
11 (g) "Foreign personal representative" means a personal
12 representative appointed by another jurisdiction.
13 (h) "Formal proceedings" means proceedings conducted before
14 a judge with notice to interested persons.
15 (i) "Funeral establishment" means that term as defined in
16 section 1801 of the occupational code, 1980 PA 299, MCL 339.1801,
17 and the owners, employees, and agents of the funeral
18 establishment.
19 (j) "General personal representative" means a personal
20 representative other than a special personal representative.
21 (k) "Governing instrument" means a deed; will; trust;
22 insurance or annuity policy; account with POD designation;
23 security registered in beneficiary form (TOD); pension, profit-
24 sharing, retirement, or similar benefit plan; instrument creating
25 or exercising a power of appointment or a power of attorney; or
26 dispositive, appointive, or nominative instrument of any similar
27 type.
1 (l) "Guardian" means a person who has qualified as a guardian
2 of a minor or a legally incapacitated individual under a parental
3 or spousal nomination or a court appointment and includes a
4 limited guardian as described in sections 5205, 5206, and 5306.
5 Guardian does not include a guardian ad litem.
6 (m) "Hazardous substance" means a substance defined as
7 hazardous or toxic or otherwise regulated by an environmental
8 law.
9 (n) "Heir" means, except as controlled by section 2720, a
10 person, including the surviving spouse or the state, that is
11 entitled under the statutes of intestate succession to a
12 decedent's property.
13 (o) "Homestead allowance" means the allowance prescribed in
14 section 2402.
15 Sec. 1105. As used in this act:
16 (a) "Incapacitated individual" means an individual who is
17 impaired by reason of mental illness, mental deficiency, physical
18 illness or disability, chronic use of drugs, chronic
19 intoxication, or other cause, not including minority, to the
20 extent of lacking sufficient understanding or capacity to make or
21 communicate informed decisions.
22 (b) "Informal proceedings" means proceedings for probate of
23 a will or appointment of a personal representative conducted by
24 the probate register without notice to interested persons.
25 (c) "Interested person" or "person interested in an estate"
26 includes, but is not limited to, the incumbent fiduciary; an
27 heir, devisee, child, spouse, creditor, and beneficiary and any
1 other person that has a property right in or claim against a
2 trust estate or the estate of a decedent, ward, or protected
3 individual; a person that has priority for appointment as
4 personal representative; and a fiduciary representing an
5 interested person. Identification of interested persons may vary
6 from time to time and shall be determined according to the
7 particular purposes of, and matter involved in, a proceeding, and
8 by the supreme court rules.
9 (d) "Interested trust beneficiary" means a person that
has 1
10 or more of the following interests in the trust:
11 (i) Life
estate.
12 (ii)
Eligible recipient of a mandatory or discretionary
13 distribution by the trustee of income or principal.
14 (iii)
Eligible recipient of a mandatory or discretionary
15 distribution by the trustee of income or principal upon
16 termination of an interest of a person described in subparagraph
17 (i) or (ii).
18 (iv)
Presently exercisable or testamentary general or special
19 power of appointment.
20 (d) (e) "Issue"
means an individual's descendant.
21 (e) (f) "Joint
tenants with the right of survivorship"
22 includes, but is not limited to, co-owners or ownership of
23 property held under circumstances that entitle 1 or more to the
24 whole of the property on the death of the other or others, but
25 does not include forms of co-ownership registration in which the
26 underlying ownership of each party is in proportion to that
27 party's contribution.
1 (f) "Jurisdiction," with respect to a geographic area,
2 includes a county, state, or country.
3 (g) "Lawyer-guardian ad litem" means an attorney appointed
4 under section 5213 or 5219 who has the powers and duties
5 referenced by and provided in section 5213.
6 (h) "Lease" includes, but is not limited to, an oil, gas, or
7 other mineral lease.
8 (i) "Legally incapacitated individual" means an individual,
9 other than a minor, for whom a guardian is appointed under this
10 act or an individual, other than a minor, who has been adjudged
11 by a court to be an incapacitated individual.
12 (j) "Letters" includes, but is not limited to, letters
13 testamentary, letters of guardianship, letters of administration,
14 and letters of conservatorship.
15 Sec. 1106. As used in this act:
16 (a) "Mental health professional" means an individual who is
17 trained and experienced in the area of mental illness or
18 developmental disabilities and who is 1 of the following:
19 (i) A physician who is licensed to practice medicine or
20 osteopathic medicine and surgery in this state under article 15
21 of the public health code, 1978 PA 368, MCL 333.16101 to
22 333.18838.
23 (ii) A psychologist licensed to practice in this state under
24 article 15 of the public health code, 1978 PA 368, MCL 333.16101
25 to 333.18838.
26 (iii) A registered professional nurse licensed to practice in
27 this state under article 15 of the public health code, 1978 PA
1 368, MCL 333.16101 to 333.18838.
2 (iv) Until July 1, 2005, a social worker registered as a
3 certified social worker under article 15 of the public health
4 code, 1978 PA 368, MCL 333.16101 to 333.18838. Beginning July 1,
5 2005, a A licensed master's social worker licensed under
article
6 15 of the public health code, 1978 PA 368, MCL 333.16101 to
7 333.18838.
8 (v) A physician's assistant licensed to practice in this
9 state under article 15 of the public health code, 1978 PA 368,
10 MCL 333.16101 to 333.18838.
11 (vi) A licensed professional counselor licensed under part
12 181 of the public health code, 1978 PA 368, MCL 333.18101 to
13 333.18117.
14 (b) "Michigan prudent investor rule" means the fiduciary
15 investment and management rule prescribed by part 5 of this
16 article.
17 (c) "Minor" means an individual who is less than 18 years of
18 age.
19 (d) "Minor ward" means a minor for whom a guardian is
20 appointed solely because of minority.
21 (e) "Money" means legal tender or a note, draft, certificate
22 of deposit, stock, bond, check, or credit card.
23 (f) "Mortgage" means a conveyance, agreement, or arrangement
24 in which property is encumbered or used as security.
25 (g) "Nonresident decedent" means a decedent who was
26 domiciled in another jurisdiction at the time of his or her
27 death.
1 (h) "Organization" means a corporation, business trust,
2 estate, trust, partnership, limited liability company,
3
association, or joint venture; ,
association, limited liability
4 company, government, governmental
subdivision, or agency, or
5 instrumentality; public corporation; or another legal or
6 commercial entity.
7 (i) "Parent" includes, but is not limited to, an individual
8 entitled to take, or who would be entitled to take, as a parent
9 under this act by intestate succession from a child who dies
10 without a will and whose relationship is in question. Parent does
11 not include an individual who is only a stepparent, foster
12 parent, or grandparent.
13 (j) "Partial guardian" means that term as defined in section
14 600 of the mental health code, 1974 PA 258, MCL 330.1600.
15 (k) (j) "Patient
advocate" means an individual designated to
16 exercise powers concerning another individual's care, custody,
17 and medical or mental health treatment or authorized to make an
18 anatomical gift on behalf of another individual, or both, as
19 provided in section 5506.
20 (l) (k) "Patient advocate designation" means the
written
21 document executed and with the effect as described in sections
22 5506 to 5515.
23 (m) (l) "Payor" means a trustee, insurer, business
entity,
24 employer, government, governmental subdivision or agency, or
25 other person authorized or obligated by law or a governing
26 instrument to make payments.
27 (n) (m) "Person"
means an individual or an organization.
1 (o) (n) "Personal
representative" includes, but is not
2 limited to, an executor, administrator, successor personal
3 representative, and special personal representative, and any
4 other person, other than a trustee of a trust subject to article
5 VII, who performs substantially the same function under the law
6 governing that person's status.
7 (p) (o) "Petition"
means a written request to the court for
8 an order after notice.
9 (q) "Plenary guardian" means that term as defined in section
10 600 of the mental health code, 1974 PA 258, MCL 330.1600.
11 (r) (p) "Proceeding"
includes an application and a petition,
12 and may be an action at law or a suit in equity. A proceeding may
13 be denominated a civil action under court rules.
14 (s) (q) "Professional
conservator" means a person that
15 provides conservatorship services for a fee. Professional
16 conservator does not include a person who is an individual who is
17 related to all but 2 of the protected individuals for whom he or
18 she is appointed as conservator.
19 (t) (r) "Professional
guardian" means a person that provides
20 guardianship services for a fee. Professional guardian does not
21 include a person who is an individual who is related to all but 2
22 of the wards for whom he or she is appointed as guardian.
23 (u) (s) "Property"
means anything that may be the subject of
24 ownership, and includes both real and personal property or an
25 interest in real or personal property.
26 (v) (t) "Protected
individual" means a minor or other
27 individual for whom a conservator has been appointed or other
1 protective order has been made as provided in part 4 of article
2 V.
3 (w) (u) "Protective
proceeding" means a proceeding under the
4 provisions of part 4 of article V.
5 Sec. 1107. As used in this act:
6 (a) "Register" or "probate register" means the official of
7 the court designated to perform the functions of register as
8 provided in section 1304.
9 (b) "Revised judicature act of 1961" means the revised
10 judicature act of 1961, 1961 PA 236, MCL 600.101 to 600.9948
11 600.9947.
12 (c) "Security" includes, but is not limited to, a note,
13 stock, treasury stock, bond, debenture, evidence of indebtedness,
14 certificate of interest or participation in an oil, gas, or
15 mining title or lease or in payments out of production under such
16 a title or lease, collateral trust certificate, transferable
17 share, voting trust certificate, or interest in a regulated
18 investment company or other entity generally referred to as a
19 mutual fund or, in general, an interest or instrument commonly
20 known as a security, or a certificate of interest or
21 participation for, a temporary or interim certificate, receipt,
22 or certificate of deposit for, or any warrant or right to
23 subscribe to or purchase any of the items listed in this
24 subdivision.
25 (d) "Settlement" means, in reference to a decedent's estate,
26 the full process of administration, distribution, and closing.
27 (e) "Special personal representative" means a personal
1 representative as described by sections 3614 to 3618.
2 (f) "State" means a state of the United States, the District
3 of Columbia, the Commonwealth of Puerto Rico, or a territory or
4 insular possession subject to the jurisdiction of the United
5 States.
6 (g) "Successor" means a person, other than a creditor, who
7 is entitled to property of a decedent under the decedent's will
8 or this act.
9 (h) "Successor personal representative" means a personal
10 representative, other than a special personal representative, who
11 is appointed to succeed a previously appointed personal
12 representative.
13 (i) "Supervised administration" means the proceedings
14 described in part 5 of article III.
15 (j) "Survive" means that an individual neither predeceases
16 an event, including the death of another individual, nor is
17 considered to predecease an event under section 2104 or 2702.
18 (k) "Terms of a trust" or "terms of the trust" means the
19 manifestation of the settlor's intent regarding a trust's
20 provisions as expressed in the trust instrument or as may be
21 established by other evidence that would be admissible in a
22 judicial proceeding.
23 (l) (k) "Testacy proceeding" means a proceeding to
establish
24 a will or determine intestacy.
25 (m) (l) "Testator" includes an individual of
either sex
26 gender.
27 (n) (m) "Trust"
includes, but is not limited to, an express
1 trust, private or charitable, with additions to the trust,
2 wherever and however created. Trust includes, but is not limited
3 to, a trust created or determined by judgment or decree under
4 which the trust is to be administered in the manner of an express
5 trust. Trust does not include a constructive trust or a resulting
6 trust, conservatorship, personal representative, custodial
7 arrangement under the Michigan uniform transfers to minors act,
8 1998 PA 433, MCL 554.521 to 554.552, business trust providing for
9 a certificate to be issued to a beneficiary, common trust fund,
10 voting trust, security arrangement, liquidation trust, or trust
11 for the primary purpose of paying debts, dividends, interest,
12 salaries, wages, profits, pensions, or employee benefits of any
13 kind, or another arrangement under which a person is a nominee or
14 escrowee for another.
15 (o) (n) "Trustee"
includes an original, additional, or
16 successor trustee, whether or not appointed or confirmed by the
17 court.
18 Sec. 1201. This act shall be liberally construed and applied
19 to promote its underlying purposes and policies, which include
20 all of the following:
21 (a) To simplify and clarify the law concerning the affairs
22 of decedents, missing individuals, protected individuals, minors,
23 and legally incapacitated individuals.
24 (b) To discover and make effective a decedent's intent in
25 distribution of the decedent's property.
26 (c) To promote a speedy and efficient system for liquidating
27 a decedent's estate and making distribution to the decedent's
1 successors.
2 (d) To facilitate use and enforcement of certain trusts.
3 (d) (e) To
make the law uniform among the various
4 jurisdictions, both within and outside of this state.
5 Sec. 1209. For the purpose of granting consent or approval
6 with regard to the acts or accounts of a personal representative,
7 or trustee, including
relief from liability or penalty for
8 failure to post bond , to register a trust, or to perform other
9 duties, the sole holder or all coholders of a presently
10 exercisable or testamentary general or special power of
11 appointment, including 1 in the form of a power of amendment or
12 revocation, are deemed to act for beneficiaries to the extent
13 their interests, as objects permissible appointees,
takers in
14 default, or otherwise, are subject to the power and to the extent
15 there is no conflict of interest between the holder and the
16
persons represented. For the
purpose, however, of granting
17 consent or approval to modification or termination of a trust or
18 to deviation from its terms, including consent or approval to
19 settlement agreements described in section 7207, only the holder
20 or holders of a presently exercisable or testamentary general
21 power of appointment are deemed to act for beneficiaries whose
22 interests are subject to the power.
23 Sec. 1210. (1) The specific dollar amounts stated in
24 sections 2102, 2402, 2404, 2405, and 3983 apply to decedents who
25 die before January 1, 2001. For decedents who die after December
26 31, 2000, these specific dollar amounts shall be multiplied by
27 the cost-of-living adjustment factor for the calendar year in
1 which the decedent dies.
2 (2) Before February 1, 2001, and annually after 2001, the
3 department of treasury shall publish the cost-of-living
4 adjustment factor to be applied to the specific dollar amounts
5 referred to in subsection (1) for decedents who die during that
6 calendar year and in section 7414 for trusts the value of the
7 property of which is insufficient to justify the cost of
8 administration. A product resulting from application of the cost-
9 of-living adjustment factor to a specific dollar amount must
10 shall be rounded to the nearest $1,000.00 amount.
11 Sec. 1212. (1) A fiduciary stands in a position of
12 confidence and trust with respect to each heir, devisee,
13 beneficiary, protected individual, or ward for whom the person is
14 a fiduciary. A fiduciary shall observe the standard of care
15 described in section 7302 7803 and shall discharge all
of the
16 duties and obligations of a confidential and fiduciary
17 relationship, including the duties of undivided loyalty;
18 impartiality between heirs, devisees, and beneficiaries; care and
19 prudence in actions; and segregation of assets held in the
20 fiduciary capacity. With respect to investments, a fiduciary
21 shall conform to the Michigan prudent investor rule.
22 (2) Except in response to legal process, in cases expressly
23 required by law, or in the necessary or proper administration of
24 the estate, a fiduciary shall not disclose facts or knowledge
25 pertaining to property in the fiduciary's possession or to the
26 affairs of those for whom the fiduciary is acting in any manner
27 without the consent of the heirs, devisees, beneficiaries,
1 protected individuals, or wards. The fiduciary of a minor or an
2 incapacitated individual may give this consent on behalf of that
3 individual. This subsection's restriction on disclosure does not
4 apply in an action or proceeding in which the fiduciary and the
5 fiduciary's heir, devisee, beneficiary, protected individual, or
6 ward are parties adverse to each other after the identity and
7 relationship is determined and established.
8 Sec. 1214. Unless the governing instrument expressly
9 authorizes such a transaction or investment, unless authorized by
10 the court, except as provided in section 3713, 5421, or 7802, or
11 except as provided in section 4405 of the banking code of 1999,
12 1999 PA 276, MCL 487.14405, a fiduciary in the fiduciary's
13 personal capacity shall not engage in a transaction with the
14 estate that the fiduciary represents and shall not invest estate
15 money in a company, corporation, or association with which the
16 fiduciary is affiliated, other than as a bondholder or minority
17 stockholder. A fiduciary in the fiduciary's personal capacity
18 shall not personally derive a profit from the purchase, sale, or
19 transfer of the estate's property. A fiduciary's deposit of money
20 in a bank or trust company, in which the fiduciary is interested
21 as an officer, director, or stockholder, does not constitute a
22 violation of this section.
23 Sec. 1308. (1) A fiduciary is liable for a loss to an estate
24 that arises from embezzlement by the fiduciary; for a loss
25 through commingling estate money with the fiduciary's money; for
26 negligence in the handling of an estate; for wanton and willful
27 mishandling of an estate; for loss through self-dealing; for
1 failure to account for an estate; for failure to terminate the
2 estate when it is ready for termination; and for misfeasance,
3 malfeasance, nonfeasance, or other breach of duty.
4 (1) A violation by a fiduciary of a duty the fiduciary owes
5 to an heir, devisee, beneficiary, protected individual, or ward
6 for whom the person is a fiduciary is a breach of duty. To remedy
7 a breach of duty that has occurred or may occur, the court may do
8 any of the following:
9 (a) Compel the fiduciary to perform the fiduciary's duties.
10 (b) Enjoin the fiduciary from committing a breach of duty.
11 (c) Compel the fiduciary to redress a breach of duty by
12 paying money, restoring property, or other means.
13 (d) Order a fiduciary to account.
14 (e) Appoint a special fiduciary to take possession of the
15 estate's, ward's, protected individual's, or trust property and
16 administer the property.
17 (f) Suspend the fiduciary.
18 (g) Remove the fiduciary as provided in this act.
19 (h) For a fiduciary otherwise entitled to compensation,
20 reduce or deny compensation to the fiduciary.
21 (i) Subject to other provisions of this act protecting
22 persons dealing with a fiduciary, void an act of the fiduciary,
23 impose a lien or a constructive trust on property, or trace
24 property wrongfully disposed of and recover the property or its
25 proceeds.
26 (2) In response to an interested person's petition or on its
27 own motion, the court may at any time order a fiduciary of an
1 estate under its jurisdiction to file an accounting. After due
2 hearing on the accounting, the court shall enter an order that
3 agrees with the law and the facts of the case.
4 Sec. 1403. In a formal proceeding that involves a trust or
5 an estate of a decedent, minor, protected individual, or
6 incapacitated individual or in a judicially supervised settlement
7 relating to such matters, the following apply:
8 (a) An interest to be affected shall be described in
9 pleadings that give reasonable information to owners by name or
10 class, by reference to the instrument that creates the interests,
11 or in another appropriate manner.
12 (b) A person is bound by an order binding others in each of
13 the following cases:
14 (i) An order that binds the sole
holder or all coholders of a
15 power of revocation or amendment or a presently exercisable or
16 testamentary general or special power of appointment ,
including
17 one in the form of a power of amendment, binds another person to
18 the extent the person's interest, as an object a permissible
19 appointee, taker in default, or otherwise, is subject to the
20 power.
21 (ii) To the extent there is no conflict of interest between
22 the persons represented, an as follows:
23 (A) An order that binds a conservator, plenary guardian, or
24
partial guardian binds the person
whose estate that the
25 conservator, plenary
guardian, or partial guardian controls. ;
an
26 (B) An order that binds an agent under a durable power of
27 attorney having authority to act binds the principal if a
1 conservator, plenary guardian, or partial guardian has not been
2 appointed.
3 (C) An order that binds a guardian having authority to act
4
with respect to the matter binds the
ward if no a conservator of
5 the ward's estate has not been appointed and no agent under a
6
durable power of attorney has authority to act. ; an
7 (D) An order that binds a trustee binds beneficiaries of the
8 trust. in proceedings to probate a will, to establish
or add to a
9 trust, or to review an act or account of a prior fiduciary, or in
10 proceedings that involve a creditor or another third party; and
11 an
12 (E) An order that binds a personal representative binds a
13 person interested in the undistributed assets of a decedent's
14 estate in an action or proceeding by or against the estate. If
15 there is no conflict of interest and a conservator or guardian
16 has not been appointed, a parent may represent his or her minor
17 child.
18 (F) An order that binds a parent who represents his or her
19 minor or unborn child binds that minor or unborn child if a
20 conservator or plenary guardian has not been appointed.
21 (iii) An unborn or
unascertained person who is not otherwise
22 represented is bound by an order to the extent the person's
23 interest is adequately represented by another party that has a
24 substantially identical interest in the proceeding. A minor,
25 incapacitated, or unborn individual or a person whose identity or
26 location is unknown and not reasonably ascertainable and who is
27 not otherwise represented is bound by an order that binds another
1 party that has a substantially identical interest in the
2 proceeding, but only to the extent there is no conflict of
3 interest between the representation and the person represented.
4 (c) Notice is required as follows:
5 (i) Notice as prescribed by section 1401 shall be given to
6 every interested person or to one who can bind an interested
7 person as described in subdivision (b)(i) or (ii). Notice may be
8 given both to a person and to another who may bind the person.
9 (ii) Notice is given to an unborn or unascertained person,
10 who is not represented under subdivision (b)(i) or (ii), by giving
11 notice to all known persons whose interests in the proceedings
12 are substantially identical to those of the unborn or
13 unascertained person.
14 (d) At any point in a proceeding, the court may appoint a
15 guardian ad litem to represent the interest of a minor, an
16 incapacitated individual, an unborn or unascertained person, or a
17 person whose identity or address is unknown, if the court
18 determines that representation of the interest otherwise would be
19 inadequate. If not precluded by a conflict of interest, a
20 guardian ad litem may be appointed to represent several persons
21 or interests. The court shall set out the reasons for appointing
22 a guardian ad litem as a part of the record of the proceeding. If
23 he or she accepts the appointment, the guardian ad litem shall
24 report of his or her investigation and recommendation concerning
25 the matters for which he or she is appointed in writing or
26 recorded testimony. In making recommendations, a guardian ad
27 litem may consider the general benefit accruing to living members
1 of the individual's family. After the attorney general files an
2 appearance as required by law in an estate proceeding on behalf
3 of an unknown or unascertained heir at law, the attorney general
4 represents the interest of the heir at law, and the court shall
5 not appoint a guardian ad litem. If a guardian ad litem was
6 previously appointed for the interest, the appointment of the
7 guardian ad litem terminates.
8 Sec. 1507. If a fiduciary estate has 2 or more
9 beneficiaries, the fiduciary shall act impartially in investing,
10 and managing, and distributing the fiduciary assets, and shall
11 take into account any differing interests of the beneficiaries.
12 Sec. 2501. (1) An individual 18 years of age or older who is
13 of sound mind has
sufficient mental capacity may make a
will.
14 (2) An individual has sufficient mental capacity to make a
15 will if all of the following requirements are met:
16 (a) The individual has the ability to understand that he or
17 she is providing for the disposition of his or her property after
18 death.
19 (b) The individual has the ability to know the nature and
20 extent of his or her property.
21 (c) The individual knows the natural objects of his or her
22 bounty.
23 (d) The individual has the ability to understand in a
24 reasonable manner the general nature and effect of his or her act
25 in signing the will.
26 Sec. 2504. (1) A will may be simultaneously executed,
27 attested, and made self-proved by acknowledgment of the will by
1 the testator and 2 witnesses' sworn statements, each made before
2 an officer authorized to administer oaths under the laws of the
3 state in which execution occurs and evidenced by the officer's
4 certificate, under official seal, in substantially the following
5 form:
6 I, ________________________, the testator, sign my name to
7 this document on __________, _____. I have taken an oath,
8 administered by the officer whose signature and seal appear on
9 this document, swearing that the statements in this document
10 are true. I declare to that officer that this document is my
11 will; that I sign it willingly or willingly direct another to
12 sign for me; that I execute it as my voluntary act for the
13 purposes
expressed in this will; and that I am 18 years of age
14 or
older , of sound mind, and under no constraint or undue
15 influence; and that I have sufficient mental capacity to make
16 this will.
17 _________________________________
18 (Signature) Testator
19 We, ________________________ and ________________________,
20 the witnesses, sign our names to this document and have taken
21 an oath, administered by the officer whose signature and seal
22 appear on this document, to swear that all of the following
23 statements are true: the individual signing this document as
24 the testator executes the document as his or her will, signs it
25 willingly or willingly directs another to sign for him or her,
26 and executes it as his or her voluntary act for the purposes
27 expressed in this will; each of us, in the testator's presence,
28 signs this will as witness to the testator's signing; and, to
29 the best of our knowledge, the testator is 18 years of age or
30 older,
of sound mind, and is under no constraint or undue
1 influence, and has sufficient mental capacity to make this will.
2 _________________________________
3 (Signature) Witness
4 _________________________________
5 (Signature) Witness
6 The State of ________________________________
7 County of ___________________________________
8 Sworn to and signed in my presence by ______________, the
9 testator, and sworn to and signed in my presence by
10 ___________________ and __________________ , witnesses, on
11 ____________, __________.
12 month/day year
13 ____________________________________
14 (SEAL) Signed
15 ____________________________________
16 (official capacity of officer)
17 (2) An attested will may be made self-proved at any time
18 after its execution by the acknowledgment of the will by the
19 testator and the sworn statements of the witnesses to the will,
20 each made before an officer authorized to administer oaths under
21 the laws of the state in which the acknowledgment occurs and
22 evidenced by the officer's certificate, under the official seal,
23 attached or annexed to the will in substantially the following
24 form:
25 The State of ________________________________
26 County of ___________________________________
27 We, ___________________, ___________________, and
28 ___________________, the testator and the witnesses,
29 respectively, whose names are signed to the attached will,
30 sign this document and have taken an oath, administered by the
1 officer whose signature and seal appear on this document, to
2 swear that all of the following statements are true: the
3 individual signing this document as the will's testator
4 executed the will as his or her will, signed it willingly or
5 willingly directed another to sign for him or her, and executed
6 it as his or her voluntary act for the purposes expressed in
7 the will; each witness, in the testator's presence, signed the
8 will as witness to the testator's signing; and, to the best of
9 the witnesses' knowledge, the testator, at the time of the
10 will's
execution, was 18 years of age or older, of sound mind,
11 and was under no constraint or undue influence, and had
12 sufficient mental capacity to make this will.
13 _________________________________
14 (Signature) Testator
15 _________________________________
16 (Signature) Witness
17 _________________________________
18 (Signature) Witness
19 Sworn to and signed in my presence by ___________, the
20 testator, and sworn to and signed in my presence by
21 ________________ and _______________ , witnesses, on
22 ____________, __________.
23 month/day year
24 ____________________________________
25 (SEAL) Signed
26 ____________________________________
27 (official capacity of officer)
28 (3) A codicil to a will may be simultaneously executed and
29 attested, and both the codicil and the original will made self-
30 proved, by acknowledgment of the codicil by the testator and by
31 witnesses' sworn statements, each made before an officer
32 authorized to administer oaths under the laws of the state in
1 which execution occurs and evidenced by the officer's
2 certificate, under official seal, in substantially the following
3 form:
4 I, _______________, the testator, sign my name to this
5 document on __________, _____. I have taken an oath,
6 administered by the officer whose signature and seal appear on
7 this document, swearing that the statements in this document
8 are true. I declare to that officer that this document is a
9 codicil to my will; that I sign it willingly or willingly
10 direct another to sign for me; that I execute it as my
11 voluntary act for the purposes expressed in this codicil; and
12 that
I am 18 years of age or older , of sound mind, and under
13 no constraint or undue influence; and that I have sufficient
14 mental capacity to make this codicil.
15 _________________________________
16 (Signature) Testator
17 We, _______________ and _______________, the witnesses,
18 sign our names to this document and have taken an oath,
19 administered by the officer whose signature and seal appear on
20 this document, to swear that all of the following statements
21 are true: the individual signing this document as the testator
22 executes the document as a codicil to his or her will, signs it
23 willingly or willingly directs another to sign for him or her,
24 and executes it as his or her voluntary act for the purposes
25 expressed in this codicil; each of us, in the testator's
26 presence, signs this codicil as witness to the testator's
27 signing; and, to the best of our knowledge, the testator is
28 18
years of age or older, of sound mind, and is under no
29 constraint or undue influence, and has sufficient mental
30 capacity to make this codicil.
1 _________________________________
2 (Signature) Witness
3 _________________________________
4 (Signature) Witness
5 The State of ________________________________
6 County of ___________________________________
7 Sworn to and signed in my presence by ___________, the
8 testator, and sworn to and signed in my presence by
9 ________________ and _______________ , witnesses, on
10 ____________, __________.
11 month/day year
12 ____________________________________
13 (SEAL) Signed
14 ____________________________________
15 (official capacity of officer)
16 (4) If necessary to prove the will's due execution, a
17 signature affixed to a self-proving sworn statement attached to a
18 will is considered a signature affixed to the will.
19 (5) Instead of the testator and witnesses each making a
20 sworn statement before an officer authorized to administer oaths
21 as prescribed in subsections (1) to (3), a will or codicil may be
22 made self-proved by a written statement that is not a sworn
23 statement. This statement shall state, or incorporate by
24 reference to an attestation clause, the facts regarding the
25 testator and the formalities observed at the signing of the will
26 or codicil as prescribed in subsections (1) to (3). The testator
27 and witnesses shall sign the statement, which must include its
28 execution date and must begin with substantially the following
29 language: "I certify (or declare) under penalty for perjury under
30 the law of the state of Michigan that...".
1 Sec. 2511. (1) A will may validly devise property to the
2 trustee of a trust established or to be established in any of the
3 following manners:
4 (a) During the testator's lifetime by the testator, by the
5 testator and some other person, or by some other person,
6 including a funded or unfunded life insurance trust, although the
7 settlor has reserved any or all rights of ownership of the
8 insurance contracts.
9 (b) At the testator's death by the testator's devise to the
10 trustee, if the trust is identified in the testator's will and
11 its terms are set forth in a written instrument, other than a
12 will, executed before, concurrently with, or after the execution
13 of the testator's will or in another individual's will if that
14 other individual has predeceased the testator, regardless of the
15 existence, size, or character of the trust corpus.
16 (2) A devise described in subsection (1) is not invalid
17 because the trust is amendable or revocable, or because the trust
18 was amended after the execution of the will or the testator's
19 death. Unless the testator's will provides otherwise, property
20 devised to a trust described in subsection (1) is not held under
21 a testamentary trust created
by the will of the testator, but it
22 becomes a part of the trust to which it is devised, and shall be
23 administered and disposed of in accordance with the provisions of
24 the governing instrument setting forth the terms of the trust,
25 including an amendment to the trust made before or after the
26 testator's death.
