MTC Recognizes the Authority of Trust Protectors
Michigan Trust Code Becomes Law
On June 18, 2009, the new, Michigan Trust Code (MTC) was signed into law by Governor Granholm. In adopting the MTC, Michigan becomes the 23rd state to revise its laws pertaining to trusts in order to reflect the Uniform Trust Code as promulgated by the National Conference of Commissioners on Uniform State Laws. The MTC recognizes that revocable trusts in particular have become increasingly popular as a means to settle one’s affairs at death, as opposed to nothing more than a simple Will.
Although the MTC totally replaces existing Michigan black-letter law pertaining to trusts, only a few provisions of the MTC are significantly different from current law.
The first change deals with the mental capacity of a person to make a trust and a Will. Whereas Michigan law has recognized different standards in the past, the MTC clearly provides that the same standard of capacity will apply to both Wills and trusts. And, that standard has been modified to bring it in line with the standard of capacity to execute other estate plan documents such as powers of attorney.
The second change recognizes the authority of “trust protectors.” A trust protector is a person or persons designated in the trust with the authority to direct certain actions under certain circumstances. The authority of a trust protector can thereby supersede the authority of the trustee. Although Michigan attorneys have used the concept of trust protectors in the past, their authority has never been recognized under Michigan law. The MTC provides for, and recognizes, the authority of trust protectors.
As with EPIC, many of the provisions of the MTC are default rules, that is, fallback rules that will apply in the event that the creator of the trust does not provide otherwise. As with prior law, however, there are a number of rules that cannot be modified by the creator of the trust.
If you have not created an estate plan, or have not reviewed or updated your plan in recent years, now is an excellent time to make sure that your wishes for the disposition of your assets at death are properly secured.
Duane L. Reynolds