27 (3) Unless the testator's will provides otherwise, a
1 revocation or termination of the trust before the testator's
2 death causes the devise to lapse.
3 Sec. 2519. (1) A will executed in the form prescribed by
4 subsection (2) and otherwise in compliance with the terms of the
5 Michigan statutory will form is a valid will. A person printing
6 and distributing the Michigan statutory will shall print and
7 distribute the form verbatim as it appears in subsection (2). The
8 notice provisions shall be printed in 10-point boldfaced type.
9 (2) The form of the Michigan statutory will is as follows:
10 MICHIGAN STATUTORY WILL NOTICE
11 1. An individual age 18 or older and of sound mind who has
12
sufficient mental capacity may sign make a
will.
13 2. There are several kinds of wills. If you choose to
14 complete this form, you will have a Michigan statutory will. If
15 this will does not meet your wishes in any way, you should talk
16 with a lawyer before choosing a Michigan statutory will.
17 3. Warning! It is strongly recommended that you do not add
18 or cross out any words on this form except for filling in the
19 blanks because all or part of this will may not be valid if you
20 do so.
21 4. This will has no effect on jointly held assets, on
22 retirement plan benefits, or on life insurance on your life if
23 you have named a beneficiary who survives you.
24 5. This will is not designed to reduce estate taxes.
25 6. This will treats adopted children and children born
1 outside of wedlock who would inherit if their parent died without
2 a will the same way as children born or conceived during
3 marriage.
4 7. You should keep this will in your safe deposit box or
5 other safe place. By paying a small fee, you may file this will
6 in your county's probate court for safekeeping. You should tell
7 your family where the will is kept.
8 8. You may make and sign a new will at any time. If you
9 marry or divorce after you sign this will, you should make and
10 sign a new will.
11 INSTRUCTIONS:
12 1. To have a Michigan statutory will, you must complete the
13 blanks on the will form. You may do this yourself, or direct
14 someone to do it for you. You must either sign the will or direct
15 someone else to sign it in your name and in your presence.
16 2. Read the entire Michigan statutory will carefully before
17 you begin filling in the blanks. If there is anything you do not
18 understand, you should ask a lawyer to explain it to you.
19 MICHIGAN STATUTORY WILL OF ________________________________
20 (Print or type your full name)
21 ARTICLE 1. DECLARATIONS
22 This is my will and I revoke any prior wills and codicils.
23 I live in ___________________________ County, Michigan.
24 My spouse is ___________________________________________.
25 (Insert spouse's name or write "none")
26 My children now living are:
1 ______________________ ______________________
2 ______________________ ______________________
3 ______________________ ______________________
4 (Insert names or write "none")
5 ARTICLE 2. DISPOSITION OF MY ASSETS
6 2.1 CASH GIFTS TO PERSONS OR CHARITIES.
7 (Optional)
8 I can leave no more than two (2) cash gifts. I make the
9 following cash gifts to the persons or charities in the amount
10 stated here. Any transfer tax due upon my death shall be paid
11 from the balance of my estate and not from these gifts. Full name
12 and address of person or charity to receive cash gift (name only
13 1 person or charity here):
14 ____________________________________
15 (Insert name of person or charity)
16 ____________________________________
17 (Insert address)
18 AMOUNT OF GIFT (In figures): $ ________________________________
19 AMOUNT OF GIFT (In words): ____________________________ Dollars
20 ____________________________________
21 (Your signature)
22 Full name and address of person or charity to receive cash gift
23 (Name only 1 person or charity):
24 ____________________________________
25 (Insert name of person or charity)
26 ____________________________________
27 (Insert address)
28 AMOUNT OF GIFT (In figures): $ ________________________________
1 AMOUNT OF GIFT (In words): ____________________________ Dollars
2 ____________________________________
3 (Your signature)
4 2.2 PERSONAL AND HOUSEHOLD ITEMS.
5 I may leave a separate list or statement, either in my
6 handwriting or signed by me at the end, regarding gifts of
7 specific books, jewelry, clothing, automobiles, furniture, and
8 other personal and household items.
9 I give my spouse all my books, jewelry, clothing,
10 automobiles, furniture, and other personal and household items
11 not included on such a separate list or statement. If I am not
12 married at the time I sign this will or if my spouse dies before
13 me, my personal representative shall distribute those items, as
14 equally as possible, among my children who survive me. If no
15 children survive me, these items shall be distributed as set
16 forth in paragraph 2.3.
17 2.3 ALL OTHER ASSETS.
18 I give everything else I own to my spouse. If I am not
19 married at the time I sign this will or if my spouse dies before
20 me, I give these assets to my children and the descendants of any
21 deceased child. If no spouse, children, or descendants of
22 children survive me, I choose 1 of the following distribution
23 clauses by signing my name on the line after that clause. If I
24 sign on both lines, if I fail to sign on either line, or if I am
1 not now married, these assets will go under distribution clause
2 (b).
3 Distribution clause, if no spouse, children, or descendants
4 of children survive me.
5 (Select only 1)
6 (a) One-half to be distributed to my heirs as if I did not
7 have a will, and one-half to be distributed to my spouse's heirs
8 as if my spouse had died just after me without a will.
9 _________________________________
10 (Your signature)
11 (b) All to be distributed to my heirs as if I did not have a
12 will.
13 _________________________________
14 (Your signature)
15 GUARDIAN, AND CONSERVATOR
16 Personal representatives, guardians, and conservators have a
17 great deal of responsibility. The role of a personal
18 representative is to collect your assets, pay debts and taxes
19 from those assets, and distribute the remaining assets as
20 directed in the will. A guardian is a person who will look after
21 the physical well-being of a child. A conservator is a person who
22 will manage a child's assets and make payments from those assets
23 for the child's benefit. Select them carefully. Also, before you
24 select them, ask them whether they are willing and able to serve.
1 3.1 PERSONAL REPRESENTATIVE.
2 (Name at least 1)
3 I nominate _____________________________________________________
4 (Insert name of person or eligible financial institution)
5 of _________________________to serve as personal representative.
6 (Insert address)
7 If my first choice does not serve, I nominate __________________
8 ___________________________________________________________
9 (Insert name of person or eligible financial institution)
10 of________________________ to serve as personal representative.
11 (Insert address)
12 3.2 GUARDIAN AND CONSERVATOR.
13 Your spouse may die before you. Therefore, if you have a
14 child under age 18, name an individual as guardian of the child,
15 and an individual or eligible financial institution as
16 conservator of the child's assets. The guardian and the
17 conservator may, but need not be, the same person.
18 If a guardian or conservator is needed for a child of
19 mine, I nominate _________________________________________
20 (Insert name of individual)
21 of ____________________________________________ as guardian and
22 (Insert address)
23 ________________________________________________________________
24 (Insert name of individual or eligible financial institution)
25 of ____________________________________ to serve as conservator.
26 (Insert address)
27 If my first choice cannot serve, I nominate
28 ______________________________________________
1 (Insert name of individual)
2 of ___________________________________________ as guardian and
3 (Insert address)
4 ________________________________________________________________
5 (Insert name of individual or eligible financial institution)
6 of ____________________________________ to serve as conservator.
7 (Insert address)
8 3.3 BOND.
9 A bond is a form of insurance in case your personal
10 representative or a conservator performs improperly and
11 jeopardizes your assets. A bond is not required. You may choose
12 whether you wish to require your personal representative and any
13 conservator to serve with or without bond. Bond premiums would be
14 paid out of your assets. (Select only 1)
15 (a) My personal representative and any conservator I have
16 named shall serve with bond.
17 _________________________________
18 (Your signature)
19 (b) My personal representative and any conservator I have
20 named shall serve without bond.
21 _________________________________
22 (Your signature)
23 3.4 DEFINITIONS AND ADDITIONAL CLAUSES.
24 Definitions and additional clauses found at the end of this
25 form are part of this will.
1 I sign my name to this Michigan statutory will on
2 ______________ , 20_____.
3 _________________________________
4 (Your signature)
5 NOTICE REGARDING WITNESSES
6 You must use 2 adults as witnesses. It is preferable to have
7 3 adult witnesses. All the witnesses must observe you sign the
8 will, have you tell them you signed the will, or have you tell
9 them the will was signed at your direction in your presence.
10 STATEMENT OF WITNESSES
11 We sign below as witnesses, declaring that the individual
12 who is making this will appears to be of sound mind have
13 sufficient mental capacity to make this will and appears to be
14 making this will freely, without duress, fraud, or undue
15 influence, and that the individual making this will acknowledges
16 that he or she has read the will, or has had it read to him or
17 her, and understands the contents of this will.
18 _____________________________________
19 (Print Name)
20 _____________________________________
21 (Signature of witness)
22 _____________________________________
23 (Address)
24 _________________________________ ______ ______
1 (City) (State) (Zip)
2 _____________________________________
3 (Print name)
4 _____________________________________
5 (Signature of witness)
6 _____________________________________
7 (Address)
8 _________________________________ ______ ______
9 (City) (State) (Zip)
10 _____________________________________
11 (Print name)
12 _____________________________________
13 (Signature of witness)
14 _____________________________________
15 (Address)
16 _________________________________ ______ ______
17 (City) (State) (Zip)
18 DEFINITIONS
19 The following definitions and rules of construction apply to
20 this Michigan statutory will:
21 (a) "Assets" means all types of property you can own, such
22 as real estate, stocks and bonds, bank accounts, business
23 interests, furniture, and automobiles.
24 (b) "Descendants" means your children, grandchildren, and
25 their descendants.
26 (c) "Descendants" or "children" includes individuals born or
27 conceived during marriage, individuals legally adopted, and
28 individuals born out of wedlock who would inherit if their parent
29 died without a will.
1 (d) "Jointly held assets" means those assets to which
2 ownership is transferred automatically upon the death of 1 of the
3 owners to the remaining owner or owners.
4 (e) "Spouse" means your husband or wife at the time you sign
5 this will.
6 (f) Whenever a distribution under a Michigan statutory will
7 is to be made to an individual's descendants, the assets are to
8 be divided into as many equal shares as there are then living
9 descendants of the nearest degree of living descendants and
10 deceased descendants of that same degree who leave living
11 descendants. Each living descendant of the nearest degree shall
12 receive 1 share. The remaining shares, if any, are combined and
13 then divided in the same manner among the surviving descendants
14 of the deceased descendants as if the surviving descendants who
15 were allocated a share and their surviving descendants had
16 predeceased the descendant. In this manner, all descendants who
17 are in the same generation will take an equal share.
18 (g) "Heirs" means those persons who would have received your
19 assets if you had died without a will, domiciled in Michigan,
20 under the laws that are then in effect.
21 (h) "Person" includes individuals and institutions.
22 (i) Plural and singular words include each other, where
23 appropriate.
24 (j) If a Michigan statutory will states that a person shall
25 perform an act, the person is required to perform that act. If a
26 Michigan statutory will states that a person may do an act, the
27 person's decision to do or not to do the act shall be made in
1 good faith exercise of the person's powers.
2 ADDITIONAL CLAUSES
3 Powers of personal representative
4 1. A personal representative has all powers of
5 administration given by Michigan law to personal representatives
6 and, to the extent funds are not needed to meet debts and
7 expenses currently payable and are not immediately distributable,
8 the power to invest and reinvest the estate from time to time in
9 accordance with the Michigan prudent investor rule. In dividing
10 and distributing the estate, the personal representative may
11 distribute partially or totally in kind, may determine the value
12 of distributions in kind without reference to income tax bases,
13 and may make non-pro rata distributions.
14 2. The personal representative may distribute estate assets
15 otherwise distributable to a minor beneficiary to the minor's
16 conservator or, in amounts not exceeding $5,000.00 per year,
17 either to the minor, if married; to a parent or another adult
18 with whom the minor resides and who has the care, custody, or
19 control of the minor; or to the guardian. The personal
20 representative is free of liability and is discharged from
21 further accountability for distributing assets in compliance with
22 the provisions of this paragraph.
23 POWERS OF GUARDIAN AND CONSERVATOR
24 A guardian named in this will has the same authority with
1 respect to the child as a parent having legal custody would have.
2 A conservator named in this will has all of the powers conferred
3 by law.
4 Sec. 2705. A The
meaning and legal effect of a governing
5 instrument's meaning and legal effect instrument other than a
6 trust are determined by the local law of the state selected in
7 the governing instrument, unless the application of that law is
8 contrary to the provisions relating to the elective share
9 described in part 2 of this article, the provisions relating to
10 exempt property and allowances described in part 4 of this
11 article, or another public policy of this state otherwise
12 applicable to the disposition.
13 Sec. 2722. (1) Subject Except as provided by another statute
14 and subject to subsection (3), if a trust is for a specific
15 lawful noncharitable purpose or for lawful noncharitable purposes
16 to be selected by the trustee, and if there is no definite or
17 definitely ascertainable beneficiary designated, the trust may be
18 performed by the trustee for 21 years, but no longer, whether or
19 not the terms of the trust contemplate a longer duration.
20 (2) Subject to this subsection and subsection (3), a trust
21 for the care of a designated domestic or pet animal is valid. The
22 trust terminates when no living animal is covered by the trust. A
23 governing instrument shall be liberally construed to bring the
24 transfer within this subsection, to presume against the merely
25 precatory or honorary nature of the disposition, and to carry out
26 the general intent of the transferor. Extrinsic evidence is
27 admissible in determining the transferor's intent.
1 (3) In addition to the provisions of subsection (1) or (2),
2 a trust covered by either of those subsections is subject to the
3 following provisions:
4 (a) Except as expressly provided otherwise in the trust
5 instrument terms of
the trust, no portion of the principal
or
6 income may be converted to the use of the trustee or to a use
7 other than for the trust's purposes or for the benefit of a
8 covered animal.
9 (b) Upon termination, the trustee shall transfer the
10 unexpended trust property in the following order:
11 (i) As directed in the trust
instrument terms of the trust.
12 (ii) To the settlor, if then living.
13 (iii) (ii) If the
trust was created in a nonresiduary clause in
14 the transferor's will or in a codicil to the transferor's will,
15 under the residuary clause in the transferor's will.
16 (iv) (iii) If no
taker is produced by the application of
17 subparagraph (i), or
(ii), or
(iii), to
the transferor's heirs under
18 section 2720.
19 (c) For the purposes of sections 2714 to 2716, the residuary
20 clause is treated as creating a future interest under the terms
21 of a trust.
22 (d) The intended use of the principal or income can may be
23 enforced by an individual designated for that purpose in the
24 trust instrument terms
of the trust or, if none, by an
individual
25 appointed by a court upon petition to it by an individual. A
26 person having an interest in the welfare of the animal may
27 request the court to appoint a person to enforce the trust or
1 remove a person appointed.
2 (e) Except as ordered by the court or required by the trust
3 instrument terms of
the trust, no filing, report,
registration,
4 periodic accounting, separate maintenance of funds, appointment,
5 or fee is required by reason of the existence of the fiduciary
6 relationship of the trustee.
7 (f) The court may reduce the amount of the property
8 transferred if it determines that that amount substantially
9 exceeds the amount required for the intended use. The amount of
10 the reduction, if any, passes as unexpended trust property under
11 subdivision (b).
12 (g) If a trustee is not designated or no designated trustee
13 is willing or able to serve, the court shall name a trustee. The
14 court may order the transfer of the property to another trustee
15 if the transfer is necessary to ensure that the intended use is
16 carried out, and if a successor trustee is not designated in the
17 trust instrument terms
of the trust or if no designated
successor
18 trustee agrees to serve or is able to serve. The court may also
19 make other orders and determinations as are advisable to carry
20 out the intent of the transferor and the purpose of this section.
21 (h) The trust is not subject to the uniform statutory rule
22 against perpetuities, 1988 PA 418, MCL 554.71 to 554.78.
23 Sec. 2901. (1) This part shall be known and may be cited as
24 the "disclaimer of property interests law".
25 (2) As used in this part:
26 (a) "Agent" means an agent or attorney in fact acting under
27 a written power of attorney and within the scope of his, her, or
1 its authority.
2 (b) "Disclaimable interest" includes, but is not limited to,
3 property, the right to receive or control property, and a power
4 of appointment. Disclaimable interest does not include an
5 interest retained by or conferred upon the disclaimant by the
6 disclaimant at the creation of the interest. For purposes of this
7 definition, the survivorship interest in joint property is not
8 considered to be an interest retained or conferred upon the
9 disclaimant even if the disclaimant created the joint property.
10 (c) "Effective date of a governing instrument other than a
11 will or testamentary trust created by will" means
the date on
12 which a property right vests or a contract right arises, even
13 though either right is subject to divestment.
14 (d) "Fiduciary" includes, but is not limited to, an agent, a
15 conservator, a guardian if no conservator has been appointed, a
16 guardian ad litem, a personal representative, a trustee, a
17 probate court acting through a protective order under this act,
18 and a temporary, successor, or foreign fiduciary.
19 (e) "Fiduciary power" means a management power relating to
20 the administration or management of assets similar to those
21 powers granted to a personal representative in section 3715 and a
22 trustee in section 7401 sections
7816 and 7817, and granted by
23 law to a fiduciary or conferred upon a fiduciary in a governing
24 instrument.
25 (f) "Governing instrument" means a deed, assignment, bill of
26 sale, will, trust, beneficiary designation, contract, instrument
27 creating or exercising a power of appointment or a power of
1 attorney, or another instrument under which property devolves, a
2 property right is created, or a contract right is created.
3 Governing instrument includes the provable terms of an oral
4 contract or arrangement under which property devolves or a
5 property right is created.
6 (g) "Joint property" means property that is owned by 2 or
7 more persons with rights of survivorship, and includes a tenancy
8 by the entireties in real property, a tenancy in personal
9 property as provided in section 1 of 1927 PA 212, MCL 557.151, a
10 joint tenancy, a joint tenancy with rights of survivorship, and a
11 joint life estate with contingent remainder in fee. For purposes
12 of this part, joint property is considered to consist of a
13 present interest and a future interest. The future interest is
14 the right of survivorship.
15 (h) "Person" includes an entity and an individual, but does
16 not include a fiduciary, an estate, or a trust.
17 (i) "Property" means anything that may be the subject of
18 ownership. Property includes both real and personal property and
19 an interest in property, including a present interest; a future
20 interest; a legal interest; an equitable interest; an interest
21 acquired by testate succession, by intestate or other statutory
22 succession, by succession to a disclaimed interest, or by lapse
23 or release of a power of appointment; or an interest that may be
24 otherwise acquired under a governing instrument.
25 (j) "Trust" means a fiduciary relationship with respect to
26 property that subjects the person who holds title to the property
27 to equitable duties to deal with the property for the benefit of
1 another person, which fiduciary relationship arises as a result
2 of a manifestation of an intention to create it. Trust includes
3 an express trust, private or charitable, with additions to the
4 trust, whether created by will or other than by will, and
5 includes a trust created by statute, judgment, or decree under
6 which the trust is to be administered in the manner of an express
7 trust. Trust does not include a constructive trust or a resulting
8 trust.
9 Sec. 2904. (1) Except as provided in section 2905, if a
10 disclaimed interest arises under a will or testamentary trust
11 created by will, or by the laws of intestacy, the disclaimer must
12 be delivered after the death of the owner of the property and
13 before any event described in section 2910. If a disclaimed
14 interest arises under a will or by the laws of intestacy, the
15 disclaimer must be delivered to the personal representative of
16 the deceased owner's estate. If a disclaimed interest arises
17 under a testamentary trust created by will, the
disclaimer must
18 be delivered to the trustee of the testamentary trust created by
19 will or, if a trustee has not been appointed, to the personal
20 representative of the deceased owner's estate.
21 (2) Except as provided in section 2905, if a disclaimed
22 interest arises under a governing instrument other than a will or
23 testamentary trust created by will, the disclaimer must be
24 delivered after the effective date of the governing instrument
25 and before any event described in section 2910. A disclaimer
26 under this subsection must be delivered in 1 of the following
27 manners:
1 (a) If the disclaimer is made by a beneficiary of a trust,
2 the disclaimer must be delivered to the trustee.
3 (b) If the disclaimer is made by a donee with respect to a
4 gift from a living donor, the disclaimer must be delivered to the
5 donor of the gift.
6 (c) If the disclaimer is made by a beneficiary under a
7 beneficiary designation, the disclaimer must be delivered to the
8 payor.
9 (d) If the disclaimer is made by a trustee with respect to a
10 separate trust that is or will be established under the governing
11 instrument, the disclaimer must be delivered to another incumbent
12 trustee of that trust who has not disclaimed or to all the
13 beneficiaries of that trust who are then living and whose
14 whereabouts are known or reasonably ascertainable.
15 Sec. 2907. (1) Except as otherwise provided in this section
16 and section 2908, if a disclaimed interest arises under a will or
17 testamentary a trust
created by will, or by the laws of
18 intestacy, and the decedent has not provided for another
19 disposition of that interest if it is disclaimed or for another
20 disposition of disclaimed or failed interests in general, the
21 disclaimed interest devolves as if the disclaimant had
22 predeceased the decedent. However, if by law, or under the will
23 or testamentary trust
created by will, the descendants of the
24 disclaimant would take the disclaimant's share by representation
25 if the disclaimant predeceased the decedent, then the disclaimed
26 interest passes by representation to the descendants of the
27 disclaimant who survive the decedent.
1 (2) A future interest that takes effect in possession or
2 enjoyment upon the termination of the disclaimed interest takes
3 effect as if the disclaimant had predeceased the decedent. A
4 future interest that is held by the disclaimant and that takes
5 effect at a time certain is not accelerated and takes effect at
6 the time certain.
7 (3) Except as otherwise provided in this section and section
8 2908, if the disclaimed interest arises under a governing
9 instrument other than a will or testamentary trust created by
10 will, and the governing instrument does not provide for another
11 disposition of that interest if it is disclaimed or for another
12 disposition of disclaimed or failed interests in general, the
13 disclaimed interest devolves as if the disclaimant had died
14 before the time when the interest was entitled to take effect in
15 possession or enjoyment. However, if by law or under the
16 governing instrument the descendants of the disclaimant would
17 take the disclaimant's share by representation if the disclaimant
18 predeceased the effective date of the instrument, then the
19 disclaimed interest passes by representation to the descendants
20 of the disclaimant who survive the effective date of the
21 instrument.
22 (4) A future interest that takes effect in possession or
23 enjoyment at or after the termination of the disclaimed interest
24 takes effect as if the disclaimant had died before the time when
25 the interest was entitled to take effect in possession or
26 enjoyment. A future interest that is held by the disclaimant and
27 that takes effect at a time certain is not accelerated and takes
1 effect at the time certain.
2 Sec. 3104. (1) Except as otherwise provided in subsection
3 (2), a proceeding to enforce a claim against a decedent's estate
4 or the decedent's successors shall not be revived or commenced
5 before the appointment of a personal representative. After the
6 appointment and until distribution, a proceeding or action to
7 enforce a claim against the estate is governed by the procedure
8 prescribed by this article. After distribution, a creditor whose
9 claim has not been barred may recover from the distributees as
10 provided in section 3955 or from a former personal representative
11 individually liable as provided in section 3956.
12 (2) This act does not apply to a proceeding by a secured
13 creditor of the decedent to enforce the creditor's right to the
14 creditor's security except as provided in part 8 of article III
15 and part 5 6 of article VII.
16 Sec. 3403. (1) Upon commencement of a formal testacy
17 proceeding, the court shall fix a time and place of hearing. The
18 petitioner shall give notice in the manner prescribed by section
19 1401 to each of the following persons:
20 (a) The decedent's heirs.
21 (b) The devisees and personal representatives named in a
22 will that is being, or has been, probated or offered for informal
23 or formal probate in the county, or that is known by the
24 petitioner to have been probated or offered for informal or
25 formal probate elsewhere.
26 (c) A personal representative of the decedent whose
27 appointment has not been terminated.
1 (d) A person who has filed a demand for notice under section
2 3205.
3 (e) The trustee of a trust described in section 7501(1)
4 7605(1) as to which the decedent was settlor.
5 (2) Notice may be given to other persons. In addition, the
6 petitioner shall give notice by publication to each unknown
7 person and to each known person whose address is unknown who has
8 an interest in the matters being litigated. If the proceeding
9 involves a request for appointment of a personal representative
10 and it appears that the deceased died intestate without leaving a
11 known heir, the petitioner shall give notice to the attorney
12 general, public administration division.
13 (3) If it appears by the petition or otherwise that the fact
14 of the decedent's death may be in doubt, or on the written demand
15 of an interested person, a copy of the notice of the hearing on
16 the petition shall be sent by registered mail to the alleged
17 decedent at his or her last known address. The court shall direct
18 the petitioner to report the results of, or make and report back
19 concerning, a reasonably diligent search for the alleged decedent
20 in any manner that may seem advisable, including by any of the
21 following methods:
22 (a) Inserting in 1 or more suitable periodicals a notice
23 requesting information from anyone having knowledge of the
24 alleged decedent's whereabouts.
25 (b) Notifying law enforcement officials and public welfare
26 agencies in appropriate locations of the alleged decedent's
27 disappearance.
1 (c) Engaging an investigator's services.
2 (4) The costs of a search conducted under subsection (3)
3 shall be paid by the petitioner if there is no administration or
4 by the decedent's estate if there is administration.
5 Sec. 3703. (1) A personal representative is a fiduciary who
6 shall observe the standard of care applicable to a trustee as
7 described by section 7302 7803. A personal
representative is
8 under a duty to settle and distribute the decedent's estate in
9 accordance with the terms of a probated and effective will and
10 this act, and as expeditiously and efficiently as is consistent
11 with the best interests of the estate. The personal
12 representative shall use the authority conferred by this act, the
13 terms of the will, if any, and an order in a proceeding to which
14 the personal representative is party for the best interests of
15 claimants whose claims have been allowed and of successors to the
16 estate.
17 (2) A personal representative shall not be surcharged for
18 acts of administration or distribution if the conduct in question
19 was authorized at the time. Subject to other obligations of
20 administration, an informally probated will is authority to
21 administer and distribute the estate according to the will's
22 terms. Whether issued in an informal or formal proceeding, an
23 order of appointment of a personal representative is authority to
24 distribute apparently intestate property to the decedent's heirs
25 if, at the time of distribution, the personal representative is
26 not aware of a pending testacy proceeding, a proceeding to vacate
27 an order entered in an earlier testacy proceeding, a formal
1 proceeding questioning the personal representative's appointment
2 or fitness to continue, or a supervised administration
3 proceeding. Nothing in this section affects the personal
4 representative's duty to administer and distribute the estate in
5 accordance with the rights of a claimant whose claim has been
6 allowed, the surviving spouse, a minor or dependent child, or a
7 pretermitted child of the decedent as described elsewhere in this
8 act.
9 (3) Except as to a proceeding that does not survive the
10 decedent's death, a personal representative of a decedent
11 domiciled in this state at death has the same standing to sue and
12 be sued in the courts of this state and the courts of another
13 jurisdiction as the decedent had immediately prior to death.
14 (4) The personal representative shall keep each presumptive
15 distributee informed of the estate settlement. Until a
16 beneficiary's share is fully distributed, the personal
17 representative shall annually, and upon completion of the estate
18 settlement, account to each beneficiary by supplying a statement
19 of the activities of the estate and of the personal
20 representative, specifying all receipts and disbursements and
21 identifying property belonging to the estate.
22 Sec. 3705. (1) Not later than 28 days after a personal
23 representative's appointment or other time specified by court
24 rule, the personal representative, except a special personal
25 representative, shall give notice of the appointment to the
26 decedent's heirs and devisees, except those who have executed a
27 written waiver of notice, including, if there has been no formal
1 testacy proceeding and if the personal representative is
2 appointed on the assumption that the decedent died intestate, the
3 devisees in a will mentioned in the application for appointment
4 of a personal representative and to the trustee of a trust
5 described in section 7501(1) 7605(1) as to which the
decedent was
6 settlor. The personal representative shall give the notice by
7 personal service or by ordinary first-class mail to each person
8 required to receive notice under this subsection whose address is
9 reasonably available to the personal representative. However, the
10 personal representative is not required to notify a person who
11 was adjudicated in a prior formal testacy proceeding to have no
12 interest in the estate. The notice required under this subsection
13 must be in a form approved by the supreme court and must include
14 all of the following information:
15 (a) That the court will not supervise the personal
16 representative. This statement shall not be included if the
17 appointment is made in a supervised proceeding under part 5 of
18 this article.
19 (b) That, unless a person files a written objection to the
20 appointment of the person named as personal representative in the
21 notice or files a demand that bond or higher bond be posted, the
22 person named in the notice is the personal representative without
23 bond or with bond in the amount shown in the notice. This
24 statement shall not be included if the personal representative is
25 appointed in a formal appointment proceeding.
26 (c) The name and address of the person appointed as the
27 estate's personal representative.
1 (d) That, during the course of administering the estate, the
2 personal representative must provide all interested persons with
3 all of the following:
4 (i) A copy of the petition for the personal representative's
5 appointment and a copy of the will, if any, with the notice.
6 (ii) A copy of the inventory.
7 (iii) A copy of the settlement petition or of the closing
8 statement.
9 (iv) Unless waived, a copy of the account, including, but not
10 limited to, fiduciary fees and attorney fees charged to the
11 estate.
12 (e) That an interested person may petition the court for a
13 court hearing on any matter at any time during the estate's
14 administration, including, but not limited to, distribution of
15 assets and expenses of administration.
16 (f) That federal and Michigan estate taxes, if any, must be
17 paid within 9 months after the date of the decedent's death or
18 another time period specified by law, to avoid penalties.
19 (g) That, if the estate is not settled within 1 year after
20 the personal representative's appointment, within 28 days after
21 the anniversary of the appointment, the personal representative
22 must file with the court and send to each interested person a
23 notice that the estate remains under administration and must
24 specify the reason for the continuation of settlement
25 proceedings. If such a notice is not received, an interested
26 person may petition the court for a hearing on the necessity for
27 continued administration or for closure of the estate.
1 (h) The identity and location of the court where papers
2 relating to the estate are on file.
3 (2) The personal representative's failure to give the
4 information required by subsection (1) is a breach of the
5 personal representative's duty to the persons concerned, but does
6 not affect the validity of the personal representative's
7 appointment, powers, or other duties. A personal representative
8 may inform other persons of the appointment by delivery or
9 ordinary first-class mail.
10 (3) A personal representative shall also give notice that
11 includes the information described in subsection (1) to the
12 attorney general, public administration division, under any of
13 the following circumstances:
14 (a) It appears from the petition that the decedent died
15 intestate without leaving a known heir.
16 (b) In the administration of an intestate estate, it appears
17 that the decedent did not leave a known heir.
18 (c) In the administration of a testate estate, it appears
19 that devisees of the purported will would not be entitled to
20 share in the estate but for the terms of the will and that the
21 decedent died without leaving a known heir.
22 (4) If notice is required to be given to the attorney
23 general under subsection (3), the attorney general, representing
24 the this state, has all the rights of an heir to be heard and
to
25 contest the validity of a claim, the appointment of a personal
26 representative, an action of the personal representative, an
27 order, an appointment, or an instrument purporting to be a
1 decedent's contract or will, and has all the rights granted or
2 accruing to an heir, representative, or creditor by a law
3 relating to the settlement of a testate or intestate estate in
4 court, or by way of rehearing or appeal.
5 (5) Within 28 days after the personal representative's
6 appointment or another time specified by court rule, the personal
7 representative, except a special personal representative, shall
8 notify the decedent's surviving spouse, if any, of the spouse's
9 right to election under part 2 of article II and of the time
10 within which the election must be exercised.
11 (6) Except as otherwise provided in this subsection, at the
12 same time the notice required by subsection (1) is given, the
13 personal representative shall give notice to the friend of the
14 court for the county in which the estate is being administered,
15 which notice identifies the decedent's surviving spouse and the
16 individuals who are, for a testate estate, the devisees or, for
17 an intestate estate, the heirs. The personal representative is
18 not required to notify the friend of the court of a devise to a
19 trustee of an existing trust or to a trustee under the will. A
20 personal representative incurs no obligation or liability to the
21 friend of the court or to another person for an error or omission
22 made in good faith compliance with this subsection.
23 Sec. 3713. (1) A sale, or encumbrance, to the personal
24 representative, the personal representative's spouse, agent, or
25 attorney, or a corporation or trust or other transaction
26 involving the investment or management of estate property in
27 which the personal representative has a substantial beneficial
1 interest , or a
transaction that is otherwise
affected by a
2 substantial conflict of interest on the part of the personal
3 representative, between
the personal representative's fiduciary
4
and personal interests is voidable by
an interested person except
5 a person who consents after fair disclosure, unless any of the
6 following are true:
7 (a) The will or a contract entered into by the decedent
8 expressly authorized the transaction.
9 (b) The transaction is approved by the court after notice to
10 interested persons.
11 (c) The transaction involves a contract entered into or
12 claim acquired by the personal representative before the person
13 became or contemplated becoming personal representative.
14 (d) (c) The
transaction is otherwise permitted by statute.
15 (2) A sale, encumbrance, or other transaction involving the
16 investment or management of estate property is presumed to be
17 affected by a conflict between personal and fiduciary interests
18 if it is entered into by the personal representative with any of
19 the following:
20 (a) The personal representative's spouse.
21 (b) The personal representative's descendant, sibling, or
22 parent or the spouse of the personal representative's descendant,
23 sibling, or parent.
24 (c) An agent or attorney of the personal representative.
25 (d) A corporation or other person or enterprise in which the
26 personal representative, or a person that owns a significant
27 interest in the personal representative, has an interest that
1 might affect the personal representative's best judgment.
2 (3) A transaction not concerning estate property in which
3 the personal representative engages in the personal
4 representative's individual capacity involves a conflict between
5 personal and fiduciary interests if the transaction concerns an
6 opportunity properly belonging to the estate.
7 (4) An investment by a personal representative in securities
8 of an investment company or investment trust to which the
9 personal representative, or its affiliate, provides services in a
10 capacity other than as personal representative is not presumed to
11 be affected by a conflict between personal and fiduciary
12 interests if the investment otherwise complies with the Michigan
13 prudent investor rule. In addition to its compensation for acting
14 as personal representative, the personal representative may be
15 compensated by the investment company or investment trust for
16 providing those services out of fees charged to the estate. If
17 the personal representative receives compensation from the
18 investment company or investment trust for providing investment
19 advisory or investment management services, the personal
20 representative shall at least annually notify the interested
21 persons of the rate and method by which that compensation was
22 determined.
23 (5) In voting shares of stock or in exercising powers of
24 control over similar interests in other forms of enterprise, the
25 personal representative shall act in the best interests of the
26 beneficiaries. If the estate is the sole owner of a corporation
27 or other form of enterprise, the personal representative shall
1 elect or appoint directors or other managers to manage the
2 corporation or enterprise in the best interest of the
3 beneficiaries.
4 (6) This section does not preclude the following
5 transactions, if fair to the beneficiaries:
6 (a) An agreement between the personal representative and the
7 interested persons relating to the compensation of the personal
8 representative.
9 (b) Payment of reasonable compensation to the personal
10 representative.
11 (c) A transaction between the estate and another trust or
12 conservatorship of which the personal representative is a
13 fiduciary or in which a beneficiary has an interest.
14 (d) A deposit of estate money in a financial institution
15 operated by or affiliated with the personal representative.
16 (e) An advance by the personal representative of money for
17 the protection of the estate.
18 Sec. 3715. Except as restricted or otherwise provided by the
19 will or by an order in a formal proceeding, and subject to the
20 priorities stated in section 3902, a personal representative,
21 acting reasonably for the benefit of interested persons, may
22 properly do any of the following:
23 (a) Retain property owned by the decedent pending
24 distribution or liquidation, including property in which the
25 personal representative is personally interested or that is
26 otherwise improper for trust investment.
27 (b) Receive property from a fiduciary or another source.
1 (c) Perform, compromise, or refuse performance of a contract
2 of the decedent that continues as an estate obligation, as the
3 personal representative determines under the circumstances. If
4 the contract is for a conveyance of land and requires the giving
5 of warranties, the personal representative shall include in the
6 deed or other instrument of conveyance the required warranties.
7 The warranties are binding on the estate as though the decedent
8 made them but do not bind the personal representative except in a
9 fiduciary capacity. In performing an enforceable contract by the
10 decedent to convey or lease land, the personal representative,
11 among other possible courses of action, may do any of the
12 following:
13 (i) Execute and deliver a deed of conveyance for cash payment
14 of the amount remaining due or for the purchaser's note for the
15 amount remaining due secured by a mortgage on the land.
16 (ii) Deliver a deed in escrow with directions that the
17 proceeds, when paid in accordance with the escrow agreement, be
18 paid to the decedent's successors, as designated in the escrow
19 agreement.
20 (d) If, in the judgment of the personal representative, the
21 decedent would have wanted the pledge satisfied under the
22 circumstances, satisfy a written charitable pledge of the
23 decedent irrespective of whether the pledge constitutes a binding
24 obligation of the decedent or is properly presented as a claim.
25 (e) If funds are not needed to meet a debt or expenses
26 currently payable and are not immediately distributable, deposit
27 or invest liquid assets of the estate, including funds received
1 from the sale of other property, in accordance with the Michigan
2 prudent investor rule.
3 (f) Acquire or dispose of property, including land in this
4 or another state, for cash or on credit, at public or private
5 sale; and manage, develop, improve, exchange, partition, change
6 the character of, or abandon estate property.
7 (g) Make an ordinary or extraordinary repair or alteration
8 in a building or other structure, demolish an improvement, or
9 raze an existing or erect a new party wall or building.
10 (h) Subdivide, develop, or dedicate land to public use, make
11 or obtain the vacation of a plat or adjust a boundary, adjust a
12 difference in valuation on exchange or partition by giving or
13 receiving consideration, or dedicate an easement to public use
14 without consideration.
15 (i) Enter into a lease as lessor or lessee for any purpose,
16 with or without an option to purchase or renew, for a term within
17 or extending beyond the period of administration.
18 (j) Enter into a lease or arrangement for exploration and
19 removal of minerals or another natural resource, or enter into a
20 pooling or unitization agreement.
21 (k) Abandon property when, in the opinion of the personal
22 representative, it is valueless, or is so encumbered or in such a
23 condition as to be of no benefit to the estate.
24 (l) Vote stocks or another security in person or by general
25 or limited proxy.
26 (m) Pay a call, assessment, or other amount chargeable or
27 accruing against or on account of a security, unless barred by a
1 provision relating to claims.
2 (n) Hold a security in the name of a nominee or in other
3 form without disclosure of the estate's interest. However, the
4 personal representative is liable for an act of the nominee in
5 connection with the security so held.
6 (o) Insure the estate property against damage, loss, and
7 liability and insure the personal representative against
8 liability as to third persons.
9 (p) Borrow money property
with or without security to be
10 repaid from the estate property or otherwise, and advance money
11 for the estate's protection.
12 (q) Effect a fair and reasonable compromise with a debtor or
13 obligor, or extend, renew, or in any manner modify the terms of
14 an obligation owing to the estate. If the personal representative
15 holds a mortgage, pledge, or other lien upon another person's
16 property, the personal representative may, in lieu of
17 foreclosure, accept a conveyance or transfer of encumbered
18 property from the property's owner in satisfaction of the
19 indebtedness secured by lien.
20 (r) Pay a tax, an assessment, the personal representative's
21 compensation, or another expense incident to the estate's
22 administration.
23 (s) Sell or exercise a stock subscription or conversion
24 right.
25 (t) Consent, directly or through a committee or other agent,
26 to the reorganization, consolidation, merger, dissolution, or
27 liquidation of a corporation or other business enterprise.
1 (u) Allocate items of income or expense to either estate
2 income or principal, as permitted or provided by law.
3 (v) Employ, and pay reasonable compensation for reasonably
4 necessary services performed by, a person, including, but not
5 limited to, an auditor, investment advisor, or agent, even if the
6 person is associated with the personal representative, to advise
7 or assist the personal representative in the performance of
8 administrative duties; act on such a person's recommendations
9 without independent investigation; and, instead of acting
10 personally, employ 1 or more agents to perform an act of
11 administration, whether or not discretionary.
12 (w) Employ an attorney to perform necessary legal services
13 or to advise or assist the personal representative in the
14 performance of the personal representative's administrative
15 duties, even if the attorney is associated with the personal
16 representative, and act without independent investigation upon
17 the attorney's recommendation. An attorney employed under this
18 subdivision shall receive reasonable compensation for his or her
19 employment.
20 (x) Prosecute or defend a claim or proceeding in any
21 jurisdiction for the protection of the estate and of the personal
22 representative in the performance of the personal
23 representative's duties.
24 (y) Sell, mortgage, or lease estate property or an interest
25 in estate property for cash, credit, or part cash and part
26 credit, and with or without security for unpaid balances.
27 (z) Continue a business or venture in which the decedent was
1 engaged at the time of death as a sole proprietor or a general
2 partner, including continuation as a general partner by a
3 personal representative that is a corporation, in any of the
4 following manners:
5 (i) In the same business form for a period of not more than 4
6 months after the date of appointment of a general personal
7 representative if continuation is a reasonable means of
8 preserving the value of the business, including goodwill.
9 (ii) In the same business form for an additional period of
10 time if approved by court order in a formal proceeding to which
11 the persons interested in the estate are parties.
12 (iii) Throughout the period of administration if the personal
13 representative incorporates the business or converts the business
14 to a limited liability company and if none of the probable
15 distributees of the business who are competent adults object to
16 its incorporation or conversion and its retention in the estate.
17 (aa) Change the form of a business or venture in which the
18 decedent was engaged at the time of death through incorporation
19 or formation as a limited liability company or other entity
20 offering protection against or limiting exposure to liabilities.
21 (bb) Provide for the personal representative's exoneration
22 from personal liability in a contract entered into on the
23 estate's behalf.
24 (cc) Respond to an environmental concern or hazard affecting
25 estate property as provided in section 3722.
26 (dd) Satisfy and settle claims and distribute the estate as
27 provided in this act.
1 (ee) Make, revise, or revoke an available allocation,
2 consent, or election in connection with a tax matter as
3 appropriate in order to carry out the decedent's estate planning
4 objectives and to reduce the overall burden of taxation, both in
5 the present and in the future. This authority includes, but is
6 not limited to, all of the following:
7 (i) Electing to take expenses as estate tax or income tax
8 deductions.
9 (ii) Electing to allocate the exemption from the tax on
10 generation skipping transfers among transfers subject to estate
11 or gift tax.
12 (iii) Electing to have all or a portion of a transfer for a
13 spouse's benefit qualify for the marital deduction.
14 (iv) Electing the date of death or an alternate valuation
15 date for federal estate tax purposes.
16 (v) Excluding or including property from the gross estate
17 for federal estate tax purposes.
18 (vi) Valuing property for federal estate tax purposes.
19 (vii) Joining with the surviving spouse or the surviving
20 spouse's personal representative in the execution and filing of a
21 joint income tax return and consenting to a gift tax return filed
22 by the surviving spouse or the surviving spouse's personal
23 representative.
24 (ff) Divide portions of the estate, including portions to be
25 allocated into trust, into 2 or more separate portions or trusts
26 with substantially identical terms and conditions, and allocate
27 property between them, in order to simplify administration for
1 generation skipping transfer tax purposes, to segregate property
2 for management purposes, or to meet another estate or trust
3 objective.
4 Sec. 3801. (1) Unless notice has already been given, upon
5 appointment a personal representative shall publish, and a
6 special personal representative may publish, a notice as provided
7 by supreme court rule notifying estate creditors to present their
8 claims within 4 months after the date of the notice's publication
9 or be forever barred. A personal representative who has published
10 notice shall also send, within the time prescribed in subsection
11 (2), a copy of the notice or a similar notice to each estate
12 creditor whom the personal representative knows at the time of
13 publication or during the 4 months following publication and to
14 the trustee of a trust described in section 7501(1) 7605(1) as
to
15 which the decedent is settlor. For purposes of this section, the
16 personal representative knows a creditor of the decedent if the
17 personal representative has actual notice of the creditor or the
18 creditor's existence is reasonably ascertainable by the personal
19 representative based on an investigation of the decedent's
20 available records for the 2 years immediately preceding death and
21 mail following death.
22 (2) Notice to a known creditor of the estate shall be given
23 within the following time limits:
24 (a) Within 4 months after the date of the publication of
25 notice to creditors.
26 (b) If the personal representative first knows of an estate
27 creditor less than 28 days before the expiration of the time
1 limit in subdivision (a), within 28 days after the personal
2 representative first knows of the creditor.
3 (3) If the personal representative or the attorney for the
4 estate in good faith believes that notice to a creditor of the
5 estate is or may be required by this section, and if the personal
6 representative gives notice based on that belief, neither the
7 personal representative nor the attorney is liable to any person
8 for having given notice.
9 (4) If the personal representative or the attorney for the
10 estate in good faith believes that notice to a person is not
11 required by this section and if the personal representative fails
12 to give notice to that person based on that belief, neither the
13 personal representative nor the attorney is personally liable to
14 any person for the failure to give notice. Liability, if any, for
15 failure to give notice is on the estate.
16 Sec. 3803. (1) A claim against a decedent's estate that
17 arose before the decedent's death, including a claim of this
18 state or a subdivision of this state, whether due or to become
19 due, absolute or contingent, liquidated or unliquidated, or based
20 on contract, tort, or another legal basis, if not barred earlier
21 by another statute of limitations or nonclaim statute, is barred
22 against the estate, the personal representative, the decedent's
23 heirs and devisees, and nonprobate transferees of the decedent
24 unless presented within 1 of the following time limits:
25 (a) If notice is given in compliance with section 3801 or
26 7504 7608, within 4 months after the date of the publication
of
27 notice to creditors, except that a claim barred by a statute at
1 the decedent's domicile before the publication for claims in this
2 state is also barred in this state.
3 (b) For a creditor known to the personal representative at
4 the time of publication or during the 4 months following
5 publication, within 1 month after the subsequent sending of
6 notice or 4 months after the date of the publication of notice to
7 creditors, whichever is later.
8 (c) If the notice requirements of section 3801 or 7504 7608
9 have not been met, within 3 years after the decedent's death.
10 (2) A claim against a decedent's estate that arises at or
11 after the decedent's death, including a claim of this state or a
12 subdivision of this state, whether due or to become due, absolute
13 or contingent, liquidated or unliquidated, or based on contract,
14 tort, or another legal basis, is barred against the estate, the
15 personal representative, and the decedent's heirs and devisees,
16 unless presented within 1 of the following time limits:
17 (a) For a claim based on a contract with the personal
18 representative, within 4 months after performance by the personal
19 representative is due.
20 (b) For a claim to which subdivision (a) does not apply,
21 within 4 months after the claim arises or the time specified in
22 subsection (1)(a), whichever is later.
23 (3) This section does not affect or prevent any of the
24 following:
25 (a) A proceeding to enforce a mortgage, pledge, or other
26 lien on estate property.
27 (b) A proceeding to establish the decedent's or the personal
1 representative's liability for which the decedent or the personal
2 representative is protected by liability insurance to the
3 insurance protection limits only.
4 (c) Collection of compensation for services rendered and
5 reimbursement of expenses advanced by the personal representative
6 or by an attorney, auditor, investment adviser, or other
7 specialized agent or assistant for the personal representative of
8 the estate.
9 Sec. 3805. (1) If the applicable estate property is
10 insufficient to pay all claims and allowances in full, the
11 personal representative shall make payment in the following order
12 of priority:
13 (a) Costs and expenses of administration.
14 (b) Reasonable funeral and burial expenses.
15 (c) Homestead allowance.
16 (d) Family allowance.
17 (e) Exempt property.
18 (f) Debts and taxes with priority under federal law,
19 including, but not limited to, medical assistance payments that
20 are subject to adjustment or recovery from an estate under
21 section 1917 of the social security act, 42 USC 1396p.
22 (g) Reasonable and necessary medical and hospital expenses
23 of the decedent's last illness, including a compensation of
24 persons attending the decedent.
25 (h) Debts and taxes with priority under other laws of this
26 state.
27 (i) All other claims.
1 (2) A preference shall not be given in the payment of a
2 claim over another claim of the same class, and a claim due and
3 payable is not entitled to a preference over a claim not due.
4 (3) If there are insufficient assets to pay all claims in
5 full or to satisfy homestead allowance, family allowance, and
6 exempt property, the personal representative shall certify the
7 amount and nature of the deficiency to the trustee of a trust
8 described in section 7501(1) 7605(1) for payment by the
trustee
9 in accordance with section 7502 7606. If the personal
10 representative is aware of other nonprobate transfers that may be
11 liable for claims and allowances, then, unless the will provides
12 otherwise, the personal representative shall proceed to collect
13 the deficiency in a manner reasonable under the circumstances so
14 that each nonprobate transfer, including those made under a trust
15 described in section 7501(1) 7605(1), bears a
proportionate share
16 or equitable share of the total burden.
17 Sec. 3914. (1) Subject to the rights of creditors and taxing
18 authorities, competent successors may agree among themselves to
19 alter the interests, shares, or amounts to which they are
20 entitled under the will of the decedent, or under the laws of
21 intestacy, in any way that they provide in a written agreement
22 executed by all who are affected by its provisions. If there is,
23 or may be, an interested person to the agreement who is a minor
24 or incapacitated individual or if there is an inalienable estate
25 or future contingent interest, after notice to the representative
26 of the individual or interest as provided by supreme court rule,
27 the court having jurisdiction of the matter may, if the agreement
1 is made in good faith and appears just and reasonable for the
2 individual or interest, direct the representative of the
3 individual or interest to sign and enter into the agreement. The
4 personal representative shall abide by the agreement's terms
5 subject to the personal representative's obligation to administer
6 the estate for the benefit of creditors, to pay all taxes and
7 costs of administration, and to carry out the fiduciary office's
8 responsibilities for the benefit of a successor of the decedent
9 who is not a party.
10 (2) A personal representative of a decedent's estate is not
11 required to see to the performance of a trust if the trustee of
12 the trust is another person who is willing to accept the trust.
13 Accordingly, a trustee of a testamentary trust created by will is
14 a successor for the purposes of this section. Nothing in this
15 section relieves a trustee of a duty owed to a trust beneficiary.
16 Sec. 3915. (1) Before distributing to a trustee, the
17 personal representative may require that the trust be registered
18 if the state in which it is to be administered provides for
19 registration and that the trustee inform the beneficiaries as
20 provided in section 7303 7814.
21 (2) If the trust instrument does terms of the trust do not
22 excuse the trustee from giving bond, or if the trustee is not a
23 financial institution qualified to do trust business in this
24 state, the personal representative may petition the appropriate
25 court to require that the trustee post bond if the personal
26 representative apprehends that distribution might jeopardize the
27 interests of persons who are not able to protect themselves, and
1 the reasonably believes
that a bond is needed to protect the
2 interests of the beneficiaries. A personal representative may
3 withhold distribution until the court acts on the petition.
4 (3) An inference of negligence on the personal
5 representative's part shall not be drawn from failure to exercise
6 the authority conferred by subsections (1) and (2).
7 (4) If it becomes necessary or convenient in the settlement
8 or distribution of a decedent's estate to appoint a trustee to
9 take charge of or invest and distribute a portion of the estate,
10 the court may appoint a trustee upon the request of the personal
11 representative or another interested person.
12 Sec. 5407. (1) The court shall exercise the authority
13 conferred in this part to encourage the development of maximum
14 self-reliance and independence of a protected individual and
15 shall make protective orders only to the extent necessitated by
16 the protected individual's mental and adaptive limitations and
17 other conditions warranting the procedure. Accordingly, the court
18 may authorize a protected individual to function without the
19 consent or supervision of the individual's conservator in
20 handling part of his or her money or property, including
21 authorizing the individual to maintain an account with a
22 financial institution. To the extent the individual is authorized
23 to function autonomously, a person may deal with the individual
24 as though the individual is mentally competent.
25 (2) The court has the following powers that may be exercised
26 directly or through a conservator in respect to a protected
27 individual's estate and business affairs:
1 (a) While a petition for a conservator's appointment or
2 another protective order is pending and after preliminary hearing
3 and without notice to others, the court has the power to preserve
4 and apply property of the individual to be protected as may be
5 required for the support of the individual or the individual's
6 dependents.
7 (b) After hearing and upon determining that a basis for an
8 appointment or other protective order exists with respect to a
9 minor without other disability, the court has all those powers
10 over the minor's estate and business affairs that are or may be
11 necessary for the best interests of the minor and members of the
12 minor's immediate family.
13 (c) After hearing and upon determining that a basis for an
14 appointment or other protective order exists with respect to an
15 individual for a reason other than minority, the court, for the
16 benefit of the individual and members of the individual's
17 immediate family, has all the powers over the estate and business
18 affairs that the individual could exercise if present and not
19 under disability, except the power to make a will. Those powers
20 include, but are not limited to, all of the following:
21 (i) To make gifts.
22 (ii) To convey or release a contingent or expectant interest
23 in property including marital property rights and a right of
24 survivorship incident to joint tenancy or tenancy by the
25 entirety.
26 (iii) To exercise or release a power held by the protected
27 individual as trustee, personal representative, custodian for a
1 minor, conservator, or donee of a power of appointment.
2 (iv) To enter into a contract.
3 (v) To create a revocable or irrevocable trust of estate
4 property that may extend beyond the disability or life of the
5 protected individual.
6 (vi) To exercise an option of the protected individual to
7 purchase securities or other property.
8 (vii) To exercise a right to elect an option and change a
9 beneficiary under an insurance or annuity policy and to surrender
10 the policy for its cash value.
11 (viii) To exercise a right to an elective share in the estate
12 of the individual's deceased spouse.
13 (ix) To renounce or disclaim an interest by testate or
14 intestate succession or by inter vivos transfer.
15 (3) The court may exercise or direct the exercise of the
16 following powers only if satisfied, after the notice and hearing,
17 that it is in the protected individual's best interests and that
18 the individual either is incapable of consenting or has consented
19 to the proposed exercise of the power:
20 (a) To exercise or release a power of appointment of which
21 the protected individual is donee.
22 (b) To renounce or disclaim an interest.
23 (c) To make a gift in trust or otherwise exceeding 20% of a
24 year's income of the estate.
25 (d) To change a beneficiary under an insurance and annuity
26 policy.
27 (4) A determination that a basis for a conservator's
1 appointment or another protective order exists has no effect on
2 the protected individual's capacity.
3 Sec. 5421. (1) A sale, or encumbrance, to a conservator, to
4 the conservator's spouse, agent, or attorney, or to a
5 corporation, trust, or other organization or other transaction
6 involving the investment or management of estate property in
7 which the conservator has a substantial beneficial interest ,
or
8 a transaction involving the estate being administered by the
9 conservator that or
that is otherwise affected by a
substantial
10 conflict between the conservator's fiduciary and personal
11 interests, is voidable unless the any of the following are true:
12 (a) The transaction is approved by the court after notice as
13 directed by the court.
14 (b) The transaction involves a contract entered into or
15 claim acquired by the conservator before the person became or
16 contemplated becoming conservator.
17 (c) The transaction is otherwise permitted by statute.
18 (2) A sale, encumbrance, or other transaction involving the
19 investment or management of estate property is presumed to be
20 affected by a conflict between personal and fiduciary interests
21 if it is entered into by the conservator with any of the
22 following:
23 (a) The conservator's spouse.
24 (b) The conservator's descendant, sibling, or parent or the
25 spouse of the conservator's descendant, sibling, or parent.
26 (c) An agent or attorney of the conservator.
27 (d) A corporation or other person or enterprise in which the
1 conservator, or a person that owns a significant interest in the
2 conservator, has an interest that might affect the conservator's
3 best judgment.
4 (3) A transaction not concerning estate property in which
5 the conservator engages in the conservator's individual capacity
6 involves a conflict between personal and fiduciary interests if
7 the transaction concerns an opportunity properly belonging to the
8 estate.
9 (4) An investment by a conservator in securities of an
10 investment company or investment trust to which the conservator,
11 or its affiliate, provides services in a capacity other than as
12 conservator is not presumed to be affected by a conflict between
13 personal and fiduciary interests if the investment otherwise
14 complies with the Michigan prudent investor rule. In addition to
15 its compensation for acting as conservator, the conservator may
16 be compensated by the investment company or investment trust for
17 providing those services out of fees charged to the estate. If
18 the conservator receives compensation from the investment company
19 or investment trust for providing investment advisory or
20 investment management services, the conservator shall at least
21 annually notify the court of the rate and method by which that
22 compensation was determined.
23 (5) In voting shares of stock or in exercising powers of
24 control over similar interests in other forms of enterprise, the
25 conservator shall act in the best interests of the estate. If the
26 estate is the sole owner of a corporation or other form of
27 enterprise, the conservator shall elect or appoint directors or
1 other managers to manage the corporation or enterprise in the
2 best interest of the estate.
3 (6) This section does not preclude the following
4 transactions, if fair to the estate:
5 (a) An agreement relating to the compensation of the
6 conservator.
7 (b) Payment of reasonable compensation to the conservator.
8 (c) A transaction between the estate and another trust or
9 conservatorship of which the conservator is a fiduciary or in
10 which the estate or protected individual has an interest.
11 (d) A deposit of estate money in a financial institution
12 operated by or affiliated with the conservator.
13 (e) An advance by the conservator of money for the
14 protection of the estate.
15 Sec. 6101. (1) A provision for a nonprobate transfer on
16 death in an insurance policy, contract of employment, bond,
17 mortgage, promissory note, certificated or uncertificated
18 security, account agreement, custodial agreement, deposit
19 agreement, compensation plan, pension plan, individual retirement
20 plan, employee benefit plan, trust, conveyance, deed of gift,
21 marital property agreement, or other written instrument of
22 similar nature is nontestamentary. This subsection includes a
23 written provision in the instrument that is intended to result in
24 1 or more of the following:
25 (a) Money or another benefit due to, controlled by, or owned
26 by a decedent before death is paid after the decedent's death to
27 a person, including a testamentary trustee of a trust created by
1 will, whom the decedent designates either in the instrument or in
2 a separate writing, including a will, executed either before, at
3 the same time as, or after the instrument.
4 (b) Money due or to become due under the instrument ceases
5 to be payable in the event of death of the promisee or the
6 promisor before payment or demand.
7 (c) Property the decedent controls or owns before death that
8 is the subject of the instrument passes to a person the decedent
9 designates either in the instrument or in a separate writing,
10 including a will, executed either before, at the same time as, or
11 after the instrument.
12 (2) This section does not limit creditors' rights under
13 another law of this state or another state or under federal law.
14 ARTICLE VII
15
TRUST ADMINISTRATION MICHIGAN TRUST CODE
16 PART 1
17
TRUST
REGISTRATION
18 Sec. 7101. (1) The trustee of a trust having its principal
19 place of administration in this state may register the trust in
20 the court at the place designated in the trust instrument or, if
21 none is designated, then at the principal place of
22 administration. The principal place of the trust's administration
23 is the trustee's usual place of business where the records
24 pertaining to the trust are kept or the trustee's residence if
25 the trustee does not have such a place of business. For a
26 corporate trustee, the usual place of business is the business
27 location of the primary trust officer for the trust.
1 (2) For cotrustees, if not designated in the trust
2 instrument, the principal place of administration is 1 of the
3 following:
4 (a) If there is only 1 corporate cotrustee, the corporate
5 trustee's usual place of business.
6 (b) If there is only 1 professional fiduciary who is an
7 individual and no corporate trustee, the professional fiduciary's
8 usual place of business or residence.
9 (c) If (a) or (b) does not apply, the usual place of
10 business or residence of any of the cotrustees as agreed upon by
11 them. This article
shall be known and may be cited as the
12 "Michigan trust code".
13 Sec. 7102. (1) A trust is registered by the filing of a
14 statement that states the trustee's name and address and in which
15 the trustee acknowledges the trusteeship. The statement must
16 indicate if the trust has been registered elsewhere. The
17 statement must identify the trust in 1 of the following manners:
18 (a) For a testamentary trust, by the name of the testator
19 and the date and place of domiciliary probate.
20 (b) For a written inter vivos trust, by the name of each
21 settlor and the original trustee and the date of the trust
22 instrument and all amendments existing on the date of
23 registration.
24 (c) For an oral trust, by information identifying the
25 settlor or other source of money and describing the trust's time
26 and manner of creation and the trust's terms, including the
27 subject matter, beneficiaries, and time of performance.
1 (2) The trust instrument and amendments are not required to
2 be filed with the court as part of the trust registration. If a
3 trust is registered elsewhere, registration in this state is
4 ineffective until the earlier registration is released by order
5 of the court where that registration occurred or by an instrument
6 executed by the trustee and all beneficiaries. The order or
7 instrument shall be filed with the registration in this state.
8 This article applies to trusts as defined in section 1107.
9 Sec. 7103. (1) By registering a trust or accepting the
10 trusteeship of a registered trust, the trustee submits personally
11 to the court's jurisdiction in a proceeding under section 7201
12 relating to the trust that is initiated by an interested person
13 while the trust remains registered. Notice of a proceeding must
14 be given to the trustee in accordance with section 1401 at the
15 trustee's address as stated in the registration or as reported to
16 the court and to the trustee's address then known to the
17 petitioner.
18 (2) To the extent of all beneficial interests in the trust
19 and if notice is given in accordance with section 1401, each
20 beneficiary of a trust properly registered in this state is
21 subject to the jurisdiction of the court of registration for the
22 purposes of a proceeding under section 7201. As used in this
23 article:
24 (a) "Action", with respect to a trustee or a trust
25 protector, includes an act or a failure to act.
26 (b) "Ascertainable standard" means a standard relating to an
27 individual's health, education, support, or maintenance within
1 the meaning of section 2041(b)(1)(A) or 2514(c)(1) of the
2 internal revenue code, 26 USC 2041 and 2514.
3 (c) "Charitable trust" means a trust, or portion of a trust,
4 created for a charitable purpose described in section 7405(1).
5 (d) "Discretionary trust provision" means a provision in a
6 trust, regardless of whether the terms of the trust provide a
7 standard for the exercise of the trustee's discretion and
8 regardless of whether the trust contains a spendthrift provision,
9 that provides that the trustee has discretion, or words of
10 similar import, to determine 1 or more of the following:
11 (i) Whether to distribute to or for the benefit of an
12 individual or a class of beneficiaries the income or principal or
13 both of the trust.
14 (ii) The amount, if any, of the income or principal or both
15 of the trust to distribute to or for the benefit of an individual
16 or a class of beneficiaries.
17 (iii) Who, if any, among a class of beneficiaries will receive
18 income or principal or both of the trust.
19 (iv) Whether the distribution of trust property is from
20 income or principal or both of the trust.
21 (v) When to pay income or principal, except that a power to
22 determine when to distribute income or principal within or with
23 respect to a calendar or taxable year of the trust is not a
24 discretionary trust provision if the distribution must be made.
25 (e) "Interests of the trust beneficiaries" means the
26 beneficial interests provided in the terms of the trust.
27 (f) "Power of withdrawal" means a presently exercisable
1 general power of appointment other than a power that is either of
2 the following:
3 (i) Exercisable by a trustee and limited by an ascertainable
4 standard.
5 (ii) Exercisable by another person only upon consent of the
6 trustee or a person holding an adverse interest.
7 (g) "Qualified trust beneficiary" means a trust beneficiary
8 to whom 1 or more of the following apply on the date the trust
9 beneficiary’s qualification is determined:
10 (i) The trust beneficiary is a distributee or permissible
11 distributee of trust income or principal.
12 (ii) The trust beneficiary would be a distributee or
13 permissible distributee of trust income or principal if the
14 interests of the distributees under the trust described in
15 subparagraph (i) terminated on that date without causing the trust
16 to terminate.
17 (iii) The trust beneficiary would be a distributee or
18 permissible distributee of trust income or principal if the trust
19 terminated on that date.
20 (h) "Revocable", as applied to a trust, means revocable by
21 the settlor without the consent of the trustee or a person
22 holding an adverse interest. A trust's characterization as
23 revocable is not affected by the settlor's lack of capacity to
24 exercise the power of revocation, regardless of whether an agent
25 of the settlor under a durable power of attorney, a conservator
26 of the settlor, or a plenary guardian of the settlor is serving.
27 (i) "Settlor" means a person, including a testator, who
1 creates a trust. If more than 1 person creates a trust, each
2 person is a settlor of the portion of the trust property
3 attributable to that person's contribution. The lapse, release,
4 or waiver of a power of appointment shall not cause the holder of
5 a power of appointment to be treated as a settlor of the trust.
6 (j) "Spendthrift provision" means a term of a trust that
7 restrains either the voluntary or involuntary transfer of a trust
8 beneficiary's interest.
9 (k) "Support provision" means a provision in a trust that
10 provides the trustee shall distribute income or principal or both
11 for the health, education, support, or maintenance of a trust
12 beneficiary, or language of similar import. A provision in a
13 trust that provides a trustee has discretion whether to
14 distribute income or principal or both for these purposes or to
15 select from among a class of beneficiaries to receive
16 distributions pursuant to the trust provision is not a support
17 provision, but rather is a discretionary trust provision.
18 (l) "Trust beneficiary" means a person to whom 1 or both of
19 the following apply:
20 (i) The person has a present or future beneficial interest in
21 a trust, vested or contingent.
22 (ii) The person holds a power of appointment over trust
23 property in a capacity other than that of trustee.
24 (m) "Trust instrument" means a governing instrument that
25 contains the terms of the trust, including any amendment to a
26 term of the trust.
27 (n) "Trust protector" means a person or committee of persons
1 appointed pursuant to the terms of the trust who has the power to
2 direct certain actions with respect to the trust. Trust protector
3 does not include either of the following:
4 (i) The settlor of a trust.
5 (ii) The holder of a power of appointment.
6 Sec. 7104. For purposes of a proceeding commenced by a trust
7 beneficiary before registration, a trustee of a trust that is not
8 registered in a proper place is subject to the personal
9 jurisdiction of a court in which the trust could have been
10 registered. In addition, a trustee who, within 28 days after
11 receipt of a written demand by a trust settlor or beneficiary,
12 fails to register a trust as required by the trust instrument is
13 subject to removal and denial of compensation or to surcharge as
14 the court may direct.
15 (1) Subject to subsection (2), a person has knowledge of a
16 fact if 1 or more of the following apply:
17 (a) The person has actual knowledge of it.
18 (b) The person has received a notice or notification of it.
19 (c) From all the facts and circumstances known to the person
20 at the time in question, the person has reason to know it.
21 (2) An organization that conducts activities through
22 employees has notice or knowledge of a fact involving a trust
23 only from the time the information was received by an employee
24 having responsibility to act for the trust or from the time the
25 information would have been brought to the employee's attention
26 if the organization had exercised reasonable diligence. An
27 organization exercises reasonable diligence if it maintains
1 reasonable routines for communicating significant information to
2 the employee having responsibility to act for the trust and there
3 is reasonable compliance with the routines. Reasonable diligence
4 does not require an employee of the organization to communicate
5 information unless the communication is part of the individual's
6 regular duties or the individual knows a matter involving the
7 trust would be materially affected by the information.
8 Sec. 7105. A foreign corporate trustee is required to
9 qualify as a foreign corporation doing business in this state if
10 it maintains a trust's principal place of administration within
11 the state. A foreign cotrustee is not required to qualify in this
12 state solely because its cotrustee maintains the principal place
13 of administration in this state. Unless otherwise doing business
14 in this state, local qualification by a foreign trustee,
15 corporate or individual, is not required for the trustee to
16 receive distribution from a local estate, to hold, invest in,
17 manage, or acquire property located in this state, or to maintain
18 litigation. This section does not affect a determination of what
19 other acts require qualification as doing business in this state.
20 (1) Except as otherwise provided in the terms of the trust,
21 this article governs the duties and powers of a trustee,
22 relations among trustees, and the rights and interests of a trust
23 beneficiary.
24 (2) The terms of a trust prevail over any provision of this
25 article except the following:
26 (a) The requirements under section 7401 for creating a
27 trust.
1 (b) The duty of a trustee to administer a trust in
2 accordance with section 7801.
3 (c) The requirement under section 7404 that the trust have a
4 purpose that is lawful, not contrary to public policy, and
5 possible to achieve.
6 (d) The power of the court to modify or terminate a trust
7 under sections 7410, 7412(1) to (3), 7414(2), 7415, and 7416.
8 (e) The effect of a spendthrift provision, a support
9 provision, and a discretionary trust provision on the rights of
10 certain creditors and assignees to reach a trust as provided in
11 part 5.
12 (f) The power of the court under section 7702 to require,
13 dispense with, or modify or terminate a bond.
14 (g) The power of the court under section 7708(2) to adjust a
15 trustee's compensation specified in the terms of the trust that
16 is unreasonably low or high.
17 (h) Except as permitted under section 7809(2), the
18 obligations imposed on a trust protector in section 7809(1).
19 (i) The duty under section 7814(2)(a) to (c) to provide
20 beneficiaries with the terms of the trust and information about
21 the trust's property, and to notify qualified trust beneficiaries
22 of an irrevocable trust of the existence of the trust and the
23 identity of the trustee.
24 (j) The power of the court to order the trustee to provide
25 statements of account and other information pursuant to section
26 7814(4).
27 (k) The effect of an exculpatory term under section 7809(8)
1 or 7908.
2 (l) The rights under sections 7910 to 7913 of a person other
3 than a trustee or beneficiary.
4 (m) Periods of limitation under this article for commencing
5 a judicial proceeding.
6 (n) The power of the court to take action and exercise
7 jurisdiction.
8 (o) The subject-matter jurisdiction of the court and venue
9 for commencing a proceeding as provided in sections 7203 and
10 7204.
11 Sec. 7107. The meaning and effect of the terms of a trust
12 are determined by the following:
13 (a) The law of the jurisdiction designated in the terms of
14 the trust unless the designation of that jurisdiction's law is
15 contrary to a strong public policy of the jurisdiction having the
16 most significant relationship to the matter at issue.
17 (b) In the absence of a controlling designation in the terms
18 of the trust, the law of the jurisdiction having the most
19 significant relationship to the matter at issue.
20 Sec. 7108. (1) Without precluding other means for
21 establishing a sufficient connection with the designated
22 jurisdiction, terms of a trust designating the principal place of
23 administration are valid and controlling if either of the
24 following applies:
25 (a) A trustee's principal place of business is located in or
26 a trustee is a resident of the designated jurisdiction.
27 (b) All or part of the administration occurs in the
1 designated jurisdiction.
2 (2) A trustee is under a continuing duty to administer the
3 trust at a place appropriate to its purposes, its administration,
4 and the interests of the qualified trust beneficiaries.
5 (3) Without precluding the right of the court to order,
6 approve, or disapprove a transfer, the trustee, in furtherance of
7 the duty prescribed by subsection (2), may transfer the trust's
8 principal place of administration to another state or to a
9 jurisdiction outside of the United States.
10 (4) The trustee shall notify the qualified trust
11 beneficiaries in writing of a proposed transfer of a trust's
12 principal place of administration not less than 63 days before
13 initiating the transfer. The notice of proposed transfer shall
14 include all of the following:
15 (a) The name of the jurisdiction to which the principal
16 place of administration is to be transferred.
17 (b) The address and telephone number at the new location at
18 which the trustee can be contacted.
19 (c) An explanation of the reasons for the proposed transfer.
20 (d) The date on which the proposed transfer is anticipated
21 to occur.
22 (e) In a conspicuous manner, the date, not less than 63 days
23 after the giving of the notice, by which a qualified trust
24 beneficiary must notify the trustee in writing of an objection to
25 the proposed transfer.
26 (5) The authority of a trustee under this section to
27 transfer a trust's principal place of administration without the
1 approval of the court terminates if a qualified trust beneficiary
2 notifies the trustee in writing of an objection to the proposed
3 transfer on or before the date specified in the notice.
4 (6) In connection with a transfer of the trust's principal
5 place of administration, the trustee may transfer some or all of
6 the trust property to a successor trustee designated in the terms
7 of the trust or appointed pursuant to section 7704.
8 (7) The view of an adult beneficiary shall be given weight
9 in determining the suitability of the trustee and the place of
10 administration.
11 Sec. 7109. (1) Notice to a person under this article or the
12 sending of a document to a person under this article shall be
13 accomplished in a manner reasonably suitable under the
14 circumstances and likely to result in receipt of the notice or
15 document. Permissible methods of notice or for sending a document
16 include first-class mail, personal delivery, delivery to the
17 person's last known place of residence or place of business, or a
18 properly directed and identified facsimile or electronic message.
19 (2) Notice otherwise required under this article or a
20 document otherwise required to be sent under this article need
21 not be provided to a person whose identity or location is unknown
22 to and not reasonably ascertainable by the trustee.
23 (3) Notice under this article or the sending of a document
24 under this article may be waived in writing by the person to be
25 notified or sent the document.
26 (4) Notice of a judicial proceeding shall be given as
27 provided in sections 1401 to 1403 and as otherwise provided by
1 court rule.
2 Sec. 7110. (1) A charitable organization expressly named in
3 the terms of a trust to receive distributions under the terms of
4 a charitable trust has the rights of a qualified trust
5 beneficiary under this article if 1 or more of the following are
6 applicable to the charitable organization on the date the
7 charitable organization's qualification is being determined:
8 (a) The charitable organization is a distributee or
9 permissible distributee of trust income or principal.
10 (b) The charitable organization would be a distributee or
11 permissible distributee of trust income or principal on the
12 termination of the interests of other distributees or permissible
13 distributees then receiving or eligible to receive distributions.
14 (c) The charitable organization would be a distributee or
15 permissible distributee of trust income or principal if the trust
16 terminated on that date.
17 (2) A person appointed to enforce a trust created for the
18 care of an animal or another noncharitable purpose as provided in
19 section 2722 has the rights of a qualified trust beneficiary
20 under this article.
21 (3) The attorney general of this state has the following
22 rights with respect to a charitable trust having its principal
23 place of administration in this state:
24 (a) The rights provided in the supervision of trustees for
25 charitable purposes act, 1961 PA 101, MCL 14.251 to 14.266.
26 (b) The right to notice of any judicial proceeding and any
27 nonjudicial settlement agreement under section 7111.
1 Sec. 7111. (1) Except as otherwise provided in subsection
2 (2), interested persons may enter into a binding nonjudicial
3 settlement agreement with respect to any matter involving a
4 trust.
5 (2) A nonjudicial settlement agreement is valid only to the
6 extent it does not violate a material purpose of the trust and
7 includes terms and conditions that could be properly approved by
8 the court under this article or other applicable law. A
9 nonjudicial settlement agreement shall not be used to accomplish
10 the termination or modification of the trust.
11 (3) Matters that may be resolved by a nonjudicial settlement
12 agreement include any of the following:
13 (a) The interpretation or construction of the terms of the
14 trust.
15 (b) The approval of a trustee's report or accounting.
16 (c) Direction to a trustee to perform or to refrain from
17 performing a particular act or to grant to or to withhold from a
18 trustee any power.
19 (d) The resignation or appointment of a trustee and the
20 determination of a trustee's compensation.
21 (e) Transfer of a trust's principal place of administration.
22 (f) Liability of a trustee for an action relating to the
23 trust.
24 (4) Any interested person or trustee may request the court
25 to approve or disapprove a nonjudicial settlement agreement. On a
26 determination that the representation as provided in part 3 was
27 adequate, that the agreement does not violate a material purpose
1 of the trust, and that the agreement contains terms and
2 conditions the court could have properly approved, the court
3 shall enter an order approving the agreement.
4 (5) As used in this section, "interested persons" means
5 persons whose consent would be required in order to achieve a
6 binding settlement were the settlement to be approved by the
7 court.
8 Sec. 7112. The rules of construction in sections 2605 to
9 2608 that apply in this state to the interpretation of and
10 disposition of property by will also apply as appropriate to the
11 interpretation of the terms of a trust and the disposition of the
12 trust property.
13 Sec. 7113. A provision in a trust that purports to penalize
14 an interested person for contesting the trust or instituting
15 another proceeding relating to the trust shall not be given
16 effect if probable cause exists for instituting a proceeding
17 contesting the trust or another proceeding relating to the trust.
18 PART 2
19
COURT JURISDICTION
CONCERNING TRUSTS
20 Sec. 7201. (1) The court has exclusive jurisdiction of
21 proceedings concerning trusts as provided in section 1302(b) and
22 (d) and concurrent jurisdiction regarding matters affecting
23 trusts as provided in section 1303.
24 (2) Neither registration of a trust nor another proceeding
25 concerning a trust results in continuing supervisory proceedings.
26 Subject to court jurisdiction as invoked by an interested person
27 or as otherwise exercised as provided by law, the management and
1 distribution of a trust estate, submission of an account or
2 report to beneficiaries, payment of a trustee's fees and other
3 trust obligations, acceptance and change of trusteeship, and any
4 other aspect of trust administration shall proceed expeditiously
5 consistent with the terms of the trust, free of judicial
6 intervention, and without court order or approval, or other court
7 action.
8 (1) A court of this state may intervene in the
9 administration of a trust to the extent its jurisdiction is
10 invoked by an interested person or as provided by law.
11 (2) A trust is not subject to continuing judicial
12 supervision unless ordered by the court. Registration of a trust
13 or another proceeding concerning a trust does not result in
14 continuing judicial supervision unless ordered by the court.
15 Subject to court jurisdiction as invoked by an interested person
16 or as otherwise exercised as provided by law, the management and
17 distribution of a trust estate, submission of an account or
18 report to beneficiaries, payment of a trustee's fees and other
19 trust obligations, acceptance and change of trusteeship, and any
20 other aspect of trust administration shall proceed expeditiously
21 consistent with the terms of the trust, free of judicial
22 intervention, and without court order or approval or other court
23 action.
24 (3) A proceeding involving a trust may relate to any matter
25 involving the trust's administration, including a request for
26 instructions and a determination regarding the validity, internal
27 affairs, or settlement of a trust; the administration,
1 distribution, modification, reformation, or termination of a
2 trust; or the declaration of rights that involve a trust,
3 trustee, or trust beneficiary, including, but not limited to,
4 proceedings to do any of the following:
5 (a) Appoint or remove a trustee.
6 (b) Review the fees of a trustee.
7 (c) Require, hear, and settle interim or final accounts.
8 (d) Ascertain beneficiaries.
9 (e) Determine a question that arises in the administration
10 or distribution of a trust, including a question of construction
11 of a trust.
12 (f) Instruct a trustee and determine relative to a trustee
13 the existence or nonexistence of an immunity, power, privilege,
14 duty, or right.
15 (g) Release registration of a trust.
16 (h) Determine an action or proceeding that involves
17 settlement of an irrevocable trust.
18 Sec. 7202. Venue for a proceeding under section 7201
19 involving a registered trust is in the place of registration.
20 Venue for a proceeding under section 7201 involving a trust not
21 registered in this state is in any place where the trust properly
22 could have been registered and as otherwise specified by the
23 rules of civil procedure.
24 (1) By registering a trust or accepting the trusteeship of a
25 registered trust or a trust having its principal place of
26 administration in this state or by moving the principal place of
27 administration to this state, the trustee submits personally to
1 the jurisdiction of the courts of this state regarding any matter
2 involving the trust. Notice of a proceeding shall be given to the
3 trustee in accordance with section 1401 at the trustee's address
4 as stated in the registration or as reported to the court and to
5 the trustee's address then known to the petitioner.
6 (2) For purposes of a proceeding commenced by a trust
7 beneficiary before registration, a trustee of a trust that is not
8 registered in a proper place is subject to the personal
9 jurisdiction of a court in which the trust could have been
10 registered. In addition, a trustee who, within 28 days after
11 receipt of a written demand by a trust settlor or beneficiary,
12 fails to register a trust as required by the terms of the trust
13 is subject to removal and denial of compensation or to surcharge
14 as the court may direct.
15 (3) With respect to their interests in the trust, the
16 beneficiaries of a trust having its principal place of
17 administration or having been properly registered in this state
18 are subject to the jurisdiction of the courts of this state
19 regarding any matter involving the trust. By accepting a
20 distribution from such a trust, the recipient submits personally
21 to the jurisdiction of the courts of this state regarding any
22 matter involving the trust.
23 (4) This section does not preclude other methods of
24 obtaining jurisdiction over a trustee, beneficiary, or other
25 person who receives property from the trust.
26 Sec. 7203. (1) If a party objects, the court shall not
27 entertain a proceeding under section 7201 involving a trust
1 registered or having its principal place of administration in
2 another state, unless either of the following applies:
3 (a) All appropriate parties could not be bound by litigation
4 in the courts of the state where the trust is registered or has
5 its principal place of administration.
6 (b) If the interests of justice would otherwise seriously be
7 impaired.
8 (2) The court may condition a stay or dismissal of a
9 proceeding under this section on the consent of a party to
10 jurisdiction of the state in which the trust is registered or has
11 its principal place of business, or the court may grant a
12 continuance or enter another appropriate order.
13 (1) The court has exclusive jurisdiction of proceedings in
14 this state brought by a trustee or beneficiary that concern the
15 administration of a trust as provided in section 1302(b) and (d).
16 (2) The court has concurrent jurisdiction with other courts
17 of this state of other proceedings that involve a trust as
18 provided in section 1303.
19 Sec. 7204. The court where a trust is registered has
20 concurrent jurisdiction with other courts of this state of an
21 action or proceeding to determine the existence or nonexistence
22 of the trust if created other than by will, of an action or
23 proceeding against a creditor or debtor of the trust, and of
24 another action or proceeding involving a trustee and a third
25 party. Venue is determined by the rules generally applicable to
26 civil actions.
27 (1) Except as otherwise provided in subsection (2), venue
Senate Bill No. 387 as amended June 3, 2009
1 for a proceeding involving a trust is as follows:
2 (a) For a proceeding under section 7203 involving a
3 registered trust, in the place of registration.
4 (b) For a proceeding under section 7203 involving a trust
5 not registered in this state, in any place where the trust
6 properly could be registered and, if the trust is created by will
7 and the estate is not yet closed, in the county in which the
8 decedent's estate is being administered.
9 (c) As otherwise specified by court rule.
10 (2) If a trust has no trustee and has not been registered,
11 venue for a judicial proceeding for the appointment of a trustee
12 is [as follows:
13 (a) In a county in this state in which a trust beneficiary
14 resides.
15 (b) In a county in which any trust property is located.
16 (c)
If the trust is created by will, in the county in which the
decedent's estate was or is being administered.
(d) As otherwise provided by court rule.]
17 Sec. 7205. On petition of an interested person, after notice
18 to all interested persons, the court may review the propriety of
19 employment of a person by a trustee including an attorney,
20 auditor, investment advisor, or other specialized agent or
21 assistant, and the reasonableness of the compensation of a person
22 so employed and the reasonableness of the compensation determined
23 by the trustee for the trustee's own services. The court may
24 order a person who receives excessive compensation from a trust
25 to make an appropriate refund.
26 (1) If a party objects, the court shall not entertain a
27 proceeding under section 7203 that involves a trust that is
1 registered or that has its principal place of administration in
2 another state, unless either of the following applies:
3 (a) All appropriate parties could not be bound by litigation
4 in the courts of the state where the trust is registered or has
5 its principal place of administration.
6 (b) The interests of justice would otherwise be seriously
7 impaired.
8 (2) The court may condition a stay or dismissal of a
9 proceeding under this section on the consent of a party to
10 jurisdiction of the state in which the trust is registered or has
11 its principal place of business, grant a continuance, or enter
12 another appropriate order.
13 Sec. 7206. A proceeding under section 7201 is initiated by
14 filing a petition in the court and giving notice to interested
15 persons as provided in section 1401. The court may order
16 notification of additional persons. A judgment or order binds
17 each person who is given notice of the proceeding even if not all
18 interested persons are notified. The court where a trust is
19 registered has concurrent jurisdiction with other courts of this
20 state of an action or proceeding to determine the existence or
21 nonexistence of the trust if created other than by will, of an
22 action or proceeding against a creditor or debtor of the trust,
23 and of another action or proceeding that involves a trustee and a
24 third party.
25 Sec. 7207. (1) On petition of an interested person, the
26 court may approve an interpretation, construction, modification,
27 or other settlement that is agreed upon in writing by all
1 presently identified and competent beneficiaries whose interests
2 in the trust may be affected to resolve a contest, controversy,
3 or question of construction or interpretation concerning the
4 existence, administration, or termination of an irrevocable
5 trust.
6 (2) If the present or future interest of an unborn,
7 unascertained, missing, or disappeared person; of a trustee or a
8 trust beneficiary described in the trust document but not yet
9 established; or of a minor or other person without legal capacity
10 is not represented or is not represented adequately under the
11 provisions of section 1209 or section 1403, the court may appoint
12 1 or more guardians ad litem to represent the interest or
13 interests.
14 (3) The court shall approve an agreement described in
15 subsection (1) if it appears to have been reached in good faith
16 and its effects are just and reasonable under all of the relevant
17 facts and circumstances.
18 (4) The order in response to a petition under subsection (1)
19 is binding on each party who is represented in the proceeding and
20 on others in accordance with section 1403(b). After issuance of
21 the order, the agreement as approved by the court shall be
22 considered a part of the governing instrument of the trust. On
23 petition of an interested person, after notice to all other
24 interested persons, the court may review the propriety of the
25 employment of a person by a trustee including an attorney,
26 auditor, investment advisor, or other specialized agent or
27 assistant and the reasonableness of the compensation of the
1 person so employed or the reasonableness of the compensation
2 determined by the trustee for the trustee's own services. The
3 court may order a person who receives excessive compensation from
4 a trust to make an appropriate refund.
5 Sec. 7208. A proceeding under section 7203 is initiated by
6 filing a petition in the court and giving notice to interested
7 persons as provided in section 1401. The court may order
8 notification of additional persons. A judgment or order binds
9 each person who is given notice of the proceeding even if not all
10 interested persons are notified.
11 Sec. 7209. (1) The trustee of a trust that has its principal
12 place of administration in this state may register the trust in
13 the court at the place designated in the terms of the trust or,
14 if none is designated, then at the principal place of
15 administration. For purposes of this article, the principal place
16 of the trust's administration is the trustee's usual place of
17 business where the records pertaining to the trust are kept or
18 the trustee's residence if the trustee does not have such a place
19 of business. For a corporate trustee, the usual place of business
20 is the business location of the primary trust officer for the
21 trust.
22 (2) For cotrustees, if not designated in the terms of the
23 trust, the principal place of administration is 1 of the
24 following:
25 (a) If there is only 1 corporate cotrustee, the corporate
26 trustee's usual place of business.
27 (b) If there is only 1 professional fiduciary who is an
1 individual and no corporate trustee, the professional fiduciary's
2 usual place of business or residence.
3 (c) If neither subdivision (a) nor (b) applies, the usual
4 place of business or residence of any of the cotrustees as agreed
5 upon by them.
6 Sec. 7210. (1) A trust is registered by the filing of a
7 statement that states the trustee's name and address and in which
8 the trustee acknowledges the trusteeship. The statement shall
9 indicate if the trust has been registered elsewhere. The
10 statement shall identify the trust in 1 of the following manners:
11 (a) For a trust created by will, by the name of the testator
12 and the date and place of domiciliary probate.
13 (b) For a written inter-vivos trust, by the name of each
14 settlor and the original trustee and the date of the trust
15 instrument and all amendments existing on the date of
16 registration.
17 (c) For an oral trust, by information identifying the
18 settlor or other source of property and describing the trust's
19 time and manner of creation and the terms of the trust, including
20 the subject matter, beneficiaries, and time of performance.
21 (2) The trust instrument is not required to be filed with
22 the court as part of the registration of a trust. If a trust is
23 registered elsewhere, registration in this state is ineffective
24 until the earlier registration is released by order of the court
25 where that registration occurred or by an instrument executed by
26 the trustee and all qualified trust beneficiaries. The order or
27 instrument shall be filed with the registration in this state.
1 Sec. 7211. A foreign corporate trustee is required to
2 qualify as a foreign corporation doing business in this state if
3 it maintains a trust's principal place of administration in this
4 state. A foreign cotrustee is not required to qualify in this
5 state solely because its cotrustee maintains the principal place
6 of administration in this state. Unless otherwise doing business
7 in this state, local qualification by a foreign trustee,
8 corporate or individual, is not required for the trustee to
9 receive distribution from a local estate, to hold, invest in,
10 manage, or acquire property located in this state, or to maintain
11 litigation. This section does not affect a determination of what
12 other acts require qualification as doing business in this state.
13 PART 3
14
DUTIES AND LIABILITIES
OF TRUSTEES
15 Sec. 7301. Except as specifically provided, the general duty
16 of a trustee to administer a trust expeditiously for the benefit
17 of the beneficiaries is not altered by this act.
18 (1) Notice to a person who may represent and bind another
19 person under this part has the same effect as if notice were
20 given directly to the other person.
21 (2) The consent of a person who may represent and bind
22 another person under this part is binding on the person
23 represented unless the person represented objects to the
24 representation before the consent would otherwise have become
25 effective.
26 (3) Except as otherwise provided in section 7602, a person
27 who under this part may represent a settlor who lacks capacity
1 may receive notice and for purposes of section 7602 may give a
2 binding consent on the settlor's behalf.
3 (4) A settlor may not represent or bind a trust beneficiary
4 under this part with respect to the termination or modification
5 of a trust under section 7411(1).
6 Sec. 7302. Except as otherwise provided by the terms of the
7 trust, the trustee shall act as would a prudent person in dealing
8 with the property of another, including following the standards
9 of the Michigan prudent investor rule. If the trustee has special
10 skills or is named trustee on the basis of representation of
11 special skills or expertise, the trustee is under a duty to use
12 those skills. The
holder of a power of revocation or amendment or
13 a presently exercisable or testamentary general or special power
14 of appointment may represent and bind a person whose interest, as
15 a permissible appointee, taker in default, or otherwise, is
16 subject to the power. For the purpose, however, of granting
17 consent or approval to modification or termination of a trust or
18 to deviation from its terms, including consent or approval to a
19 settlement agreement described in section 7111, only the holder
20 of a presently exercisable or testamentary general power of
21 appointment may represent and bind such a person.
22 Sec. 7303. (1) Subject to subsection (2), the trustee of a
23 revocable trust shall keep the settlor reasonably informed of the
24 trust and its administration. Unless otherwise provided in the
25 trust instrument, the trustee of a revocable trust does not have
26 a duty to inform a trust beneficiary of the trust and its
27 administration, other than the settlor or, if the settlor is an
1 incapacitated person, the settlor's designated agent.
2 (2) Unless otherwise provided in the trust instrument, if
3 the trustee reasonably believes the settlor of a revocable trust
4 is an incapacitated person and has no designated agent, the
5 trustee shall keep each beneficiary, who, if the settlor were
6 then deceased, would be a current trust beneficiary, reasonably
7 informed of the trust and its administration. Notwithstanding the
8 provisions of the trust instrument, upon good cause shown, the
9 court may order the trustee to keep other beneficiaries
10 reasonably informed of the trust and its administration.
11 (3) For a revocable trust, within 28 days after acceptance
12 of trust or the death of the settlor, whichever is later, and for
13 all other trusts, within 28 days after acceptance of the trust,
14 the trustee shall inform in writing each interested trust
15 beneficiary of the trust's existence, of the court in which the
16 trust is registered, if it is registered, of the trustee's name
17 and address, and of the interested trust beneficiary's right to
18 request and receive both a copy of the trust's terms that
19 describe or affect the interested trust beneficiary's interest
20 and relevant information about the trust property. In addition,
21 all of the following apply:
22 (a) Upon reasonable request, the trustee shall provide a
23 beneficiary with a copy of the trust's terms that describe or
24 affect the beneficiary's interest and with relevant information
25 about the trust property.
26 (b) Unless the settlor directs or requests in the trust
27 instrument that the trustee provide accounts to less than all
1 interested trust beneficiaries, all of the following apply:
2 (i) At
least annually and on termination of the trust or a
3 change of the trustee, the trustee shall provide a statement of
4 account to each current trust beneficiary and shall keep each
5 current trust beneficiary informed of the trust and its
6 administration.
7 (ii) Upon
reasonable request, the trustee shall provide a
8 statement of account to each interested trust beneficiary who is
9 not also a current trust beneficiary and shall keep each of those
10 persons reasonably informed of the trust and its administration.
11 (iii) The
trustee shall provide a statement of account and
12 other information to a beneficiary as the court directs.
13 (iv) In
the trustee's discretion, the trustee may provide a
14 statement of account and other information to any beneficiary.
15 (c) If the settlor requests or directs the trustee in the
16 trust instrument to provide accounts and information to less than
17 all interested trust beneficiaries, the trustee shall provide
18 statements of account and information as provided in the trust
19 instrument. At the court's direction, the trustee shall provide
20 statements of account and other information to persons excluded
21 by the settlor's request or direction to the extent and in the
22 manner the court directs.
23 (d) A statement of account under this section is a report by
24 the trustee that shall, at a minimum, list the trust assets, if
25 feasible giving their market values, the trust liabilities,
26 receipts, and disbursements, and state the source and amount of
27 the trustee's compensation. A particular format or formality is
1 not required for a report or statement of account under this
2 section unless a court specifies its content and manner of
3 presentation. To the extent there is no conflict of interest
4 between the representative and the person represented or among
5 those being represented with respect to a particular question or
6 dispute, all of the following apply:
7 (a) A conservator, plenary guardian, or partial guardian
8 having authority to act with respect to the trust may represent
9 and bind the estate that the conservator, plenary guardian, or
10 partial guardian controls.
11 (b) An agent under a durable power of attorney having
12 authority to act with respect to the trust may represent and bind
13 the principal if a conservator, plenary guardian, or partial
14 guardian has not been appointed.
15 (c) A guardian having authority to act with respect to the
16 trust may represent and bind the ward if a conservator of the
17 ward's estate has not been appointed and no agent under a durable
18 power has authority to act.
19 (d) A trustee may represent and bind the beneficiaries of
20 the trust.
21 (e) A personal representative of a decedent's estate may
22 represent and bind persons interested in the estate.
23 (f) A parent may represent and bind the parent's minor or
24 unborn child if a conservator, plenary guardian, or partial
25 guardian has not been appointed.
26 Sec. 7304. A trustee need not
provide bond to secure
27 performance of the trustee's duties
unless required by the terms
1 of the trust, reasonably requested by a
beneficiary, or found by
2 the court to be necessary to protect the
interests of the
3 beneficiaries who are not able to protect
themselves and whose
4 interests are not otherwise adequately
represented. On petition
5 of the trustee or an interested person,
the court may excuse a
6 requirement of bond, reduce the amount of
the bond, release the
7 surety, or permit the substitution of
another bond with the same
8 or different sureties. If bond is
required, the bond shall be
9 filed in the court of registration or
another appropriate court
10 in an amount and with the sureties and
liabilities as provided in
11 sections 3604 and 3606 relating to the
bond of a personal
12 representative. Unless otherwise represented, a minor,
13 incapacitated, or unborn individual, or a person whose identity
14 or location is unknown and not reasonably ascertainable, may be
15 represented by and bound by another having a substantially
16 identical interest with respect to the particular question or
17 dispute, but only to the extent there is no conflict of interest
18 between the representative and the person represented.
19 Sec. 7305. A trustee is under a continuing duty to
20 administer the trust at a place appropriate to the purposes of
21 the trust and to its sound, efficient management. If the
22 principal place of administration becomes inappropriate for any
23 reason, the court may enter an order furthering efficient
24 administration and the interests of beneficiaries, including, if
25 appropriate, release of registration, removal of the trustee, and
26 appointment of a trustee in another state. A trust provision
27 relating to the place of administration, to changes in the place
1 of administration, or to change of trustee controls unless
2 compliance would be contrary to efficient administration or the
3 purposes of the trust. The view of an adult beneficiary shall be
4 given weight in determining the suitability of the trustee and
5 the place of administration.
6 (1) If the court determines that an interest is not
7 represented under this part, or that the otherwise available
8 representation might be inadequate, the court may appoint a
9 guardian ad litem to receive notice, give consent, and otherwise
10 represent, bind, and act on behalf of a minor, incapacitated, or
11 unborn individual, or a person whose identity or location is
12 unknown. A guardian ad litem may be appointed to represent
13 several persons or interests.
14 (2) A guardian ad litem may act on behalf of the individual
15 represented with respect to any matter arising under this
16 article, whether or not a judicial proceeding concerning the
17 trust is pending.
18 (3) In making decisions, a guardian ad litem may consider
19 the general benefit accruing to the living members of the
20 individual's family.
21 PART 4
22
POWERS OF
TRUSTEES
23 Sec. 7401. (1) A trustee has the power to perform in a
24 reasonable and prudent manner every act that a reasonable and
25 prudent person would perform incident to the collection,
26 preservation, management, use, and distribution of the trust
27 property to accomplish the desired result of administering the
1 trust legally and in the trust beneficiaries' best interest.
2 (2) Subject to the standards described in subsection (1) and
3 except as otherwise provided in the trust instrument, a trustee
4 possesses all of the following specific powers:
5 (a) To take possession, custody, or control of property
6 transferred to the trust.
7 (b) To retain property that the trustee receives, including
8 property in which the trustee is personally interested, in
9 accordance with the Michigan prudent investor rule.
10 (c) To receive property from a fiduciary or another source
11 that is acceptable to the trustee.
12 (d) To perform, compromise, or refuse to perform a contract
13 of the settlor that is an obligation of the trust, as the trustee
14 may determine under the circumstances. In performing an
15 enforceable contract by the settlor to convey or lease land, if
16 the contract for a conveyance requires the giving of a warranty,
17 the deed or other instrument of conveyance to be given by the
18 trustee must contain the warranty required. The warranty is
19 binding on the trust as though made by the settlor, but does not
20 bind the trustee except in the trustee's fiduciary capacity. The
21 trustee, among other possible courses of action, may do either of
22 the following:
23 (i)
Execute and deliver a deed of conveyance for cash payment
24 of money remaining due or the purchaser's note for the money
25 remaining due secured by a mortgage on the land.
26 (ii)
Deliver a deed in escrow with directions that the
27 proceeds, when paid in accordance with the escrow agreement, be
1 paid to the trustee, as designated in the escrow agreement.
2 (e) To satisfy a settlor's written charitable pledge
3 irrespective of whether the pledge constitutes a binding
4 obligation of the settlor or was properly presented as a claim,
5 if in the trustee's judgment the settlor would have wanted the
6 pledge completed under the circumstances.
7 (f) To deposit trust money in a bank, including a bank
8 operated by the trustee and to invest and reinvest trust property
9 as would a prudent investor acting in accordance with the
10 Michigan prudent investor rule.
11 (g) To acquire property, including property in this or
12 another state or country, in any manner for cash or on credit, at
13 public or private sale; and to manage, develop, improve,
14 exchange, partition, or change the character of trust property.
15 (h) To make an ordinary or extraordinary repair or
16 alteration in a building or another structure, to demolish an
17 improvement, or to raze an existing or erect a new party wall or
18 building.
19 (i) To subdivide, develop, or dedicate land to public use;
20 to make or obtain the vacation of a plat or adjust a boundary; to
21 adjust a difference in valuation on exchange or partition by
22 giving or receiving consideration; or to dedicate an easement to
23 public use without consideration.
24 (j) To enter for any purpose into a lease as lessor or
25 lessee, with or without an option to purchase or renew, for any
26 term.
27 (k) To enter into a lease or arrangement for exploration and
1 removal of minerals or another natural resource or to enter into
2 a pooling or unitization agreement.
3 (l) To
abandon property if, in the trustee's opinion, the
4 property is valueless, or is so encumbered or in such a condition
5 that it is of no benefit to the trust.
6 (m) To vote a stock or other security in person, by general
7 or limited proxy, or in another manner provided by law.
8 (n) To pay a call, assessment, or other amount chargeable or
9 accruing against or on account of a security.
10 (o) To hold property in the name of a nominee or in another
11 form without disclosure of the interest of the trust. However,
12 the trustee is liable for an act of the nominee in connection
13 with the property so held.
14 (p) To insure the trust property against damage, loss, or
15 liability and to insure the trustee against liability as to a
16 third person.
17 (q) To borrow money for any purpose from the trustee or
18 others and to mortgage or pledge trust property.
19 (r) To effect a fair and reasonable compromise with a debtor
20 or obligor, or extend, renew, or in any manner modify the terms
21 of an obligation owing to the trust. If the trustee holds a
22 mortgage, pledge, or another lien on property of another person,
23 the trustee may, instead of foreclosure, accept a conveyance or
24 transfer of encumbered property from the property's owner in
25 satisfaction of the indebtedness secured by a lien.
26 (s) To pay a tax, an assessment, the trustee's compensation,
27 or another expense incident to the administration of the trust.
1 (t) To sell or exercise a subscription or conversion right
2 or to consent, directly or through a committee or another agent,
3 to the reorganization, consolidation, merger, dissolution, or
4 liquidation of a business enterprise.
5 (u) To allocate an item of income or expense to either trust
6 income or principal, as permitted or provided by law.
7 (v) To employ, and pay reasonable compensation for services
8 performed by, a person, including an auditor, investment advisor,
9 accountant, appraiser, broker, custodian, rental agent, realtor,
10 or agent, even if the person is associated with the trustee, for
11 the purpose of advising or assisting the trustee in the
12 performance of an administrative duty; to act without independent
13 investigation upon such a person's recommendation; and, instead
14 of acting personally, to employ 1 or more agents to perform an
15 act of administration, whether or not discretionary.
16 (w) To employ an attorney to perform necessary legal
17 services or to advise or assist the trustee in the performance of
18 the trustee's administrative duties, even if the attorney is
19 associated with the trustee, and to act without independent
20 investigation upon the attorney's recommendation. An attorney
21 employed under this subdivision shall receive reasonable
22 compensation for his or her employment.
23 (x) To prosecute, defend, arbitrate, settle, release,
24 compromise, or agree to indemnify a claim or proceeding in any
25 jurisdiction or under an alternative dispute resolution
26 procedure. The trustee may act under this subsection for the
27 trustee's protection in the performance of the trustee's duties.
1 (y) To sell, exchange, partition, or otherwise dispose of,
2 or grant an option with respect to, trust property for any
3 purpose upon any terms or conditions.
4 (z) To continue or participate in a business or venture in
5 any manner, in any form, and for any length of time.
6 (aa) To change the form, in any manner, of a business or
7 venture in which the settlor was engaged at the time of death.
8 (bb) To provide for exoneration of the trustee from personal
9 liability in a contract entered into on behalf of the trust.
10 (cc) To respond to environmental concerns and hazards
11 affecting trust property as provided in section 7407.
12 (dd) To collect, pay, contest, settle, release, agree to
13 indemnify against, compromise, or abandon a claim of or against
14 the trust, including a claim against the trust by the trustee.
15 (ee) To respond to a tax matter as provided in section 7408.
16 (ff) To divide trust property into 2 or more separate
17 portions or trusts with substantially identical terms and
18 conditions and to allocate property between them, in order to
19 simplify administration for generation skipping transfer tax
20 purposes, to segregate property for management purposes, or to
21 meet another trust objective.
22 (gg) To make a payment of money, or other property instead
23 of money, to or for a minor or incapacitated individual as
24 provided in section 7409.
25 (hh) To make a distribution or division of trust property in
26 cash or in kind, or both; to allot a different kind or
27 disproportionate portion of, or an undivided interest in, trust
1 property among beneficiaries and determine the value of allotted
2 trust property; or to distribute an unclaimed share as described
3 in section 3916.
4 (ii) To transfer the property of a trust to another
5 jurisdiction and appoint, compensate, or remove a successor
6 trustee, individual or corporate, for trust property in another
7 jurisdiction, with any trust powers set out in this part that the
8 trustee delegates to the successor trustee.
9 (jj) To execute and deliver an instrument that accomplishes
10 or facilitates the exercise of a power vested in the trustee.
11 (3) A trust that contains substantially identical provisions
12 as another trust established for the same beneficiary or
13 beneficiaries may be consolidated and administered as 1 trust. If
14 the rule against perpetuities speaks from different dates with
15 reference to the trusts or if there are other variations in
16 terms, consolidation may still take place, but the property of
17 the trusts shall be maintained in separate accounts if necessary
18 to recognize and give effect to the differences.
19 (1) A trust may be created by any of the following:
20 (a) Transfer of property to another person as trustee during
21 the settlor's lifetime or by will or other disposition taking
22 effect upon the settlor's death.
23 (b) Declaration by the owner of property that the owner
24 holds identifiable property as trustee.
25 (c) Exercise of a power of appointment in favor of a
26 trustee.
27 (d) A promise by 1 person to another person, whose rights
1 under the promise are to be held in trust for a third person.
2 (2) The instrument establishing the terms of a trust is not
3 rendered invalid because property or an interest in property is
4 not transferred to the trustee or made subject to the terms of
5 the trust concurrently with the signing of the instrument. Until
6 property or an interest in property is transferred to the trustee
7 or made subject to the terms of the trust, the person nominated
8 as trustee has no fiduciary or other obligations under the
9 instrument establishing the terms of the trust except as may have
10 been specifically agreed by the settlor and the nominated
11 trustee.
12 Sec. 7402. For cause shown and on the petition of the
13 trustee or an affected beneficiary and on appropriate notice to
14 the affected parties, the court may relieve a trustee from a
15 restriction on the trustee's powers that would otherwise be
16 placed on the trustee by the trust instrument or by this part.
17 (1) A trust is created only if all of the following apply:
18 (a) The settlor has capacity to create a trust.
19 (b) The settlor indicates an intention to create the trust.
20 (c) The trust has a definite beneficiary or is either of the
21 following:
22 (i) A charitable trust.
23 (ii) A trust for a noncharitable purpose or for the care of
24 an animal, as provided in section 2722.
25 (d) The trustee has duties to perform.
26 (e) The same person is not the sole trustee and sole
27 beneficiary.
1 (2) A trust beneficiary is definite if the trust beneficiary
2 can be ascertained now or in the future, subject to any
3 applicable rule against perpetuities.
4 (3) A power in a trustee to select a trust beneficiary from
5 an indefinite class is valid only in a charitable trust.
6 Sec. 7403. (1) If the trustee's duty and the trustee's
7 individual interest or the trustee's interest as a trustee of
8 another trust conflict in the exercise of a trust power, the
9 power may be exercised if any of the following are true:
10 (a) The trust agreement expressly authorizes the
11 transaction.
12 (b) The transaction is approved by the court after notice to
13 interested persons.
14 (c) The transaction is otherwise permitted by statute.
15 (2) Under this section, personal profit or advantage to an
16 affiliated or subsidiary company or association is personal
17 profit to a corporate trustee. A trust not created by will is
18 validly created if its creation complies with the law of the
19 jurisdiction in which the trust instrument was executed or the
20 law of a jurisdiction to which, at the time of creation, any of
21 the following applied:
22 (a) The settlor was domiciled, had a place of abode, or was
23 a national in the jurisdiction.
24 (b) A trustee was domiciled or had a place of business in
25 the jurisdiction.
26 (c) Any trust property was located in the jurisdiction.
27 Sec. 7404. With respect to a third person dealing with a
1 trustee or assisting a trustee in the conduct of a transaction,
2 the existence of a trust power and its proper exercise by the
3 trustee may be assumed without inquiry. The third person is not
4 bound to inquire whether the trustee may act or is properly
5 exercising the power. A third person, without actual knowledge
6 that the trustee is exceeding a trust power or improperly
7 exercising it, is fully protected in dealing with the trustee as
8 if the trustee possessed and properly exercised the power the
9 trustee purports to exercise. A third person is not bound to
10 assure the proper application of trust property paid or delivered
11 to the trustee. A
trust may be created only to the extent its
12 purposes are lawful, not contrary to public policy, and possible
13 to achieve.
14 Sec. 7405. Unless otherwise provided in the trust
15 instrument, if 1 of several trustees dies, resigns, or is
16 removed, the remaining trustees have all rights, title, and
17 powers of all previous trustees. If the trust instrument provides
18 that a successor trustee be appointed to fill a vacancy, the
19 remaining trustees may exercise the powers of all previous
20 trustees until the successor is appointed.
21 (1) A charitable trust may be created for the relief of
22 poverty, the advancement of education or religion, the promotion
23 of health, scientific, literary, benevolent, governmental, or
24 municipal purposes, any purpose described in section 501(c)(3) of
25 the internal revenue code, 26 USC 501, or other purposes the
26 achievement of which is beneficial to the community.
27 (2) If the terms of a charitable trust do not identify a
1 particular charitable purpose or beneficiary, the court may
2 select 1 or more charitable purposes or beneficiaries. The
3 selection shall be consistent with the settlor's intention to the
4 extent it can be ascertained.
5 (3) The settlor, a named beneficiary, or the attorney
6 general of this state, among others, may maintain a proceeding to
7 enforce a charitable trust. The right of the settlor of a
8 charitable trust to enforce the trust is personal to the settlor
9 and may not be exercised by any of the following:
10 (a) The settlor's heirs, assigns, or beneficiaries.
11 (b) The settlor's fiduciary, other than the trustee of the
12 charitable trust the enforcement of which is being sought.
13 (c) An agent of the settlor acting pursuant to a durable
14 power of attorney, unless the right to enforce the trust is
15 expressly conferred on the agent by the power of attorney.
16 Sec. 7406. (1) If there are 2 or more trustees and the trust
17 instrument expressly makes provision for the execution of any of
18 the trustees' powers by both or all of them or by any 1 or more
19 of them, the provisions of the trust instrument govern.
20 (2) If there is no governing provision in the trust
21 instrument, cotrustees may provide, by written agreement signed
22 by all of them and filed with and approved by the court where the
23 trust would be registered, as determined in accordance with
24 section 7101, that any 1 or more of the powers designated in
25 section 7401 may be exercised by any designated 1 or more of the
26 trustees.
27 (3) Subject to subsection (1), if 2 or more trustees own
1 securities, their acts with respect to voting have 1 of the
2 following effects:
3 (a) If only 1 trustee votes, in person or by proxy, that
4 trustee's act binds all of the trustees.
5 (b) If more than 1 trustee votes, in person or by proxy, the
6 act of the majority so voting binds all of the trustees.
7 (c) If more than 1 trustee votes, in person or by proxy, but
8 the vote is evenly split on a particular matter, each faction is
9 entitled to vote the securities proportionately.
10 (4) Subject to subsections (1) to (3), all other acts and
11 duties shall be performed by both of the trustees if there are 2
12 or by a majority of the trustees if there are more than 2. A
13 trustee who has not joined in exercising a power is not liable to
14 a beneficiary or another person for the consequences of the
15 exercise of that power. A dissenting trustee is not liable for
16 the consequences of an act in which the dissenting trustee joins
17 at the direction of the other trustees, if the dissenting trustee
18 expressed dissent in writing to a cotrustee at or before the time
19 of joinder.
20 (5) A trustee is not relieved of liability by entering into
21 an agreement under this section. A trust is void to the extent
22 its creation was induced by fraud, duress, or undue influence.
23 Sec. 7407. (1) In connection with an environmental concern
24 or hazard, a trustee may do any of the following:
25 (a) Inspect property or the operation of a business activity
26 on property, including property held in or operated by a sole
27 proprietorship, partnership, corporation, or limited liability
1 company or any other type of entity, for the purpose of
2 determining compliance with environmental law affecting the
3 property and to respond to an actual or threatened violation of
4 an environmental law affecting property held or tendered to the
5 trustee.
6 (b) Take action necessary to prevent, abate, or otherwise
7 remedy an actual or threatened violation of an environmental law
8 affecting property held by the trustee, either before or after a
9 governmental body initiates an enforcement action.
10 (c) Refuse to accept property in trust if the trustee
11 determines that the property to be transferred to the trust
12 either is or may be contaminated by a hazardous substance or has
13 been or is being used for an activity directly or indirectly
14 involving a hazardous substance that could result in liability to
15 the trust or otherwise impair the value of the trust property.
16 (d) Settle or compromise at any time a claim against the
17 trust that a governmental body or private party may assert
18 involving the alleged violation of an environmental law affecting
19 property held in the trust.
20 (e) Disclaim a power granted by a document, statute, or rule
21 of law that, in the sole discretion of the trustee, may cause the
22 trustee to incur personal liability under an environmental law.
23 (f) Decline to serve or resign as a trustee if the trustee
24 reasonably believes that there is or may be a conflict of
25 interest between it in its fiduciary capacity and in its
26 individual capacity because of a potential claim or liability
27 that may be asserted against the trustee on the trust's behalf
1 because of the type or condition of property held in trust.
2 (g) Appoint an independent special trustee to hold title to,
3 and take a reasonably required action, as provided in this
4 section, relating to environmental law in regard to, property
5 tendered to the trust, until the time that the trustee determines
6 no substantial risk exists if the tendered property becomes part
7 of the trust property or abandons the tendered property.
8 (h) Charge the cost of an inspection, review, abatement,
9 response, cleanup, settlement of claim, or remedial action
10 authorized by this section against the trust property.
11 (2) A trustee is not personally liable to a beneficiary or
12 other party for a decrease in value of trust property by reason
13 of the trustee's compliance with an environmental law,
14 specifically including a reporting requirement under that law.
15 The trustee's acceptance of property or failure to inspect
16 property or a business operation does not create an inference
17 that there is or may be liability under an environmental law with
18 respect to the property or business operation. The authority
19 granted by this section is solely to facilitate the
20 administration and protection of trust property and is not to
21 impose greater responsibility or liability on the trustee than
22 imposed by law absent this section. Except as required by a
23 statute other than this article, a trust need not be evidenced by
24 a trust instrument, but the creation of an oral trust and its
25 terms may be established only by clear and convincing evidence.
26 Sec. 7410. Unless the distribution or payment can no longer
27 be questioned because of adjudication, estoppel, or other
1 limitation, a distributee or claimant that receives property that
2 is improperly distributed or paid from a trust shall return the
3 property and any income and gain from the property since
4 distribution, if the recipient has the property. If the recipient
5 does not have the property, the recipient shall pay the value of
6 the property as of the date of distribution or payment and any
7 income and gain from the property since distribution.
8 (1) In addition to the methods of termination prescribed by
9 sections 7411 to 7414, a trust terminates to the extent the trust
10 is revoked or expires pursuant to its terms, no purpose of the
11 trust remains to be achieved, or the purposes of the trust have
12 become impossible to achieve or are found by a court to be
13 unlawful or contrary to public policy.
14 (2) A proceeding to confirm the termination of a trust under
15 subsection (1) or to approve or disapprove a proposed
16 modification or termination under sections 7411 to 7416 or trust
17 combination or division under section 7417 may be commenced by a
18 trustee or beneficiary. A proceeding to modify a charitable trust
19 under section 7413 may be commenced by the persons with the power
20 to enforce the terms of a charitable trust pursuant to section
21 7405.
22 Sec. 7411. (1) Subject to subsection (2), a noncharitable
23 irrevocable trust may be modified or terminated in any of the
24 following ways:
25 (a) By the court upon the consent of the trustee and the
26 qualified trust beneficiaries, if the court concludes that the
27 modification or termination of the trust is consistent with the
1 material purposes of the trust or that continuance of the trust
2 is not necessary to achieve any material purpose of the trust.
3 (b) Upon the consent of the qualified trust beneficiaries
4 and a trust protector who is given the power under the terms of
5 the trust to grant, veto, or withhold approval of termination or
6 modification of the trust.
7 (c) By a trustee or trust protector to whom a power to
8 direct the termination or modification of the trust has been
9 given by the terms of a trust.
10 (2) Subsection (1) does not apply to irrevocable trusts
11 created before or to revocable trusts that become irrevocable
12 before the effective date of the amendatory act that added this
13 section.
14 (3) Notice of any proceeding to terminate or modify a trust
15 shall be given to the settlor, or the settlor's representative if
16 the petitioner has a reasonable basis to believe the settlor is
17 an incapacitated individual, the trust protector, if any, the
18 trustee, and any other person named in the terms of the trust to
19 receive notice of such a proceeding.
20 (4) Upon termination of a trust under subsection (1), the
21 trustee shall distribute the trust property as agreed by the
22 qualified trust beneficiaries.
23 (5) If the trustee fails or refuses to consent, or fewer
24 than all of the qualified trust beneficiaries consent, to a
25 proposed modification or termination of the trust under
26 subsection (1), the modification or termination may be approved
27 by the court if the court is satisfied that both of the following
1 apply:
2 (a) If the trustee and all of the qualified trust
3 beneficiaries had consented, the trust could have been modified
4 or terminated under this section.
5 (b) The interests of a qualified trust beneficiary who does
6 not consent will be adequately protected.
7 (6) As used in this section, "settlor's representative"
8 means the settlor's agent under a durable power of attorney, if
9 the attorney in fact is known to the petitioner, or, if an agent
10 has not been appointed, the settlor's conservator, plenary
11 guardian, or partial guardian.
12 Sec. 7412. (1) The court may modify the administrative terms
13 of a trust if continuation of the trust on its existing terms
14 would be impracticable or wasteful or impair the trust's
15 administration.
16 (2) The court may modify the administrative or dispositive
17 terms of a trust or terminate the trust if, because of
18 circumstances not anticipated by the settlor, modification or
19 termination will further the settlor's stated purpose or, if
20 there is no stated purpose, the settlor's probable intention.
21 (3) If a trust is terminated under this section, the trustee
22 shall distribute the trust property as ordered by the court.
23 (4) Notice of any proceeding to terminate or modify a trust
24 shall be given in the manner described in section 7411(3).
25 Sec. 7413. (1) Except as otherwise provided in subsections
26 (2) or (3), if a particular charitable purpose becomes unlawful,
27 impracticable, or impossible to achieve, no alternative taker is
1 named or provided for, and the court finds the settlor had a
2 general, rather than a specific, charitable intent, all of the
3 following apply:
4 (a) The trust does not fail, in whole or in part.
5 (b) The trust property does not revert to the settlor or the
6 settlor's successors in interest.
7 (c) The court may apply cy pres to modify or terminate the
8 trust by directing that the trust property be applied or
9 distributed, in whole or in part, in a manner consistent with the
10 settlor's general charitable intent.
11 (2) If the terms of a charitable trust confer a power on the
12 trustee, or another person designated in the trust or gift, to
13 modify or terminate either the charitable trust, a charitable
14 gift to the trust, or the charitable purpose of the trust or gift
15 in favor of another charitable trust, gift, or purpose, the terms
16 of the trust prevail over the power of the court to apply cy pres
17 to modify or terminate the trust.
18 (3) A provision in the terms of a charitable trust that
19 would result in distribution of the trust property to a
20 noncharitable beneficiary prevails over the power of the court to
21 apply cy pres to modify or terminate the trust only if, when the
22 provision takes effect, either of the following applies:
23 (a) The trust property is to revert to the settlor and the
24 settlor is still living.
25 (b) Less than 50 years have elapsed since the date of the
26 trust's creation.
27 Sec. 7414. (1) After 63 days after notice to the qualified
1 trust beneficiaries and, if the trust is a charitable trust, to
2 the attorney general of this state, the trustee of a trust
3 consisting of trust property having a total value less than
4 $50,000.00 may terminate the trust if the trustee concludes that
5 the value of the trust property is insufficient to justify the
6 cost of administration. The $50,000.00 amount expressed in this
7 section shall be adjusted each year as provided in section 1210.
8 (2) The court may modify or terminate a trust or remove the
9 trustee and appoint a different trustee if it determines that the
10 value of the trust property is insufficient to justify the cost
11 of administration.
12 (3) Upon termination of a trust under this section, the
13 trustee shall distribute the trust property in the manner
14 provided for in the terms of the trust, if any, and otherwise to
15 the current income beneficiaries or, if there are no current
16 income beneficiaries, in the manner directed by the court.
17 (4) This section does not apply to an easement for
18 conservation or preservation.
19 Sec. 7415. The court may reform the terms of a trust, even
20 if unambiguous, to conform the terms to the settlor's intention
21 if it is proved by clear and convincing evidence that both the
22 settlor's intent and the terms of the trust were affected by a
23 mistake of fact or law, whether in expression or inducement.
24 Sec. 7416. To achieve the settlor's tax objectives, the
25 court may modify the terms of a trust in a manner that is not
26 contrary to the settlor's probable intention. The court may
27 provide that the modification has retroactive effect.
1 Sec. 7417. (1) After notice to the qualified trust
2 beneficiaries and to the holders of powers of appointment, a
3 trustee may divide trust property into 2 or more separate
4 portions or trusts and allocate property between them if the
5 trusts have substantially identical terms and conditions or if
6 the result does not impair rights of any beneficiary or adversely
7 affect achievement of the purposes of the trust.
8 (2) After notice to the qualified trust beneficiaries and to
9 the holders of powers of appointment, a trustee may consolidate 2
10 or more trusts and administer them as 1 trust if the trusts have
11 substantially identical terms and conditions or if the result
12 does not impair rights of any beneficiary or adversely affect
13 achievement of the purposes of the trust. If the rule against
14 perpetuities speaks from different dates with reference to the
15 trusts or if there are other variations in terms, consolidation
16 may still take place, but the property of the trusts shall be
17 maintained in separate accounts if necessary to recognize and
18 give effect to the differences.
19 PART 5
20
CLAIMS AGAINST A DECEDENT'S
REVOCABLE TRUST
21 Sec. 7501. (1) The property of a trust over which the
22 settlor has the right without regard to the settlor's mental
23 capacity, at his or her death, either alone or in conjunction
24 with another person, to revoke the trust and revest principal in
25 himself or herself is subject to all of the following, but only
26 to the extent that the settlor's property subject to probate
27 administration is insufficient to satisfy the following expenses,
1 claims, and allowances:
2 (a) The administration expenses of the settlor's estate.
3 (b) An enforceable and timely presented claim of a creditor
4 of the settlor, including a claim for the settlor's funeral and
5 burial expenses.
6 (c) Homestead, family, and exempt property allowances.
7 (2) A trust established as part of, and all payments from,
8 an employee annuity described in section 403 of the internal
9 revenue code, an individual retirement account described in
10 section 408 of the internal revenue code, a Keogh (HR-10 plan),
11 or a retirement or other plan that is qualified under section 401
12 of the internal revenue code shall not be considered to be a
13 trust described in subsection (1).
14 (3) This section does not impair a right that an individual
15 has under a qualified domestic relations order as that term is
16 defined in section 414(p) of the internal revenue code.
17 (4) For purposes of this section, property held or received
18 by a trust to the extent that the property would not have been
19 subject to a claim against the settlor's estate if it had been
20 paid directly to a trust created under the settlor's will or
21 other than to the settlor's estate, or property received from a
22 trust other than a trust described in this section, shall not be
23 considered trust property available for the payment of the
24 administration expenses, a claim against the settlor's estate, or
25 an allowance described in subsection (1). This part applies to a
26 creditor's or transferee's claims with respect to spendthrift,
27 support, and discretionary trusts.
1 Sec. 7502. (1) A trustee of a trust described in section
2 7501(1) shall pay to the personal representative of the settlor's
3 estate the amount from time to time that the personal
4 representative certifies in writing to the trustee is required to
5 pay the administration expenses of the settlor's estate; an
6 enforceable and timely presented claim of a creditor of the
7 settlor, including a claim for the settlor's funeral and burial
8 expenses; and homestead, family, and exempt property allowances.
9 Without liability to a trust beneficiary or another party, the
10 trustee may rely on the certificate of the personal
11 representative. In the event there is no personal representative
12 appointed for the settlor's estate, the trustee shall pay
13 directly to the creditor an enforceable and timely served claim
14 of a creditor of the settlor, including a claim for the settlor's
15 funeral and burial expenses. If a personal representative is not
16 appointed for the settlor's estate within 4 months after the date
17 of the publication of notice to creditors, a trust described in
18 section 7501(1) is not liable for payment of homestead, family,
19 or exempt property allowances. A payment made by a trustee is
20 subject to this section, but the payment shall be made
21 exclusively out of property, or the proceeds of property, that is
22 includable in the settlor's gross estate for federal estate tax
23 purposes, other than assets described in section 7501(2), (3),
24 and (4).
25 (2) Unless a settlor provides in his or her will or, in the
26 absence of such a provision, designates in the trust the money or
27 property passing under a trust to be used as described in section
1 7501, the administration expenses of the settlor's estate; an
2 enforceable and timely filed claim of a creditor of the settlor,
3 including a claim for the settlor's funeral and burial expenses;
4 or homestead, family, and exempt property allowances, to be paid
5 in accordance with subsection (1), shall be paid from the
6 property of the trust in the following order:
7 (a) Property of the trust residue remaining after all
8 distributions that are to be satisfied by reference to a specific
9 property or type of property, fund, money, or statutory amount.
10 (b) Property that is not to be distributed out of specified
11 or identified property or a specified or identified item of
12 property.
13 (c) Property that is to be distributed out of specified or
14 identified property or a specified or identified item of
15 property.
16 (1) A spendthrift provision is valid and enforceable.
17 (2) A term of a trust providing that the interest of a trust
18 beneficiary is held subject to a "spendthrift trust," or words of
19 similar import, restrains both voluntary and involuntary transfer
20 of the trust beneficiary's interest.
21 (3) Except as provided in sections 7504, 7506, and 7507, the
22 trust beneficiary's interest in a trust may not be transferred in
23 violation of a valid spendthrift provision and trust property is
24 not subject to enforcement of a judgment until distributed
25 directly to the trust beneficiary.
26 (4) Notwithstanding the existence of a spendthrift provision
27 in the terms of the trust, a trustee is not liable to the
1 beneficiaries of the trust for making a distribution to which a
2 trust beneficiary is otherwise entitled pursuant to the direction
3 of the trust beneficiary.
4 Sec. 7503. (1) The following rules apply to section 7502(2):
5 (a) Upon the failure or insufficiency of money or property
6 out of which payment should be made, to the extent of the
7 insufficiency, a distribution of property from the trust that is
8 to be satisfied out of specified or identified property shall be
9 classed as a distribution to be satisfied out of the general
10 trust property not otherwise disposed of in the trust instrument.
11 (b) A distribution of property from the trust given for
12 valuable consideration shall abate with other distributions of
13 the same class only to the extent of the excess over the amount
14 of the value of the consideration until all others of the same
15 class are exhausted.
16 (c) Except as otherwise provided in this section,
17 distributions of property from the trust shall abate equally and
18 ratably and without preference or priority as between real and
19 personal property.
20 (d) If a specified or identified item of property that has
21 been designated for distribution in the trust instrument or that
22 is charged with a distribution is sold or taken by the trustee,
23 other beneficiaries shall contribute according to their
24 respective interests to the beneficiary whose property is sold or
25 taken, and before distribution, the trustee shall determine the
26 amounts of the respective contributions, which shall be paid or
27 withheld before distribution is made.
1 (2) Costs and expenses of trust administration, including
2 trustee compensation and attorney fees, shall be paid by the
3 trustee before and in preference to the administration costs and
4 expenses of the settlor's estate, an enforceable and timely filed
5 claim of a creditor of the settlor, and homestead, family, and
6 exempt property allowances. If, after paying costs and expenses
7 of trust administration, the trust property is insufficient to
8 pay in full all charges for which the trust is liable under
9 section 7501(1), the trustee shall make payment in the following
10 order of priority:
11 (a) Costs and expenses of administration of the decedent's
12 estate.
13 (b) Reasonable funeral and burial expenses.
14 (c) Homestead allowance.
15 (d) Family allowance.
16 (e) Exempt property.
17 (f) Debts and taxes with priority under federal law.
18 (g) Reasonable and necessary medical and hospital expenses
19 of the decedent's last illness, including compensation of a
20 person attending the decedent.
21 (h) Debts and taxes with priority under other laws of this
22 state.
23 (i) All other claims.
24 (3) A preference shall not be given in the payment of a
25 charge over another charge of the same class under subsection
26 (2), and a charge due and payable is not entitled to a preference
27 over a charge not due.
1 (4) If the decedent was the settlor of more than 1 trust
2 described in section 7501(1), the charges described in that
3 section are payable pro rata from those trusts, based on the
4 gross values of the respective trusts on the date of the
5 decedent's death. Each trustee is entitled to right of
6 contribution as necessary to effect the pro rata liability. The
7 allocation and contribution, however, are subject to provisions
8 in the trusts regarding the allocation and burden of the charges.
9 If there is conflict between the governing instruments regarding
10 the allocation and burden of the charges, the decedent's will
11 controls.
12 (1) The interest of a trust beneficiary that is subject to a
13 support provision may not be transferred and the trust property
14 is not subject to the enforcement of a judgment until income or
15 principal, or both, is distributed directly to the trust
16 beneficiary. After a distribution to a trust beneficiary whose
17 interest is subject to a support provision, the income and
18 principal distributed are subject to the enforcement of a
19 judgment only to the extent that the income or principal, or
20 both, is not necessary for the health, education, support, or
21 maintenance of the trust beneficiary.
22 (2) The use or enjoyment of trust property by a trust
23 beneficiary whose interest is subject to a support provision may
24 not be transferred and is not subject to the enforcement of a
25 judgment against the trust beneficiary.
26 (3) Subsections (1) and (2) do not apply under circumstances
27 described in section 7504, 7506, or 7507.
1 Sec. 7504. If there is no personal representative of the
2 settlor's estate to whom letters of administration have been
3 issued so that the publication and notice requirements of section
4 3801 have not been discharged, then each trustee of a trust
5 described in section 7501(1) must cause a notice to creditors to
6 be published and served in the same manner, with the same duties,
7 and with the same protection for the trustee and the attorney for
8 the trustee as described in section 3801 for a personal
9 representative. The notice must comply with an applicable court
10 rule and contain the name of the trust's deceased settlor; the
11 trust's name or other designation, if any; the date the trust was
12 established; the name and address of each trustee serving at the
13 time of or as a result of the settlor's death; and the name and
14 address of the trustee's attorney, if any. The notice must state
15 the date of publication.
16 (1) The interest of a trust beneficiary that is subject to a
17 spendthrift provision, a support provision, or both may be
18 reached in satisfaction of an enforceable claim against the trust
19 beneficiary by any of the following:
20 (a) A trust beneficiary's child or former spouse who has a
21 judgment or court order against the trust beneficiary for support
22 or maintenance.
23 (b) A judgment creditor who has provided services that
24 enhance, preserve, or protect a trust beneficiary's interest in
25 the trust.
26 (c) This state or the United States.
27 (2) The court shall order the trustee to satisfy all or part
1 of a judgment described in subsection (1) only out of all or part
2 of distributions of income or principal as they become due.
3 (3) Notwithstanding that the terms of the trust include a
4 spendthrift provision, this section does not apply to the
5 interest of a trust beneficiary that is subject to a
6 discretionary trust provision.
7 (4) As used in this section, "child" includes any person for
8 whom an order or judgment for child support has been entered in
9 this or another state.
10 Sec. 7505. (1) If notice to claimants is given by a trustee
11 as provided in section 7504, a claimant shall present a claim
12 against a trust described in section 7501(1) in either of the
13 following ways:
14 (a) The claimant may mail or deliver to the trustee a
15 written statement of the claim indicating its basis, the name and
16 address of the claimant, and the amount claimed. The claim is
17 considered presented on the trustee's receipt of the claim. If a
18 claim is not yet due, the date when it will become due must be
19 stated. If the claim is contingent or unliquidated, the nature of
20 the uncertainty must be stated. If the claim is secured, the
21 security must be described. Failure to describe correctly the
22 security, the nature of any uncertainty, and the due date of a
23 claim not yet due does not invalidate a claim's presentation.
24 (b) The claimant may commence a proceeding to obtain payment
25 of a claim against the trust in a court where the trustee is
26 subject to jurisdiction. The commencement of the proceeding must
27 occur within the time limit for presenting the claim.
1 Presentation of a claim is not required in regard to matters
2 claimed in proceedings against the trust or settlor that were
3 pending at the time of the settlor's death.
4 (2) If a personal representative is appointed for the
5 settlor's estate, presentation of a claim against the settlor's
6 estate must be made in the manner described in section 3804, and
7 such a presentation is sufficient to assert liability against a
8 trust described in section 7501(1) without an additional
9 presentation of the claim against the trustee. The transferee or
10 creditor of the beneficiary of a discretionary trust provision
11 does not have a right to any amount of trust income or principal
12 that may be distributed only in the exercise of the trustee's
13 discretion, and trust property is not subject to the enforcement
14 of a judgment until income or principal, or both, is distributed
15 directly to the trust beneficiary.
16 Sec. 7506. (1) If not barred earlier by another statute of
17 limitations, a claim against the settlor of a trust described in
18 section 7501(1) that arose at or before the settlor's death that
19 a person seeks to recover from the trust is barred against the
20 trust, each trustee of the trust, and a trust beneficiary, unless
21 presented within 1 of the following times:
22 (a) If notice is given in compliance either with section
23 3801 or section 7504, within 4 months after the date of
24 publication of notice to creditors.
25 (b) For a creditor known to the personal representative at
26 the time of publication or during the 4 months following
27 publication, or known to the trustee at or during such a time if
1 publication occurred under section 7504, within 28 days after the
2 subsequent sending of notice or 4 months after the date of
3 publication of notice to creditors, whichever is later.
4 (c) If the notice requirements of either section 3801 or
5 section 7504 are not met, within 3 years after the settlor's
6 death.
7 (2) This section does not affect or prevent any of the
8 following:
9 (a) A proceeding to enforce a mortgage, pledge, or other
10 lien upon property held in the trust.
11 (b) A proceeding to establish the settlor's or the trustee's
12 liability for which the settlor or the trustee is protected by
13 liability insurance to the limits of the insurance protection
14 only.
15 (c) Collection of compensation for services rendered and
16 reimbursement of expenses advanced by the trustee or by an
17 attorney, auditor, investment adviser, or other specialized agent
18 or assistant for the trustee.
19 (1) Whether or not the terms of a trust contain a
20 spendthrift provision, the following rules apply:
21 (a) During the lifetime of the settlor, the property of a
22 revocable trust is subject to claims of the settlor's creditors.
23 (b) After the death of a settlor, and subject to the
24 settlor's right to direct the source from which liabilities will
25 be paid, the property of a trust that at the settlor's death was
26 revocable by the settlor, either alone or in conjunction with
27 another person, is subject to expenses, claims, and allowances as
1 provided in section 7605.
2 (c) With respect to an irrevocable trust, a creditor or
3 assignee of the settlor may reach no more than the lesser of the
4 following:
5 (i) The claim of the creditor or assignee.
6 (ii) The maximum amount that can be distributed to or for the
7 settlor's benefit exclusive of sums to pay the settlor's taxes
8 during the settlor's lifetime.
9 (2) If a trust has more than 1 settlor, the amount a
10 creditor or assignee of a particular settlor may reach under
11 subsection (1)(c) shall not exceed the settlor's interest in the
12 portion of the trust attributable to that settlor's contribution.
13 (3) A trust beneficiary is not considered a settlor merely
14 because of a lapse, waiver, or release of a power of withdrawal
15 over the trust property.
16 (4) An individual who creates a trust shall not be
17 considered a settlor with regard to the individual's retained
18 beneficial interest in the trust that follows the termination of
19 the individual's spouse's prior beneficial interest in the trust
20 if all of the following apply:
21 (a) The individual creates, or has created, the trust for
22 the benefit of the individual's spouse.
23 (b) The trust is treated as qualified terminable interest
24 property under section 2523(f) of the internal revenue code, 26
25 USC 2523.
26 (c) The individual retains a beneficial interest in the
27 trust income, trust principal, or both, which beneficial interest
1 follows the termination of the individual's spouse's prior
2 beneficial interest in the trust.
3 Sec. 7507. If there is no personal representative appointed
4 for the settlor's estate and notice is given in accordance with
5 section 7504, the allowance or disallowance of a claim presented
6 in the manner described in section 7505(1) and within a time
7 period described in section 7506 is governed by the following
8 provisions:
9 (a) The trustee may deliver or mail a notice to the claimant
10 stating that the claim has been disallowed in whole or in part.
11 If, after allowing or disallowing a claim, the trustee changes a
12 decision concerning the claim, the trustee shall notify the
13 claimant. The trustee shall not change a decision disallowing a
14 claim if the time for the claimant to commence a proceeding for
15 allowance expires or if the time to commence a proceeding on the
16 claim expires and the claim has been barred. A claim that is
17 disallowed in whole or in part by the trustee is barred to the
18 extent not allowed unless the claimant commences a proceeding
19 against the trustee not later than 63 days after the mailing of
20 the notice of disallowance or partial allowance if the notice
21 warns the claimant of the impending bar. Failure by the trustee
22 to deliver or mail to a claimant notice of action on the claim
23 within 63 days after the time for the claim's presentation has
24 expired constitutes a notice of allowance.
25 (b) After allowing or disallowing a claim, the trustee may
26 change the allowance or disallowance as provided in this
27 subdivision. Before payment, the trustee may change the allowance
1 to a disallowance in whole or in part, but not after allowance by
2 a court order or judgment, or an order directing payment of the
3 claim. The trustee shall notify the claimant of the change to
4 disallowance, and the disallowed claim is then subject to bar as
5 provided in subdivision (a). The trustee may change a
6 disallowance to an allowance, in whole or in part, until it is
7 barred under subdivision (a). After a claim is barred, it may be
8 allowed and paid only if the trust is solvent and all whose
9 interests would be affected consent.
10 (c) Upon the trustee's or a claimant's commencement of a
11 proceeding, the court may allow in whole or in part a claim
12 properly presented in due time and not barred by subdivision (a).
13 (d) A judgment in a proceeding in another court against a
14 trustee to enforce a claim against a decedent's estate
15 constitutes an allowance of the claim.
16 (e) Unless otherwise provided in a judgment in another court
17 entered against the trustee, an allowed claim bears interest at a
18 rate determined under section 6013 of the revised judicature act
19 of 1961, MCL 600.6013, for the period commencing 63 days after
20 the time for original presentation of the claim has expired,
21 unless based on a contract that provides for interest, in which
22 case the claim bears interest in accordance with the contract.
23 (1) Whether or not a trust contains a spendthrift provision,
24 a creditor or assignee of a trust beneficiary may reach a
25 mandatory distribution of income or principal, including a
26 distribution upon termination of the trust, if the trustee has
27 not made the distribution to the trust beneficiary within a
1 reasonable time after the designated distribution date.
2 (2) As used in this section, "mandatory distribution" means
3 a distribution of income or principal that the trustee is
4 required to make to a trust beneficiary under the terms of the
5 trust, including a distribution upon termination of the trust.
6 Mandatory distribution does not include a distribution subject to
7 the exercise of the trustee's discretion even if either of the
8 following applies:
9 (a) The direction is expressed in the form of a standard of
10 distribution.
11 (b) The terms of the trust authorizing a distribution use
12 language of discretion and language of direction.
13 Sec. 7508. (1) Upon the expiration of 4 months after the
14 date of the publication of the notice to creditors, the trustee
15 shall proceed to pay the claims allowed against the trust in the
16 order of priority prescribed in section 7503(2)(f) to (g), after
17 making provision for costs and expenses of trust administration,
18 for reasonable funeral and burial expenses, for each claim
19 already presented that is not yet allowed or whose allowance is
20 appealed, and for each unbarred claim that may yet be presented.
21 A claimant whose claim is allowed, but not paid as provided in
22 this section, may petition the court to secure an order directing
23 the trustee to pay the claim to the extent that money of the
24 trust is available for the payment.
25 (2) At any time, the trustee may pay a claim that is not
26 barred, with or without formal presentation, but is individually
27 liable to another claimant whose claim is allowed and who is
1 injured by the payment if either of the following occurs:
2 (a) Payment is made before the expiration of the time limit
3 stated in subsection (1) and the trustee fails to require the
4 payee to give adequate security for the refund of any of the
5 payment necessary to pay another claimant.
6 (b) Payment is made, due to the negligence or willful fault
7 of the trustee, in a manner that deprives the injured claimant of
8 priority.
9 (3) If a claim is allowed, but the whereabouts of the
10 claimant is unknown at the time the trustee attempts to pay the
11 claim, upon petition by the trustee and after notice the court
12 considers advisable, the court may disallow the claim. If the
13 court disallows a claim under this subsection, the claim is
14 barred. Trust
property is not subject to personal obligations of
15 the trustee, even if the trustee becomes insolvent or bankrupt.
16 PART 6
17 Sec. 7601. The capacity required to create, amend, revoke,
18 or add property to a revocable trust, or to direct the actions of
19 the trustee of a revocable trust, is the same as that required to
20 make a will.
21 Sec. 7602. (1) Unless the terms of a trust expressly provide
22 that the trust is irrevocable, the settlor may revoke or amend
23 the trust. This subsection does not apply to a trust created
24 under a trust instrument executed before the effective date of
25 the amendatory act that added this section.
26 (2) If a revocable trust is created or funded by more than 1
27 settlor, all of the following apply:
1 (a) To the extent that the trust consists of community
2 property, the trust may be revoked by either spouse acting alone
3 but may be amended only by joint action of both spouses.
4 (b) To the extent that the trust consists of property other
5 than community property, each settlor may revoke or amend the
6 trust with regard to the portion of the trust property
7 attributable to that settlor's contribution.
8 (c) Upon notification by the settlor of the revocation or
9 amendment of the trust by fewer than all of the settlors, the
10 trustee shall promptly notify the other settlors of the
11 revocation or amendment.
12 (3) The settlor may revoke or amend a revocable trust in any
13 of the following ways:
14 (a) By substantially complying with a method provided in the
15 terms of the trust.
16 (b) If the terms of the trust do not provide a method or the
17 method provided in the terms is not expressly made exclusive, in
18 either of the following ways:
19 (i) If the trust is created pursuant to a writing, by another
20 writing manifesting clear and convincing evidence of the
21 settlor's intent to revoke or amend the trust.
22 (ii) If the trust is an oral trust, by any method manifesting
23 clear and convincing evidence of the settlor's intent.
24 (4) Upon revocation of a revocable trust, the trustee shall
25 deliver the trust property as the settlor directs.
26 (5) A settlor's powers with respect to revocation,
27 amendment, or distribution of trust property may be exercised by
1 an agent under a durable power of attorney only to the extent
2 expressly authorized by the terms of the trust or the power of
3 attorney.
4 (6) A conservator or plenary guardian of the settlor may
5 exercise a settlor's powers with respect to revocation,
6 amendment, or distribution of trust property only to the extent
7 expressly authorized by the terms of the trust and with the
8 approval of the court supervising the conservatorship or
9 guardianship.
10 (7) A trustee who does not know that a trust has been
11 revoked or amended is not liable to the settlor or the settlor's
12 successors in interest, including the trust beneficiaries, for
13 distributions made and other actions taken on the assumption that
14 the trust had not been amended or revoked.
15 Sec. 7603. (1) Subject to subsection (2), while a trust is
16 revocable, rights of the trust beneficiaries are subject to the
17 control of, and the duties of the trustee are owed exclusively
18 to, the settlor.
19 (2) If the trustee reasonably believes that the settlor of a
20 revocable trust is an incapacitated individual, the trustee shall
21 keep the settlor's designated agent or, if there is no designated
22 agent or if the sole agent is a trustee, each beneficiary who, if
23 the settlor were then deceased, would be a qualified trust
24 beneficiary informed of the existence of the trust and reasonably
25 informed of its administration.
26 (3) While a trust is not revocable and while a person has a
27 currently exercisable power of withdrawal over the entire
1 principal of the trust, the duties of a trustee are owed
2 exclusively to the person.
3 (4) A person who succeeds to the position of trustee of a
4 revocable trust upon the death, resignation, or incapacity of a
5 trustee who was also the trust settlor is not liable for an
6 action of the settlor while the settlor was serving as trustee.
7 (5) With respect to a predecessor trustee who was also the
8 settlor, the successor trustee has no responsibility to
9 investigate a transaction by the predecessor trustee, to review
10 an account, to review an action of the predecessor trustee, or to
11 take action for a breach of trust by the predecessor trustee.
12 Sec. 7604. (1) A person may commence a judicial proceeding
13 to contest the validity of a trust that was revocable at the
14 settlor's death within the earlier of the following:
15 (a) Two years after the settlor's death.
16 (b) Six months after the trustee sent the person a notice
17 informing the person of all of the following:
18 (i) The trust's existence.
19 (ii) The date of the trust instrument.
20 (iii) The date of any amendments known to the trustee.
21 (iv) A copy of relevant portions of the terms of the trust
22 that describe or affect the person's interest in the trust, if
23 any.
24 (v) The settlor's name.
25 (vi) The trustee's name and address.
26 (vii) The time allowed for commencing a proceeding.
27 (2) Upon the death of the settlor of a trust that was
1 revocable at the settlor's death, the trustee may proceed to
2 distribute the trust property in accordance with the terms of the
3 trust. The trustee is not subject to liability for doing so
4 unless either of the following applies:
5 (a) The trustee knows of a pending judicial proceeding
6 contesting the validity of the trust.
7 (b) A potential contestant has notified the trustee in
8 writing of a possible judicial proceeding to contest the trust
9 and a judicial proceeding is commenced within 63 days after the
10 contestant sent the notification.
11 (3) A beneficiary of a trust that is determined to have been
12 invalid is liable to return any distribution received.
13 Sec. 7605. (1) The property of a trust over which the
14 settlor has the right without regard to the settlor's mental
15 capacity, at his or her death, either alone or in conjunction
16 with another person, to revoke the trust and revest principal in
17 himself or herself is subject to all of the following, but only
18 to the extent that the settlor's property subject to probate
19 administration is insufficient to satisfy the following expenses,
20 claims, and allowances:
21 (a) The administration expenses of the settlor's estate.
22 (b) An enforceable and timely presented claim of a creditor
23 of the settlor, including a claim for the settlor's funeral and
24 burial expenses.
25 (c) Homestead, family, and exempt property allowances.
26 (2) A trust established as part of, and all payments from,
27 an employee annuity described in section 403 of the internal
1 revenue code, 26 USC 403, an individual retirement account
2 described in section 408 of the internal revenue code, 26 USC
3 408, a Keogh, or HR-10, plan, or a retirement or other plan that
4 is qualified under section 401 of the internal revenue code, 26
5 USC 401, shall not be considered to be a trust described in
6 subsection (1).
7 (3) This section does not impair a right that an individual
8 has under a qualified domestic relations order as that term is
9 defined in section 414(p) of the internal revenue code, 26 USC
10 414.
11 (4) For purposes of this section, property held or received
12 by a trust to the extent that the property would not have been
13 subject to a claim against the settlor's estate if it had been
14 paid directly to a trust created under the settlor's will or
15 other than to the settlor's estate, or property received from a
16 trust other than a trust described in this section, shall not be
17 considered trust property available for the payment of the
18 administration expenses, a claim against the settlor's estate, or
19 an allowance described in subsection (1).
20 Sec. 7606. (1) A trustee of a trust described in section
21 7605(1) shall pay to the personal representative of the settlor's
22 estate the amount that the personal representative certifies in
23 writing to the trustee is required to pay the administration
24 expenses of the settlor's estate; an enforceable and timely
25 presented claim of a creditor of the settlor, including a claim
26 for the settlor's funeral and burial expenses; and homestead,
27 family, and exempt property allowances. The trustee may rely on
1 the certificate of the personal representative without liability
2 to a trust beneficiary or another party. If a personal
3 representative is not appointed for the settlor's estate, the
4 trustee shall pay directly to the creditor an enforceable and
5 timely served claim of a creditor of the settlor, including a
6 claim for the settlor's funeral and burial expenses. If a
7 personal representative is not appointed for the settlor's estate
8 within 4 months after the date of the publication of notice to
9 creditors, a trust described in section 7605(1) is not liable for
10 payment of homestead, family, or exempt property allowances. A
11 payment made by a trustee is subject to this section, but the
12 payment shall be made exclusively out of property, or the
13 proceeds of property, that is includable in the settlor's gross
14 estate for federal estate tax purposes, other than assets
15 described in section 7605(2) to (4).
16 (2) Subject to section 7607, unless a settlor provides in
17 his or her will or, in the absence of such a provision,
18 designates in the trust the money or property passing under a
19 trust to be used as described in section 7605(1), the
20 administration expenses of the settlor's estate; an enforceable
21 and timely filed claim of a creditor of the settlor, including a
22 claim for the settlor's funeral and burial expenses; or
23 homestead, family, and exempt property allowances, to be paid in
24 accordance with subsection (1), shall be paid from the property
25 of the trust in the following order:
26 (a) Property of the trust residue remaining after all
27 distributions that are to be satisfied by reference to a specific
1 property or type of property, fund, money, or statutory amount.
2 (b) Property that is not to be distributed out of specified
3 or identified property or a specified or identified item of
4 property.
5 (c) Property that is to be distributed out of specified or
6 identified property or a specified or identified item of
7 property.
8 Sec. 7607. (1) The following rules apply to section 7606(2):
9 (a) Upon the failure or insufficiency of money or property
10 out of which payment should be made, to the extent of the
11 insufficiency, a distribution of property from the trust that is
12 to be satisfied out of specified or identified property shall be
13 classed as a distribution to be satisfied out of the general
14 trust property not otherwise disposed of in the terms of the
15 trust.
16 (b) A distribution of property from the trust given for
17 valuable consideration abates with other distributions of the
18 same class only to the extent of the excess over the amount of
19 the value of the consideration until all others of the same class
20 are exhausted.
21 (c) Except as otherwise provided in this section,
22 distributions of property from the trust abate equally and
23 ratably and without preference or priority as between real and
24 personal property.
25 (d) If a specified or identified item of property that has
26 been designated for distribution in the terms of the trust or
27 that is charged with a distribution is sold or taken by the
1 trustee, other beneficiaries shall contribute according to their
2 respective interests to the trust beneficiary whose property is
3 sold or taken, and, before distribution, the trustee shall
4 determine the amounts of the respective contributions, which
5 shall be paid or withheld before distribution is made.
6 (2) Costs and expenses of trust administration, including
7 trustee compensation and attorney fees, shall be paid by the
8 trustee before and in preference to the administration costs and
9 expenses of the settlor's estate, an enforceable and timely filed
10 claim of a creditor of the settlor, and homestead, family, and
11 exempt property allowances. If, after paying costs and expenses
12 of trust administration, the trust property is insufficient to
13 pay in full all charges for which the trust is liable under
14 section 7605(1), the trustee shall make payment in the following
15 order of priority:
16 (a) Costs and expenses of administration of the decedent's
17 estate.
18 (b) Reasonable funeral and burial expenses.
19 (c) Homestead allowance.
20 (d) Family allowance.
21 (e) Exempt property.
22 (f) Debts and taxes with priority under federal law.
23 (g) Reasonable and necessary medical and hospital expenses
24 of the decedent's last illness, including compensation of a
25 person attending the decedent.
26 (h) Debts and taxes with priority under other laws of this
27 state.
1 (i) All other claims.
2 (3) A preference shall not be given in the payment of a
3 charge over another charge of the same class under subsection
4 (2), and a charge due and payable is not entitled to a preference
5 over a charge not due.
6 (4) If the decedent was the settlor of more than 1 trust
7 described in section 7605(1), the charges described in that
8 section are payable pro rata from those trusts based on the gross
9 values of the respective trusts on the date of the decedent's
10 death. Each trustee is entitled to right of contribution as
11 necessary to effect the pro rata liability. The allocation and
12 contribution, however, are subject to provisions in the trusts
13 regarding the allocation and burden of the charges. If there is
14 conflict between the terms of the trusts regarding the allocation
15 and burden of the charges, the decedent's will controls.
16 Sec. 7608. If there is no personal representative of the
17 settlor's estate to whom letters of administration have been
18 issued so that the publication and notice requirements of section
19 3801 have not been discharged, each trustee of a trust described
20 in section 7605(1) shall publish and serve a notice to creditors
21 in the same manner, with the same duties, and with the same
22 protection for the trustee and the attorney for the trustee as
23 described in section 3801 for a personal representative. The
24 notice shall comply with applicable court rules and contain the
25 name of the trust's deceased settlor; the trust's name or other
26 designation, if any; the date the trust was established; the name
27 and address of each trustee serving at the time of or as a result
1 of the settlor's death; and the name and address of the trustee's
2 attorney, if any. The notice shall state the date of publication.
3 Sec. 7609. (1) Subject to section 7611, if notice to
4 claimants is given by a trustee as provided in section 7608, a
5 claimant shall present a claim against a trust described in
6 section 7605(1) in either of the following ways:
7 (a) The claimant may mail or deliver to the trustee a
8 written statement of the claim indicating its basis, the name and
9 address of the claimant, and the amount claimed. The claim is
10 considered presented on the trustee's receipt of the claim. If a
11 claim is not yet due, the date when it will become due shall be
12 stated. If the claim is contingent or unliquidated, the nature of
13 the uncertainty shall be stated. If the claim is secured, the
14 security shall be described. Failure to describe correctly the
15 security, the nature of any uncertainty, and the due date of a
16 claim not yet due does not invalidate a claim's presentation.
17 (b) The claimant may commence a proceeding to obtain payment
18 of a claim against the trust in a court where the trustee is
19 subject to jurisdiction. The commencement of the proceeding shall
20 occur within the time limit for presenting the claim.
21 Presentation of a claim is not required in regard to matters
22 claimed in proceedings against the trust or settlor that were
23 pending at the time of the settlor's death.
24 (2) If a personal representative is appointed for the
25 settlor's estate, presentation of a claim against the settlor's
26 estate shall be made in the manner described in section 3804, and
27 such a presentation is sufficient to assert liability against a
1 trust described in section 7605(1) without an additional
2 presentation of the claim against the trustee.
3 Sec. 7610. (1) Subject to section 7611, if not barred
4 earlier by another statute of limitations, a claim against the
5 settlor of a trust described in section 7606(1) that arose at or
6 before the settlor's death that a person seeks to recover from
7 the trust is barred against the trust, each trustee of the trust,
8 and a trust beneficiary, unless presented within 1 of the
9 following times:
10 (a) If notice is given in compliance either with section
11 3801 or section 7608, within 4 months after the date of
12 publication of notice to creditors.
13 (b) For a creditor known to the personal representative at
14 the time of publication or during the 4 months following
15 publication, or known to the trustee at or during such a time if
16 publication occurred under section 7608, within 28 days after the
17 subsequent sending of notice or 4 months after the date of
18 publication of notice to creditors, whichever is later.
19 (c) If the notice requirements of either section 3801 or
20 section 7608 are not met, within 3 years after the settlor's
21 death.
22 (2) This section does not affect or prevent any of the
23 following:
24 (a) A proceeding to enforce a mortgage, pledge, or other
25 lien upon property held in the trust.
26 (b) A proceeding to establish the settlor's or the trustee's
27 liability for which the settlor or the trustee is protected by
1 liability insurance to the limits of the insurance protection
2 only.
3 (c) Collection of compensation for services rendered and
4 reimbursement of expenses advanced by the trustee or by an
5 attorney, auditor, investment adviser, or other specialized agent
6 or assistant for the trustee.
7 Sec. 7611. If there is no personal representative appointed
8 for the settlor's estate and notice is given in accordance with
9 section 7608, the allowance or disallowance of a claim presented
10 in the manner described in section 7609(1) and within a time
11 period described in section 7610 is governed by the following
12 provisions:
13 (a) The trustee may deliver or mail a notice to the claimant
14 stating that the claim has been disallowed in whole or in part.
15 If, after allowing or disallowing a claim, the trustee changes a
16 decision concerning the claim, the trustee shall notify the
17 claimant. The trustee shall not change a decision disallowing a
18 claim if the time for the claimant to commence a proceeding for
19 allowance expires or if the time to commence a proceeding on the
20 claim expires and the claim has been barred. A claim that is
21 disallowed in whole or in part by the trustee is barred to the
22 extent not allowed unless the claimant commences a proceeding
23 against the trustee not later than 63 days after the mailing of
24 the notice of disallowance or partial allowance if the notice
25 warns the claimant of the impending bar. Failure by the trustee
26 to deliver or mail to a claimant notice of action on the claim
27 within 63 days after the time for the claim's presentation has
1 expired constitutes a notice of allowance.
2 (b) After allowing or disallowing a claim, the trustee may
3 change the allowance or disallowance as provided in this
4 subdivision. Before payment, the trustee may change the allowance
5 to a disallowance in whole or in part, but not after allowance by
6 a court order or judgment, or an order directing payment of the
7 claim. The trustee shall notify the claimant of the change to
8 disallowance, and the disallowed claim is then subject to bar as
9 provided in subdivision (a). The trustee may change a
10 disallowance to an allowance, in whole or in part, until it is
11 barred under subdivision (a). After a claim is barred, it may be
12 allowed and paid only if the trust is solvent and all whose
13 interests would be affected consent.
14 (c) Upon the trustee's or a claimant's commencement of a
15 proceeding, the court may allow in whole or in part a claim
16 properly presented in due time and not barred by subdivision (a).
17 (d) A judgment in a proceeding in another court against a
18 trustee to enforce a claim against a decedent's estate
19 constitutes an allowance of the claim.
20 (e) Unless otherwise provided in a judgment in another court
21 entered against the trustee, an allowed claim bears interest at a
22 rate determined under section 6013 of the revised judicature act
23 of 1961, MCL 600.6013, for the period commencing 63 days after
24 the time for original presentation of the claim has expired,
25 unless based on a contract that provides for interest, in which
26 case the claim bears interest in accordance with the contract.
27 Sec. 7612. (1) Upon the expiration of 4 months after the
1 date of the publication of the notice to creditors, the trustee
2 shall proceed to pay the claims allowed against the trust in the
3 order of priority prescribed in section 7607(2)(f) to (i), after
4 making provision for costs and expenses of trust administration,
5 for reasonable funeral and burial expenses, for each claim
6 already presented that is not yet allowed or whose allowance is
7 appealed, and for each unbarred claim that may yet be presented.
8 A claimant whose claim is allowed, but not paid as provided in
9 this section, may petition the court to secure an order directing
10 the trustee to pay the claim to the extent that money of the
11 trust is available for the payment.
12 (2) At any time, the trustee may pay a claim that is not
13 barred, with or without formal presentation, but is individually
14 liable to another claimant whose claim is allowed and who is
15 injured by the payment if either of the following occurs:
16 (a) Payment is made before the expiration of the time limit
17 stated in subsection (1) and the trustee fails to require the
18 payee to give adequate security for the refund of any of the
19 payment necessary to pay another claimant.
20 (b) Payment is made, due to the negligence or willful fault
21 of the trustee, in a manner that deprives the injured claimant of
22 priority.
23 (3) If a claim is allowed but the whereabouts of the
24 claimant is unknown at the time the trustee attempts to pay the
25 claim, upon petition by the trustee and after notice the court
26 considers advisable, the court may disallow the claim. If the
27 court disallows a claim under this subsection, the claim is
1 barred.
2 Sec. 7613. Payment of a secured claim shall be upon the
3 basis of the amount allowed if the creditor surrenders the
4 security. Otherwise, payment shall be upon the basis of 1 of the
5 following:
6 (a) If the creditor exhausts the security before receiving
7 payment, upon the claim amount allowed less the fair value of the
8 security.
9 (b) If the creditor does not have the right to exhaust the
10 security or does not do so, upon the claim amount allowed less
11 the value of the security as determined by converting it into
12 money according to the terms of the agreement under which the
13 security is delivered to the creditor, or as determined by the
14 creditor and trustee by agreement, arbitration, compromise, or
15 litigation.
16 Sec. 7614. A claim that will become due at a future time, a
17 contingent claim, or an unliquidated claim is governed by the
18 following:
19 (a) If a claim becomes due or certain before the
20 distribution of the trust, and if the claim is allowed or
21 established by a proceeding, the claim shall be paid in the same
22 manner as presently due and absolute claims of the same class.
23 (b) For a claim not covered by subdivision (a), the trustee
24 or, on petition of the trustee or the claimant in a proceeding
25 for the purpose, the court may provide for payment as follows:
26 (i) If the claimant consents, the claimant may be paid the
27 present or agreed value of the claim, taking any uncertainty into
1 account.
2 (ii) Arrangement for future payment, or possible payment, on
3 the happening of the contingency or on liquidation may be made by
4 creating a trust, giving a mortgage, obtaining a bond or security
5 from a distributee, or otherwise.
6 Sec. 7615. In allowing a claim, the trustee may deduct a
7 counterclaim that the trustee has against the claimant. In
8 determining a claim against a trust, the court shall reduce the
9 amount allowed by the amount of a counterclaim and, if the total
10 counterclaims exceed the claim, render a judgment against the
11 claimant in the amount of the excess. A counterclaim, liquidated
12 or unliquidated, may arise from a transaction other than that
13 upon which the claim is based. A counterclaim may give rise to
14 relief exceeding in amount or different in kind from that sought
15 in the claim.
16 PART 7
17 Sec. 7701. (1) Except as otherwise provided in subsection
18 (3), a person designated as trustee accepts the trusteeship by
19 doing either of the following:
20 (a) Substantially complying with a method of acceptance
21 provided in the terms of the trust.
22 (b) If the terms of the trust do not provide a method or the
23 method provided in the terms is not expressly made exclusive,
24 accepting delivery of the trust property, exercising powers or
25 performing duties as trustee, or otherwise indicating acceptance
26 of the trusteeship.
27 (2) A person designated as trustee who has not yet accepted
1 the trusteeship may reject the trusteeship. A designated trustee
2 who does not accept the trusteeship within a reasonable time
3 after knowing of the designation is deemed to have rejected the
4 trusteeship.
5 (3) A person designated as trustee, without accepting the
6 trusteeship, may do all of the following:
7 (a) Act to preserve the trust property if, within a
8 reasonable time after acting, the person sends a rejection of the
9 trusteeship to the settlor or, if the settlor is dead or lacks
10 capacity, to a qualified trust beneficiary.
11 (b) Exercise all powers set forth under section 7818(1)(a).
12 (c) Inspect or investigate trust property to determine
13 potential liability under other law or for any other purpose.
14 Sec. 7702. (1) A trustee shall give bond to secure
15 performance of the trustee's duties only if the court finds that
16 a bond is needed to protect the interests of the trust
17 beneficiaries or is required by the terms of the trust and the
18 court has not dispensed with the requirement.
19 (2) The court may specify the amount of a bond, its
20 liabilities, and whether sureties are necessary. The court may
21 modify or terminate a bond at any time.
22 (3) A financial institution qualified to do trust business
23 in this state need not give bond, even if required by the terms
24 of the trust.
25 Sec. 7703. (1) Cotrustees shall act by majority decision.
26 (2) If a vacancy occurs in a cotrusteeship, the remaining
27 cotrustee or cotrustees may act for the trust.
1 (3) A cotrustee shall participate in the performance of a
2 trustee's function unless the cotrustee is unavailable to perform
3 the function because of absence, illness, disqualification under
4 other law, or other temporary incapacity or the cotrustee has
5 properly delegated the performance of the function to another
6 trustee.
7 (4) If prompt action is necessary to avoid injury to the
8 trust property, the remaining cotrustee or a majority of the
9 remaining cotrustees may act for the trust if either of the
10 following applies:
11 (a) A cotrustee is unavailable to perform duties because of
12 absence, illness, disqualification under other law, or other
13 temporary incapacity.
14 (b) A cotrustee who is available fails or refuses to
15 participate in the administration of the trust following notice
16 from the remaining cotrustee or cotrustees.
17 (5) By agreement of the trustees, a trustee may delegate to
18 a cotrustee 1 or both of the following:
19 (a) Any power that is permitted to be delegated pursuant to
20 section 7817(v) to an agent who is not a trustee.
21 (b) Any power that can only be performed by a trustee, if
22 notice of the delegation is provided to the qualified trust
23 beneficiaries within 28 days.
24 (6) Unless a delegation under subsection (5) was
25 irrevocable, a trustee may revoke the delegation previously made.
26 A revocation under this subsection shall be in writing and shall
27 be given to all of the remaining cotrustees. If notice of the
1 delegation was required to be provided to the qualified trust
2 beneficiaries, notice of the revocation shall be given to the
3 qualified trust beneficiaries within 28 days after the
4 revocation.
5 (7) If 2 or more trustees own securities, their acts with
6 respect to voting have 1 of the following effects:
7 (a) If only 1 trustee votes, in person or by proxy, that
8 trustee's act binds all of the trustees.
9 (b) If more than 1 trustee votes, in person or by proxy, the
10 act of the majority so voting binds all of the trustees.
11 (c) If more than 1 trustee votes, in person or by proxy, but
12 the vote is evenly split on a particular matter, each faction is
13 entitled to vote the securities proportionately.
14 (8) A trustee is not liable for the action or omission of a
15 cotrustee if all of the following apply:
16 (a) The trustee is not unavailable to perform a trustee's
17 function because of absence, illness, disqualification under
18 other law, or other incapacity or has not properly delegated the
19 performance of the function to a cotrustee.
20 (b) The trustee is aware of but does not join in the action
21 or omission of the cotrustee.
22 (c) The trustee dissents in writing to each cotrustee at or
23 before the time of the action or omission.
24 (9) A trustee who is not aware of an action by a cotrustee
25 is not liable for that action unless the trustee should have
26 known that the action would be taken and, if the trustee had
27 known, would have had an affirmative duty to take action to
1 prevent the action.
2 (10) A dissenting trustee who joins in an action at the
3 direction of the majority of the trustees and who notified any
4 cotrustee in writing of the dissent at or before the time of the
5 action is not liable for the action.
6 Sec. 7704. (1) A vacancy in a trusteeship occurs if 1 or
7 more of the following occur:
8 (a) A person designated as trustee rejects the trusteeship.
9 (b) A person designated as trustee cannot be identified or
10 does not exist.
11 (c) A trustee resigns.
12 (d) A trustee is disqualified or removed.
13 (e) A trustee dies.
14 (f) A guardian or conservator is appointed for an individual
15 serving as trustee.
16 (2) If 1 or more cotrustees remain in office, a vacancy in a
17 trusteeship need not be filled. A vacancy in a trusteeship shall
18 be filled if the trust has no remaining trustee.
19 (3) If a vacancy in a trusteeship of a noncharitable trust
20 is to be filled, the vacancy shall be filled in the following
21 order of priority:
22 (a) In the manner designated by the terms of the trust.
23 (b) By a person appointed by the court.
24 (4) If a vacancy in a trusteeship of a charitable trust is
25 to be filled, the vacancy shall be filled in the following order
26 of priority:
27 (a) In the manner designated by the terms of the trust.
1 (b) By a person selected by the charitable organizations
2 expressly designated to receive distributions under the terms of
3 the trust if the attorney general concurs in the selection.
4 (c) By a person appointed by the court.
5 (5) Whether or not a vacancy in a trusteeship exists or is
6 required to be filled, the court may appoint an additional
7 trustee or special fiduciary upon the showing of good cause.
8 Sec. 7705. (1) A trustee may resign in either of the
9 following circumstances:
10 (a) Upon at least 28 days' notice to the qualified trust
11 beneficiaries, the holders of powers of appointment, and all
12 cotrustees.
13 (b) With the approval of the court.
14 (2) In approving a resignation, the court may issue orders
15 and impose conditions reasonably necessary for the protection of
16 the trust property.
17 (3) Any liability of a resigning trustee or of any sureties
18 on the trustee's bond for acts or omissions of the trustee is not
19 discharged or affected by the trustee's resignation.
20 Sec. 7706. (1) The settlor, a cotrustee, or a qualified
21 trust beneficiary may request the court to remove a trustee, or a
22 trustee may be removed by the court on its own initiative.
23 (2) The court may remove a trustee if 1 or more of the
24 following occur:
25 (a) The trustee commits a serious breach of trust.
26 (b) Lack of cooperation among cotrustees substantially
27 impairs the administration of the trust.
1 (c) Because of unfitness, unwillingness, or persistent
2 failure of the trustee to administer the trust effectively, the
3 court determines that removal of the trustee best serves the
4 purposes of the trust.
5 (d) There has been a substantial change of circumstances,
6 the court finds that removal of the trustee best serves the
7 interests of the trust beneficiaries and is not inconsistent with
8 a material purpose of the trust, and a suitable cotrustee or
9 successor trustee is available.
10 (3) Pending a final decision on a request to remove a
11 trustee, or in lieu of or in addition to removing a trustee, to
12 the extent it is not inconsistent with a material purpose of the
13 trust, the court may order any appropriate relief under section
14 7901(2) that is necessary to protect the trust property or the
15 interests of the trust beneficiaries.
16 Sec. 7707. (1) Unless a cotrustee remains in office or the
17 court otherwise orders, and until the trust property is delivered
18 to a successor trustee or other person entitled to it, a trustee
19 who has resigned or been removed has the duties of a trustee and
20 the powers necessary to protect the trust property.
21 (2) A trustee who has resigned or been removed shall proceed
22 expeditiously to deliver the trust property in the trustee's
23 possession to the cotrustee, successor trustee, or other person
24 entitled to it.
25 Sec. 7708. (1) If the terms of a trust do not specify the
26 trustee's compensation, a trustee is entitled to compensation
27 that is reasonable under the circumstances.
1 (2) If the terms of a trust specify the trustee's
2 compensation, the trustee is entitled to be compensated as
3 specified, but the court may allow more or less compensation if
4 either of the following apply:
5 (a) The duties of the trustee are substantially different
6 from those contemplated when the trust was created.
7 (b) The compensation specified by the terms of the trust
8 would be unreasonably low or high.
9 Sec. 7709. (1) A trustee is entitled to be reimbursed out of
10 the trust property, with interest as appropriate, for both of the
11 following:
12 (a) Expenses that were properly incurred in the
13 administration of the trust.
14 (b) To the extent necessary to prevent unjust enrichment of
15 the trust, expenses that were not properly incurred in the
16 administration of the trust.
17 (2) An advance by the trustee of money for the protection of
18 the trust gives rise to a lien against trust property to secure
19 reimbursement with reasonable interest.
20 (3) Advances and reimbursement under this section are not
21 considered self-dealing by the trustee and are not a breach of
22 the trustee's fiduciary duty.
23 PART 8
24 Sec. 7801. Upon acceptance of a trusteeship, the trustee
25 shall administer the trust in good faith, expeditiously, in
26 accordance with its terms and purposes, for the benefit of the
27 trust beneficiaries, and in accordance with this article.
1 Sec. 7802. (1) A trustee shall administer the trust solely
2 in the interests of the trust beneficiaries.
3 (2) Subject to the rights of persons dealing with or
4 assisting the trustee as provided in section 7912, a sale,
5 encumbrance, or other transaction involving the investment or
6 management of trust property entered into by the trustee for the
7 trustee's own personal account or which is otherwise affected by
8 a substantial conflict between the trustee's fiduciary and
9 personal interests is voidable by a trust beneficiary affected by
10 the transaction unless 1 or more of the following apply:
11 (a) The transaction was authorized by the terms of the
12 trust.
13 (b) The transaction was approved by the court after notice
14 to the interested persons.
15 (c) The trust beneficiary did not commence a judicial
16 proceeding within the time allowed by section 7905.
17 (d) The trust beneficiary consented to the trustee's
18 conduct, ratified the transaction, or released the trustee in
19 compliance with section 7909.
20 (e) The transaction involves a contract entered into or
21 claim acquired by the trustee before the person became or
22 contemplated becoming trustee.
23 (f) The transaction is otherwise permitted by statute.
24 (3) A sale, encumbrance, or other transaction involving the
25 investment or management of trust property is presumed to be
26 affected by a conflict between personal and fiduciary interests
27 if it is entered into by the trustee with any of the following:
1 (a) The trustee's spouse.
2 (b) The trustee's descendant, sibling, or parent or the
3 spouse of a descendant, sibling, or parent.
4 (c) An agent or attorney of the trustee.
5 (d) A corporation or other person or enterprise in which the
6 trustee, or a person that owns a significant interest in the
7 trustee, has an interest that might affect the trustee's best
8 judgment.
9 (4) A transaction that does not concern trust property in
10 which the trustee engages in the trustee's individual capacity
11 involves a conflict between personal and fiduciary interests if
12 the transaction concerns an opportunity properly belonging to the
13 trust.
14 (5) An investment by a trustee in securities of an
15 investment company or investment trust to which the trustee, or
16 its affiliate, provides services in a capacity other than as
17 trustee is not presumed to be affected by a conflict between
18 personal and fiduciary interests if the investment otherwise
19 complies with the Michigan prudent investor rule. In addition to
20 its compensation for acting as trustee, the trustee may be
21 compensated by the investment company or investment trust for
22 providing those services out of fees charged to the trust. If the
23 trustee receives compensation from the investment company or
24 investment trust for providing investment advisory or investment
25 management services, the trustee shall at least annually notify
26 the persons entitled under section 7814 to receive a copy of the
27 trustee's annual report of the rate and method by which that
1 compensation was determined.
2 (6) In voting shares of stock or in exercising powers of
3 control over similar interests in other forms of enterprise, the
4 trustee shall act in the best interests of the trust
5 beneficiaries. If the trust is the sole owner of a corporation or
6 other form of enterprise, the trustee shall elect or appoint
7 directors or other managers to manage the corporation or
8 enterprise in the best interests of the trust beneficiaries.
9 (7) This section does not preclude the following
10 transactions, if fair to the trust beneficiaries:
11 (a) An agreement between a trustee and a trust beneficiary
12 relating to the appointment or compensation of the trustee.
13 (b) Payment of reasonable compensation to the trustee.
14 (c) A transaction between a trust and another trust,
15 decedent's estate, or conservatorship of which the trustee is a
16 fiduciary or in which a trust beneficiary has an interest.
17 (d) A deposit of trust money in a financial institution
18 operated by or affiliated with the trustee.
19 (e) An advance by the trustee of money for the protection of
20 the trust.
21 Sec. 7803. The trustee shall act as would a prudent person
22 in dealing with the property of another, including following the
23 standards of the Michigan prudent investor rule. If the trustee
24 has special skills or is named trustee on the basis of
25 representation of special skills or expertise, the trustee is
26 under a duty to use those skills.
27 Sec. 7808. While a trust is revocable, the trustee may
1 follow a direction of the settlor that is contrary to the terms
2 of the trust.
3 Sec. 7809. (1) A trust protector, other than a trust
4 protector who is a beneficiary of the trust, is subject to all of
5 the following:
6 (a) Except as provided in subsection (2), the trust
7 protector is a fiduciary to the extent of the powers, duties, and
8 discretions granted to him or her under the terms of the trust.
9 (b) In exercising or refraining from exercising any power,
10 duty, or discretion, the trust protector shall act in good faith
11 and in accordance with the terms and purposes of the trust and
12 the interests of the beneficiaries.
13 (c) The trust protector is liable for any loss that results
14 from the breach of his or her fiduciary duties.
15 (2) The terms of a trust may provide that a trust protector
16 to whom powers of administration described in section 675(4) of
17 the internal revenue code, 26 USC 675, have been granted may
18 exercise those powers in a nonfiduciary capacity. However, the
19 terms of the trust shall not relieve the trust protector from the
20 requirement under subsection (1)(b) that he or she exercise or
21 refrain from exercising any power, duty, or discretion in good
22 faith and in accordance with the terms and purposes of the trust
23 and the interests of the beneficiaries.
24 (3) Except as otherwise provided in subsection (4), the
25 trustee shall act in accordance with a trust protector's exercise
26 of the trust protector's specified powers and is not liable for
27 so acting.
1 (4) If either of the following applies to a trust
2 protector's attempted exercise of a specified power, the trustee
3 shall not act in accordance with the attempted exercise of the
4 power unless the trustee receives prior direction from the court:
5 (a) The exercise is contrary to the terms of the trust.
6 (b) The exercise would constitute a breach of any fiduciary
7 duty that the trust protector owes to the beneficiaries of the
8 trust.
9 (5) A trustee is not liable for any loss that results from
10 any of the following:
11 (a) The trustee's compliance with a direction of a trust
12 protector, unless the attempted exercise was described in
13 subsection (4).
14 (b) The trustee's failure to take any action that requires a
15 prior authorization of the trust protector if the trustee timely
16 sought but failed to receive the authorization.
17 (c) Seeking a determination from the court regarding the
18 trust protector's actions or directions.
19 (d) The trustee's refraining from action pursuant to
20 subsection (4).
21 (6) The terms of a trust may confer upon a trustee or other
22 person a power to direct the modification or termination of the
23 trust.
24 (7) By accepting an appointment to serve as a trust
25 protector of a trust registered in this state or having its
26 principal place of administration in this state, the trust
27 protector submits to the jurisdiction of the courts of this state
1 even if investment advisory agreements or other related
2 agreements provide otherwise, and the trust protector may be made
3 a party to any action or proceeding relating to a decision,
4 action, or inaction of the trust protector.
5 (8) A term of a trust that relieves a trust protector from
6 liability for breach of his or her fiduciary duties is
7 unenforceable to the extent that either of the following applies:
8 (a) The term relieves the trust protector of liability for
9 acts committed in bad faith or with reckless indifference to the
10 purposes of the trust or the interests of the trust
11 beneficiaries.
12 (b) The term was inserted as the result of an abuse by the
13 trust protector of a fiduciary or confidential relationship to
14 the settlor.
15 Sec. 7810. A trustee shall take reasonable steps to take
16 control of and protect the trust property.
17 Sec. 7811. (1) A trustee shall keep adequate records of the
18 administration of the trust.
19 (2) A trustee shall keep trust property separate from the
20 trustee's own property.
21 (3) Except as otherwise provided in subsection (4), to the
22 extent that property is held by someone other than the trustee,
23 the trustee shall cause the trust's interest in the trust's
24 property to appear in records maintained by the party holding the
25 trust property.
26 (4) A trustee may do any of the following:
27 (a) Invest as a whole the property of 2 or more separate
1 trusts, provided the trustee maintains records clearly indicating
2 the respective interests.
3 (b) Hold trust property in nominee form.
4 (c) If the trust is revocable by the settlor, cause the
5 trust's interest in the trust's property to appear in records in
6 the manner directed by the settlor.
7 (d) Not reflect the trust's interest in the trust's property
8 when the nature of the property is such that it is not possible
9 or practicable to do so.
10 Sec. 7812. A trustee shall take reasonable steps to enforce
11 claims of the trust and to defend claims against the trust.
12 Sec. 7813. (1) A trustee shall take reasonable steps to
13 locate trust property and to compel a former trustee or other
14 person to deliver trust property to the trustee.
15 (2) A resigning trustee or a trustee being replaced by a
16 successor may retain a reasonable reserve for the payment of
17 debts, taxes, and expenses, including attorney fees and other
18 expenses incidental to the allowance of the trustee's accounts.
19 (3) Unless the distribution or payment can no longer be
20 questioned because of adjudication, estoppel, or other
21 limitation, a distributee or claimant that receives property that
22 is improperly distributed or paid from a trust shall return the
23 property and any income and gain from the property since
24 distribution, if the recipient has the property. If the recipient
25 does not have the property, the recipient shall pay the value of
26 the property as of the date of distribution or payment and any
27 income and gain from the property since distribution.
1 (4) If a person embezzles or wrongfully converts trust
2 property, or refuses, without colorable claim of right, to
3 transfer possession of trust property to the current trustee upon
4 demand, the person is liable in an action brought by the current
5 trustee, or the beneficiary of the trust for the benefit of the
6 trust, for double the value of any property embezzled, converted,
7 or wrongfully withheld from the current trustee.
8 Sec. 7814. (1) A trustee shall keep the qualified trust
9 beneficiaries reasonably informed about the administration of the
10 trust and of the material facts necessary for them to protect
11 their interests. Unless unreasonable under the circumstances, a
12 trustee shall promptly respond to a trust beneficiary's request
13 for information related to the administration of the trust.
14 (2) A trustee shall do all of the following:
15 (a) Upon the reasonable request of a trust beneficiary,
16 promptly furnish to the trust beneficiary a copy of the terms of
17 the trust that describe or affect the trust beneficiary's
18 interest and relevant information about the trust property.
19 (b) Subject to subsection (6), within 63 days after
20 accepting a trusteeship, notify the qualified trust beneficiaries
21 of the acceptance, of the court in which the trust is registered,
22 if it is registered, and of the trustee's name, address, and
23 telephone number.
24 (c) Subject to subsection (6), within 63 days after the date
25 the trustee acquires knowledge of the creation of an irrevocable
26 trust, or the date the trustee acquires knowledge that a formerly
27 revocable trust has become irrevocable, whether by the death of
1 the settlor or otherwise, notify the qualified trust
2 beneficiaries of the trust's existence, of the identity of the
3 settlor or settlors, of the court in which the trust is
4 registered, if it is registered, and of the right to request a
5 copy of the terms of the trust that describe or affect the trust
6 beneficiary's interests.
7 (d) Notify the qualified trust beneficiaries in advance of
8 any change in the method or rate of the trustee's compensation.
9 (3) A trustee shall send to the distributees or permissible
10 distributees of trust income or principal, and to other qualified
11 or nonqualified trust beneficiaries who request it, at least
12 annually and at the termination of the trust, a report of the
13 trust property, liabilities, receipts, and disbursements,
14 including the source and amount of the trustee's compensation, a
15 listing of the trust property and, if feasible, their respective
16 market values, and, if applicable, any disclosure required under
17 section 7802(5). In the trustee's discretion, the trustee may
18 provide the report to any trust beneficiary. Upon a vacancy in a
19 trusteeship, unless a cotrustee remains in office, a report shall
20 be sent to the qualified trust beneficiaries by the former
21 trustee. A personal representative, conservator, or guardian may
22 send the qualified trust beneficiaries a report on behalf of a
23 deceased or incapacitated trustee.
24 (4) If the terms of a trust direct that accounts and
25 information be provided to less than all qualified trust
26 beneficiaries, at the court's direction, the trustee shall
27 provide statements of account and other information to persons
1 excluded under the terms of the trust to the extent and in the
2 manner the court directs.
3 (5) A trust beneficiary may waive the right to a trustee's
4 report or other information otherwise required to be furnished
5 under this section. A trust beneficiary, with respect to future
6 reports and other information, may withdraw a waiver previously
7 given.
8 (6) Subsection (2)(b) and (c) applies only to a trustee who
9 accepts a trusteeship, an irrevocable trust created, or a
10 revocable trust that becomes irrevocable on or after the
11 effective date of the amendatory act that added this section.
12 Sec. 7815. (1) A beneficiary of a discretionary trust
13 provision as described in section 7505 has no property right in a
14 trust interest that is subject to a discretionary trust
15 provision, and has no right to any amount of trust income or
16 principal that may be distributed only in the exercise of the
17 trustee's discretion. However, and notwithstanding the breadth of
18 discretion granted to a trustee in the terms of the trust,
19 including the use of such terms as "absolute", "sole", or
20 "uncontrolled", a trustee abuses the trustee's discretion in
21 exercising or failing to exercise a discretionary power if the
22 trustee does any of the following:
23 (a) Acts dishonestly.
24 (b) Acts with an improper motive, even though not a
25 dishonest motive.
26 (c) Fails to exercise the trustee's judgment in accordance
27 with the terms and purposes of the trust.
1 (2) Subject to subsection (4), the following rules apply to
2 a trustee's exercise of a power unless the terms of the trust
3 expressly indicate that the rule does not apply:
4 (a) A person other than a settlor who is a trust beneficiary
5 and trustee of a trust that confers on the trustee a power to
6 make distributions pursuant to a discretionary trust provision to
7 or for the trustee's benefit may exercise the power only in
8 accordance with an ascertainable standard.
9 (b) A trustee may not exercise a power to make distributions
10 pursuant to a discretionary trust provision in a manner to
11 satisfy a legal obligation of support that the trustee personally
12 owes another person.
13 (3) A power whose exercise is limited or prohibited by
14 subsection (2) may be exercised by a majority of the remaining
15 trustees whose exercise of the power is not so limited or
16 prohibited. If the power of all trustees is so limited or
17 prohibited, the court may appoint a special fiduciary with
18 authority to exercise the power.
19 (4) Subsection (2) does not apply to any of the following:
20 (a) A power held by the settlor's spouse who is the trustee
21 of a trust for which a marital deduction, as defined in section
22 2056(b)(5) or 2523(e) of the internal revenue code, 26 USC 2056
23 and 2523, was previously allowed.
24 (b) Any trust during any period that the trust may be
25 revoked or amended by its settlor.
26 (c) A trust if contributions to the trust qualify for the
27 annual exclusion under section 2503(c) of the internal revenue
1 code, 26 USC 2503.
2 Sec. 7816. (1) A trustee, without authorization by the
3 court, may exercise all of the following:
4 (a) Powers conferred by the terms of the trust.
5 (b) Except as limited by the terms of the trust, all of the
6 following:
7 (i) All powers over the trust property that an unmarried
8 competent owner has over individually owned property.
9 (ii) Any other powers appropriate to achieve the proper
10 investment, management, and distribution of the trust property.
11 (iii) Any other powers conferred by this article.
12 (2) The exercise of a power is subject to the fiduciary
13 duties prescribed by this article.
14 Sec. 7817. Without limiting the authority conferred by
15 section 7816, a trustee has all of the following powers:
16 (a) To take possession, custody, or control of property
17 transferred to the trust and accept or reject additions to the
18 trust.
19 (b) To retain property that the trustee receives, including
20 property in which the trustee is personally interested, in
21 accordance with the Michigan prudent investor rule.
22 (c) To receive property from a fiduciary or another source
23 that is acceptable to the trustee.
24 (d) To perform, compromise, or refuse to perform a contract
25 of the settlor that is an obligation of the trust, as the trustee
26 may determine under the circumstances. In performing an
27 enforceable contract by the settlor to convey or lease land, if
1 the contract for a conveyance requires the giving of a warranty,
2 the deed or other instrument of conveyance to be given by the
3 trustee shall contain the warranty required. The warranty is
4 binding on the trust as though made by the settlor, but does not
5 bind the trustee except in the trustee's fiduciary capacity. The
6 trustee, among other possible courses of action, may do either of
7 the following:
8 (i) Execute and deliver a deed of conveyance for cash payment
9 of money remaining due or the purchaser's note for the money
10 remaining due secured by a mortgage on the land.
11 (ii) Deliver a deed in escrow with directions that the
12 proceeds, when paid in accordance with the escrow agreement, be
13 paid to the trustee, as designated in the escrow agreement.
14 (e) To satisfy a settlor's written charitable pledge
15 irrespective of whether the pledge constitutes a binding
16 obligation of the settlor or was properly presented as a claim,
17 if in the trustee's judgment the settlor would have wanted the
18 pledge completed under the circumstances.
19 (f) To deposit trust property in a financial institution,
20 including a financial institution operated by or affiliated with
21 the trustee and to invest and reinvest trust property as would a
22 prudent investor acting in accordance with the Michigan prudent
23 investor rule and to deposit securities with a depositary or
24 other financial institution.
25 (g) To acquire property, including property in this or
26 another state or country, in any manner for cash or on credit, at
27 public or private sale; and to manage, develop, improve,
1 exchange, partition, or change the character of trust property.
2 (h) To make an ordinary or extraordinary repair or
3 alteration in a building or another structure, to demolish an
4 improvement, or to raze an existing or erect a new party wall or
5 building.
6 (i) To subdivide, develop, or dedicate land to public use;
7 to make or obtain the vacation of a plat or adjust a boundary; to
8 adjust a difference in valuation on exchange or partition by
9 giving or receiving consideration; or to dedicate an easement to
10 public use without consideration.
11 (j) To enter for any purpose into a lease as lessor or
12 lessee, with or without an option to purchase or renew, for a
13 period within or extending beyond the duration of the trust.
14 (k) To enter into a lease or arrangement for exploration and
15 removal of minerals or another natural resource or to enter into
16 a pooling or unitization agreement for a period within or
17 extending beyond the duration of the trust.
18 (l) To abandon or decline to administer property if, in the
19 trustee's opinion, the property is valueless, or is so encumbered
20 or in such a condition that it is of no benefit to the trust.
21 (m) To vote a stock or other security in person, by general
22 or limited proxy, or in another manner provided by law, or enter
23 into or continue a voting trust agreement.
24 (n) To pay a call, assessment, or other amount chargeable or
25 accruing against or on account of a security, and sell or
26 exercise stock subscription or conversion rights.
27 (o) To hold property in the name of a nominee or in another
1 form without disclosure of the interest of the trust. However,
2 the trustee is liable for an act of the nominee in connection
3 with the property so held.
4 (p) To insure the trust property against damage, loss, or
5 liability and to insure the trustee, the trustee's agents, and
6 the trust beneficiaries against liability arising from the
7 administration of the trust.
8 (q) To borrow property, with or without security, for any
9 purpose from the trustee or others and to mortgage or pledge
10 trust property for a period within or extending beyond the
11 duration of the trust.
12 (r) To effect a fair and reasonable compromise with a debtor
13 or obligor, or extend, renew, or in any manner modify the terms
14 of an obligation owing to the trust. If the trustee holds a
15 mortgage, pledge, or another lien on property of another person,
16 the trustee may, instead of foreclosure, accept a conveyance or
17 transfer of encumbered property from the property's owner in
18 satisfaction of the indebtedness secured by a lien.
19 (s) To pay a tax, an assessment, the trustee's compensation,
20 or another expense incident to the administration of the trust.
21 (t) To sell or exercise a subscription or conversion right
22 or to consent, directly or through a committee or another agent,
23 to the reorganization, consolidation, merger, dissolution, or
24 liquidation of a business enterprise.
25 (u) To allocate an item of income or expense to either trust
26 income or principal, as permitted or provided by law.
27 (v) To employ, and pay reasonable compensation for services
1 performed by, a person, including an auditor, investment advisor,
2 accountant, appraiser, broker, custodian, rental agent, realtor,
3 or agent, even if the person is associated with the trustee, for
4 the purpose of advising or assisting the trustee in the
5 performance of an administrative duty; to act without independent
6 investigation upon such a person's recommendation; and, instead
7 of acting personally, to employ 1 or more agents to perform an
8 act of administration, whether or not discretionary.
9 (w) To employ an attorney to perform necessary legal
10 services or to advise or assist the trustee in the performance of
11 the trustee's administrative duties. An attorney employed under
12 this subdivision shall receive reasonable compensation for that
13 employment.
14 (x) To prosecute, defend, arbitrate, settle, release,
15 compromise, or agree to indemnify an action, claim, or proceeding
16 in any jurisdiction or under an alternative dispute resolution
17 procedure. The trustee may act under this subdivision for the
18 trustee's protection in the performance of the trustee's duties.
19 (y) To sell, exchange, partition, or otherwise dispose of,
20 or grant an option with respect to, trust property for any
21 purpose upon any terms or conditions for a period within or
22 extending beyond the duration of the trust.
23 (z) To continue or participate in a business or enterprise
24 in any manner, in any form, and for any length of time.
25 (aa) To change the form, in any manner, of a business or
26 enterprise in which the settlor was engaged at the time of death.
27 (bb) To provide for exoneration of the trustee from personal
1 liability in a contract entered into on behalf of the trust.
2 (cc) To respond to environmental concerns and hazards
3 affecting trust property as provided in section 7818.
4 (dd) To collect, pay, contest, settle, release, agree to
5 indemnify against, compromise, or abandon a claim of or against
6 the trust, including a claim against the trust by the trustee.
7 (ee) To respond to a tax matter as provided in section 7819.
8 (ff) To make a payment of money, or other property instead
9 of money, to or for a minor or incapacitated trust beneficiary as
10 provided in section 7820.
11 (gg) To make a distribution or division of trust property in
12 cash or in kind, or both; to allot a different kind or
13 disproportionate portion of, or an undivided interest in, trust
14 property among beneficiaries and determine the value of allotted
15 trust property; or to distribute an unclaimed share in the same
16 manner as described in section 3916.
17 (hh) To transfer the property of a trust to another
18 jurisdiction and appoint, compensate, or remove a successor
19 trustee, individual or corporate, for trust property in another
20 jurisdiction, with any trust powers set out in this part that the
21 trustee delegates to the successor trustee.
22 (ii) To execute and deliver an instrument that accomplishes
23 or facilitates the exercise of a power vested in the trustee.
24 (jj) To select a mode of payment under any employee benefit
25 or retirement plan, annuity, or life insurance payable to the
26 trustee, exercise rights thereunder, including exercise of the
27 right to indemnification for expenses and against liabilities,
1 and take appropriate action to collect the proceeds.
2 (kk) To make loans out of trust property, including loans to
3 a trust beneficiary on terms and conditions the trustee considers
4 to be fair and reasonable under the circumstances. The trustee
5 has a lien on future distributions for repayment of loans made
6 under this subdivision.
7 (ll) To pledge trust property to guarantee loans made by
8 others to the trust beneficiary.
9 (mm) To resolve a dispute concerning the interpretation of
10 the trust or its administration by mediation, arbitration, or
11 other procedure for alternative dispute resolution.
12 (nn) On termination of the trust, to exercise the powers
13 appropriate to wind up the administration of the trust and
14 distribute the trust property to the persons entitled to it.
15 Sec. 7818. (1) In connection with an environmental concern
16 or hazard, a trustee may do any of the following:
17 (a) Inspect property or the operation of a business activity
18 on property, including property held in or operated by a sole
19 proprietorship, partnership, corporation, or limited liability
20 company or any other type of entity, for the purpose of
21 determining compliance with environmental law affecting the
22 property and to respond to an actual or threatened violation of
23 an environmental law affecting property held or tendered to the
24 trustee.
25 (b) Take action necessary to prevent, abate, or otherwise
26 remedy an actual or threatened violation of an environmental law
27 affecting property held by the trustee, either before or after a
1 governmental body initiates an enforcement action.
2 (c) Refuse to accept property in trust if the trustee
3 determines that the property to be transferred to the trust
4 either is or may be contaminated by a hazardous substance or has
5 been or is being used for an activity directly or indirectly
6 involving a hazardous substance that could result in liability to
7 the trust or otherwise impair the value of the trust property.
8 (d) Settle or compromise at any time a claim against the
9 trust that a governmental body or private party may assert
10 involving the alleged violation of an environmental law affecting
11 property held in the trust.
12 (e) Disclaim a power granted by a document, statute, or rule
13 of law that, in the sole discretion of the trustee, may cause the
14 trustee to incur personal liability under an environmental law.
15 (f) Decline to serve or resign as a trustee if the trustee
16 reasonably believes that there is or may be a conflict of
17 interest between it in its fiduciary capacity and in its
18 individual capacity because of a potential claim or liability
19 that may be asserted against the trustee on the trust's behalf
20 because of the type or condition of property held in trust.
21 (g) Appoint an independent special trustee to hold title to,
22 and take a reasonably required action, as provided in this
23 section, relating to environmental law in regard to, property
24 tendered to the trust, until the time that the trustee determines
25 that no substantial risk exists if the tendered property becomes
26 part of the trust property or abandons the tendered property.
27 (h) Charge the cost of an inspection, review, abatement,
1 response, cleanup, settlement of claim, or remedial action
2 authorized by this section against the trust property.
3 (2) A trustee is not personally liable to a trust
4 beneficiary or other party for a decrease in value of trust
5 property by reason of the trustee's compliance with an
6 environmental law, specifically including a reporting requirement
7 under that law. The trustee's acceptance of property or failure
8 to inspect property or a business operation does not create an
9 inference that there is or may be liability under an
10 environmental law with respect to the property or business
11 operation. The authority granted by this section is solely to
12 facilitate the administration and protection of trust property
13 and is not to impose greater responsibility or liability on the
14 trustee than imposed by law absent this section.
15 Sec. 7819. (1) A trustee may do any of the following in
16 connection with a tax matter:
17 (a) Make, revise, or revoke an available allocation,
18 consent, or election affecting a tax that is appropriate in order
19 to carry out the settlor's estate planning objectives and to
20 reduce the overall burden of taxation, both in the present and in
21 the future. This authority includes, but is not limited to, all
22 of the following:
23 (i) Electing to take expenses as estate tax or income tax
24 deductions.
25 (ii) Electing to allocate the exemption from the tax on
26 generation skipping transfers among transfers subject to estate
27 or gift tax.
1 (iii) Electing to have all or a portion of a transfer for a
2 spouse's benefit qualify for the marital deduction.
3 (iv) Electing the date of death or an alternate valuation
4 date for federal estate tax purposes.
5 (b) Exclude or include property from the gross estate for
6 federal estate tax purposes.
7 (c) Value property for federal estate tax purposes.
8 (d) Join with the surviving spouse or the surviving spouse's
9 personal representative in the execution and filing of a joint
10 income tax return and consenting to a gift tax return filed by
11 the surviving spouse or the surviving spouse's personal
12 representative.
13 (2) A trustee's decision on a matter described in subsection
14 (1)(a) binds all beneficiaries.
15 (3) After making a decision described in subsection (1)(a),
16 a trustee may make compensating adjustments between principal and
17 income in the manner provided by the uniform principal and income
18 act, 2004 PA 159, MCL 555.501 to 555.1005.
19 Sec. 7820. (1) A trustee may act under section 7817(ff) by
20 paying money or other property to 1 or more of the following:
21 (a) The minor or incapacitated individual directly.
22 (b) A person or institution providing support, maintenance,
23 education, or medical, surgical, hospital, or other institutional
24 care for the minor or incapacitated individual in direct payment
25 for those services.
26 (c) The legal or natural guardian of the minor or
27 incapacitated individual.
1 (d) A person, whether or not appointed guardian by a court,
2 who shall in fact have the care and custody of the minor or
3 incapacitated individual.
4 (e) A custodian for the minor or incapacitated individual
5 under a uniform gifts or transfers to minors act.
6 (2) A trustee also may manage an amount distributable to a
7 trust beneficiary who is a minor or incapacitated individual as a
8 separate fund on the trust beneficiary's behalf, subject to the
9 trust beneficiary's continuing right to withdraw the
10 distribution.
11 (3) If the trustee exercises due care in the selection of
12 the person to whom a payment is made under this section,
13 including a minor or incapacitated individual, the trustee does
14 not have a duty to see to the payment's application. The person's
15 receipt for the payment completely discharges the trustee.
16 Sec. 7821. (1) Upon termination or partial termination of a
17 trust, the trustee may send to the trust beneficiaries a proposal
18 for distribution. The right of any trust beneficiary to object to
19 the proposed distribution terminates if the trust beneficiary
20 does not notify the trustee of an objection within 28 days after
21 the proposal was sent, but only if the proposal informed the
22 trust beneficiary of the right to object and of the time allowed
23 for objection.
24 (2) Upon the occurrence of an event terminating or partially
25 terminating a trust, the trustee shall proceed expeditiously to
26 distribute the trust property to the persons entitled to it,
27 subject to the right of the trustee to retain a reasonable
1 reserve for the payment of debts, taxes, and expenses, including
2 attorney fees and other expenses incidental to the allowance of
3 the trustee's accounts.
4 (3) A release by a trust beneficiary of a trustee from
5 liability for breach of trust is invalid to the extent either of
6 the following applies:
7 (a) The release was induced by improper conduct of the
8 trustee.
9 (b) The trust beneficiary, at the time of the release, did
10 not know of the trust beneficiary's rights or of the material
11 facts relating to the breach.
12 PART 9
13 Sec. 7901. (1) A violation by a trustee of a duty the
14 trustee owes to a trust beneficiary is a breach of trust.
15 (2) To remedy a breach of trust that has occurred or may
16 occur, the court may do any of the following:
17 (a) Compel the trustee to perform the trustee's duties.
18 (b) Enjoin the trustee from committing a breach of trust.
19 (c) Compel the trustee to redress a breach of trust by
20 paying money, restoring property, or other means.
21 (d) Order a trustee to account.
22 (e) Appoint a special fiduciary to take possession of the
23 trust property and administer the trust.
24 (f) Suspend the trustee.
25 (g) Remove the trustee as provided in section 7706.
26 (h) Reduce or deny compensation to the trustee.
27 (i) Subject to section 7912, void an act of the trustee,
1 impose a lien or a constructive trust on trust property, or trace
2 trust property wrongfully disposed of and recover the property or
3 its proceeds.
4 (j) Order any other appropriate relief.
5 Sec. 7902. A trustee who commits a breach of trust is liable
6 to the trust beneficiaries affected for whichever of the
7 following is larger:
8 (a) The amount required to restore the value of the trust
9 property and trust distributions to what they would have been had
10 the breach not occurred.
11 (b) The profit the trustee made by reason of the breach.
12 Sec. 7903. (1) A trustee is accountable to an affected trust
13 beneficiary for any profit made by the trustee arising from the
14 administration of the trust, even absent a breach of trust.
15 (2) Absent a breach of trust, a trustee is not liable to a
16 trust beneficiary for a loss or depreciation in the value of
17 trust property, for failure to generate income, or for not having
18 made a profit.
19 (3) This section does not do either of the following:
20 (a) Limit a trustee's right to compensation under section
21 7708 or payments allowed under section 7802(5).
22 (b) Make a trustee accountable to an affected beneficiary in
23 connection with a matter to which section 4405 of the banking
24 code of 1999, 1999 PA 276, MCL 487.14405, applies and the
25 requirements of that section have been satisfied.
26 Sec. 7904. (1) In a proceeding involving the administration
27 of a trust, the court, as justice and equity require, may award
1 costs and expenses, including reasonable attorney fees, to any
2 party who enhances, preserves, or protects trust property, to be
3 paid from the trust that is the subject of the proceeding.
4 (2) Subject to subsection (3), if a trustee participates in
5 a civil action or proceeding in good faith, whether successful or
6 not, the trustee is entitled to receive from trust property all
7 expenses and disbursements including reasonable attorney fees
8 that the trustee incurs in connection with its participation.
9 (3) A court may reduce or deny a trustee's claim for
10 compensation, expenses, or disbursements with respect to a breach
11 of trust.
12 Sec. 7905. (1) The following limitations on commencing
13 proceedings apply in addition to other limitations provided by
14 law:
15 (a) A trust beneficiary shall not commence a proceeding
16 against a trustee for breach of trust more than 1 year after the
17 date the trust beneficiary or a representative of the trust
18 beneficiary was sent a report that adequately disclosed the
19 existence of a potential claim for breach of trust and informed
20 the trust beneficiary of the time allowed for commencing a
21 proceeding.
22 (b) A trust beneficiary who has waived the right to receive
23 reports pursuant to section 7814(5) shall not commence a
24 proceeding for a breach of trust more than 1 year after the end
25 of the calendar year in which the alleged breach occurred.
26 (2) A report adequately discloses the existence of a
27 potential claim for breach of trust if it provides sufficient
1 information so that the trust beneficiary or representative knows
2 of the potential claim or should have inquired into the potential
3 claim's existence.
4 (3) If subsection (1) does not apply, a judicial proceeding
5 by a trust beneficiary against a trustee for breach of trust
6 shall be commenced within 5 years after the first of the
7 following to occur:
8 (a) The removal, resignation, or death of the trustee.
9 (b) The termination of the trust beneficiary's interest in
10 the trust.
11 (c) The termination of the trust.
12 Sec. 7906. A trustee who acts in reasonable reliance on the
13 terms of the trust as expressed in the trust instrument is not
14 liable to a trust beneficiary for a breach of trust to the extent
15 the breach resulted from the reliance.
16 Sec. 7907. If the happening of an event, including, but not
17 limited to, marriage, divorce, performance of educational
18 requirements, attainment of a specific age, or death, affects the
19 administration or distribution of a trust, a trustee who has
20 exercised reasonable care to ascertain the happening of the event
21 is not liable for a loss resulting from the trustee's lack of
22 knowledge or lack of notice.
23 Sec. 7908. (1) A term of a trust relieving a trustee of
24 liability for breach of trust is unenforceable to the extent that
25 either of the following applies:
26 (a) The term relieves the trustee of liability for breach of
27 trust committed in bad faith or with reckless indifference to the
1 purposes of the trust or the interests of the trust
2 beneficiaries.
3 (b) The term was inserted as the result of an abuse by the
4 trustee of a fiduciary or confidential relationship to the
5 settlor.
6 (2) The terms of a trust relieving a trustee of liability
7 for breach of trust for the acquisition or retention of a
8 particular asset or asset class or failure to diversify
9 investments are enforceable.
10 Sec. 7909. A trustee is not liable to a trust beneficiary
11 for breach of trust if the trust beneficiary consented to the
12 conduct constituting the breach, released the trustee from
13 liability for the breach, or ratified the transaction
14 constituting the breach, unless either of the following applies:
15 (a) The consent, release, or ratification of the trust
16 beneficiary was induced by improper conduct of the trustee.
17 (b) At the time of the consent, release, or ratification,
18 the trust beneficiary did not know of 1 or more of the material
19 facts relating to the breach.
20 Sec. 7910. (1) Unless otherwise provided in the contract, a
21 trustee is not personally liable on a contract properly entered
22 into in the trustee's fiduciary capacity in the course of
23 administration of the trust estate unless the trustee fails to
24 reveal the trustee's representative capacity and identify the
25 trust estate in the contract.
26 (2) A trustee is personally liable for an obligation arising
27 from ownership or control of the trust estate property or for a
1 tort committed in the course of administration of the trust
2 estate only if the trustee is personally at fault.
3 (3) A claim based on a contract entered into by a trustee in
4 the trustee's fiduciary capacity, on an obligation arising from
5 ownership or control of the trust estate, or on a tort committed
6 in the course of trust administration may be asserted against the
7 trust estate by proceeding against the trustee in the trustee's
8 fiduciary capacity, whether or not the trustee is personally
9 liable for the claim.
10 (4) The question of liability as between the trust estate
11 and the trustee individually may be determined in a proceeding
12 for accounting, surcharge, or indemnification or in another
13 appropriate proceeding.
14 Sec. 7911. (1) Except as otherwise provided in subsection
15 (3), a trustee who holds an interest as a general partner in a
16 general or limited partnership is not personally liable on a
17 contract entered into by the partnership after the trust's
18 acquisition of the interest if the fiduciary capacity was
19 disclosed in the contract or in a statement previously filed
20 pursuant to the Michigan revised uniform limited partnership act,
21 1982 PA 213, MCL 449.1101 to 449.2108, or was known by the other
22 party to the contract.
23 (2) Except as otherwise provided in subsection (3), a
24 trustee who holds an interest as a general partner is not
25 personally liable for torts committed by the partnership or for
26 obligations arising from ownership or control of the interest
27 unless the trustee is personally at fault.
1 (3) The immunity provided by this section does not apply
2 with respect to a general partnership interest held in any
3 capacity other than as trustee.
4 (4) If the trustee of a revocable trust holds an interest as
5 a general partner, the settlor is personally liable for contracts
6 and other obligations of the partnership as if the settlor were a
7 general partner.
8 Sec. 7912. (1) A person other than a trust beneficiary who
9 in good faith assists a trustee, or who in good faith and for
10 value deals with a trustee, without knowledge that the trustee is
11 exceeding or improperly exercising the trustee's powers is
12 protected from liability as if the trustee properly exercised the
13 power.
14 (2) A person other than a trust beneficiary who in good
15 faith deals with a trustee is not required to inquire into the
16 extent of the trustee's powers or the propriety of the exercise
17 of the powers.
18 (3) A person who in good faith delivers assets to a trustee
19 need not ensure the proper application of the assets.
20 (4) A person other than a trust beneficiary who in good
21 faith assists a former trustee, or who in good faith and for
22 value deals with a former trustee, without knowledge that the
23 trusteeship has terminated is protected from liability as if the
24 former trustee were still a trustee.
25 (5) Comparable protective provisions of other laws relating
26 to commercial transactions or transfer of securities by
27 fiduciaries prevail over the protection provided by this section.
1 Sec. 7913. (1) Instead of furnishing a copy of the trust
2 instrument to a person other than a trust beneficiary, the
3 trustee may furnish to the person a certificate of trust
4 containing all of the following information:
5 (a) The name of the trust and the date of the trust
6 instrument and any amendments.
7 (b) The name and address of the currently acting trustee.
8 (c) The powers of the trustee relating to the purposes for
9 which the certificate is being offered.
10 (d) The revocability or irrevocability of the trust and the
11 identity of any person holding a power to revoke the trust.
12 (e) The authority of cotrustees to sign or otherwise
13 authenticate and whether all or less than all are required in
14 order to exercise powers of the trustee.
15 (2) A certificate of trust may be signed or otherwise
16 authenticated by the settlor, any trustee, or an attorney for the
17 settlor or trustee. The certificate shall be in the form of an
18 affidavit.
19 (3) A certificate of trust shall state that the trust has
20 not been revoked, modified, or amended in any manner that would
21 cause the representations contained in the certificate of trust
22 to be incorrect.
23 (4) A certificate of trust need not contain the dispositive
24 terms of the trust.
25 (5) A recipient of a certificate of trust may require the
26 trustee to furnish copies of those excerpts from the original
27 trust instrument and later amendments that designate the trustee
1 and confer upon the trustee the power to act in the pending
2 transaction.
3 (6) A person who acts in reliance upon a certificate of
4 trust without knowledge that the representations contained in the
5 certificate are incorrect is not liable to any person for so
6 acting and may assume without inquiry the existence of the facts
7 contained in the certificate.
8 (7) A person who in good faith enters into a transaction in
9 reliance upon a certificate of trust may enforce the transaction
10 against the trust property as if the representations contained in
11 the certificate were correct.
12 (8) A person making a demand for the trust instrument in
13 addition to a certificate of trust or excerpts is liable for
14 damages, costs, expenses, and legal fees if the court determines
15 that the person was not acting pursuant to a legal requirement in
16 demanding the trust instrument.
17 (9) This section does not limit the right of a person to
18 obtain a copy of the trust instrument in a judicial proceeding
19 concerning the trust.
20 Sec. 8201. (1) Article VII shall be construed and applied to
21 promote its underlying purposes and policies.
22 (2) The following are the underlying purposes and policies
23 of article VII:
24 (a) To make more comprehensive and to clarify the law
25 governing trusts in this state.
26 (b) To permit the continued expansion and development of
27 trust practices through custom, usage, and agreement of the
1 parties.
2 (c) To foster certainty in the law so that settlors of
3 trusts will have confidence that their instructions will be
4 carried out as expressed in the terms of the trust.
5 Sec. 8202. The provisions of article VII governing the legal
6 effect, validity, or enforceability of electronic records or
7 electronic signatures, and of contracts formed or performed with
8 the use of electronic records or signatures, conform to the
9 requirements of section 102 of the electronic signatures in
10 global and national commerce act, 15 USC 7002, and supersede,
11 modify, and limit the requirements of the electronic signatures
12 in global and national commerce act, 15 USC 7001 to 7031.
13 Sec. 8204. The amendments and additions to article VII
14 enacted by the amendatory act that added this section take effect
15 on April 1, 2010.
16 Sec. 8206. (1) Except as otherwise provided in article VII,
17 all of the following apply on the effective date of the
18 amendatory act that added this section:
19 (a) The amendments and additions to article VII enacted by
20 the amendatory act that added this section apply to all trusts
21 created before, on, or after that effective date.
22 (b) The amendments and additions to article VII enacted by
23 the amendatory act that added this section apply to all judicial
24 proceedings concerning trusts commenced on or after that
25 effective date.
26 (c) The amendments and additions to article VII enacted by
27 the amendatory act that added this section apply to judicial
Senate Bill No. 387 as amended June 3, 2009
1 proceedings concerning trusts commenced before that effective
2 date unless the court finds that application of a particular
3 provision of the amendments and additions would substantially
4 interfere with the effective conduct of the judicial proceedings
5 or prejudice the rights of the parties, in which case the
6 particular provision of the amendments and additions does not
7 apply and the superseded provisions apply.
8 (d) Any rule of construction or presumption provided in the
9 amendments and additions to article VII enacted by the amendatory
10 act that added this section applies to trust instruments executed
11 before that effective date unless there is a clear indication of
12 a contrary intent in the terms of the trust.
13 (2) The amendments and additions to article VII enacted by
14 the amendatory act that added this section do not impair an
15 accrued right or affect an act done before that effective date.
16 If a right is acquired, extinguished, or barred upon the
17 expiration of a prescribed period that has commenced to run under
18 any other statute before that effective date, that statute
19 continues to apply to the right even if it has been repealed or
20 superseded.
21 (3) If any provision of the amendments and additions to
22 article VII enacted by the amendatory act that added this section
23 conflicts with any provision of 1846 RS 63, MCL 555.1 to 555.27,
24 the provision of [article VII] prevails.
25 Enacting section 1. Sections 7306 to 7308, 7408, 7409, and
26 7509 to 7511 of the estates and protected individuals code, 1998
27 PA 386, MCL 700.7306 to 700.7308, 700.7408, 700.7409, and
Senate Bill No. 387 as amended June 3, 2009
1 700.7509 to 700.7511, are repealed.
2 [Enacting section 2. This amendatory act takes effect April 1,
3 2010.
4 Enacting section 3. This amendatory act does not take effect unless
5 all of the following bills of the 95th Legislature are enacted into law:
6 (a) Senate Bill No. 383.
7 (b) Senate Bill No. 384.
8 (c) Senate Bill No. 385.
9 (d) Senate Bill No. 386.
10
11
12 ]