Bill Text: MI HB6259 | 2023-2024 | 102nd Legislature | Engrossed
Bill Title: Probate: trusts; charitable organization as a qualified trust beneficiary; modify. Amends secs. 7103 & 7110 of 1998 PA 386 (MCL 700.7103 & 700.7110).
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Engrossed - Dead) 2024-12-18 - Referred To Committee On Government Operations [HB6259 Detail]
Download: Michigan-2023-HB6259-Engrossed.html
Substitute For
HOUSE BILL NO. 6259
A bill to amend 1998 PA 386, entitled
"Estates and protected individuals code,"
by amending sections 7103 and 7110 (MCL 700.7103 and 700.7110), as amended by 2024 PA 1.
the people of the state of michigan enact:
Sec. 7103. As used in this article:
(a) "Action", with respect to a trustee, includes an act or a failure to act.
(b) "Ascertainable standard" means a standard relating to an individual's health, education, support, or maintenance within the meaning of section 2041(b)(1)(A) or 2514(c)(1) of the internal revenue code of 1986, 26 USC 2041 and 2514.
(c) "Charitable trust" means a trust, or portion of a trust, created for a charitable purpose described in section 7405(1). if the charitable purpose is a material purpose of the trust.
(d) "Discretionary trust provision" means a provision in a trust, regardless of whether the terms of the trust provide a standard for the exercise of the trustee's discretion and regardless of whether the trust contains a spendthrift provision, that provides that the trustee has discretion, or words of similar import, to determine 1 or more of the following:
(i) Whether to distribute to or for the benefit of an individual or a class of beneficiaries the income or principal or both of the trust.
(ii) The amount, if any, of the income or principal or both of the trust to distribute to or for the benefit of an individual or a class of beneficiaries.
(iii) Who, if any, among a class of beneficiaries will receive income or principal or both of the trust.
(iv) Whether the distribution of trust property is from income or principal or both of the trust.
(v) When to pay income or principal, except that a power to determine when to distribute income or principal within or with respect to a calendar or taxable year of the trust is not a discretionary trust provision if the distribution must be made.
(e) "Interests of the trust beneficiaries" means the beneficial interests provided in the terms of the trust.
(f) "Power of withdrawal" means a presently exercisable general power of appointment other than a power that is either of the following:
(i) Exercisable by a trustee and limited by an ascertainable standard.
(ii) Exercisable by another person only on consent of the trustee or a person holding an adverse interest.
(g) "Qualified trust beneficiary" means, either of the following:
(i) A subject to subdivision (h), a trust beneficiary whom the settlor intends to benefit as a material purpose of the trust and to whom 1 or more of the following apply on the date the trust beneficiary's qualification is determined:
(i) (A) The trust beneficiary is a distributee or permissible distributee of trust income or principal.
(ii) (B) The trust beneficiary would be a distributee or permissible distributee of trust income or principal if the interests of the distributees under the trust described in sub-subparagraph (A) subparagraph (i) terminated on that date without causing the trust to terminate.
(iii) (C) The trust beneficiary would be a distributee or permissible distributee of trust income or principal if the trust terminated on that date.
(ii) If on the date a trust beneficiary's qualification is determined there is no trust beneficiary described in subparagraph (i), a trust beneficiary to whom 1 or more of the following apply on the date the trust beneficiary's qualification is determined:
(A) The trust beneficiary is a distributee or permissible distributee of trust income or principal.
(B) The trust beneficiary would be a distributee or permissible distributee of trust income or principal if the interests of the distributees under the trust described in sub-subparagraph (A) terminated on that date without causing the trust to terminate.
(C) The trust beneficiary would be a distributee or permissible distributee of trust income or principal if the trust terminated on that date.
(h) "Qualified trust beneficiary" does not mean a trust beneficiary who is not described in subdivision (g)(i) on the date of the trust beneficiary's qualification but is described in subdivision (g)(ii) or (iii) if, as of the time of the creation of the trust, the probability of the trust beneficiary's interest's ever becoming possessory was so low, or the expected time of its becoming possessory, if at all, so distant as to make it seem likely, in the light of the terms of the trust, that the settlor's intent in creating the trust beneficiary's interest was primarily to avoid the imposition of a resulting trust.
(i) (h) "Revocable", as applied to a trust, means revocable by the settlor without the consent of the trustee or a person holding an adverse interest. A trust's characterization as revocable is not affected by the settlor's lack of capacity to exercise the power of revocation, regardless of whether an agent of the settlor under a durable power of attorney, a conservator of the settlor, or a plenary guardian of the settlor is serving.
(j) (i) "Settlor" means a person, including a testator or a trustee, who creates a trust. If more than 1 person creates a trust, each person is a settlor of the portion of the trust property attributable to that person's contribution. The lapse, release, or waiver of a power of appointment does not cause the holder of a power of appointment to be treated as a settlor of the trust.
(k) (j) "Spendthrift provision" means a term of a trust that restrains either the voluntary or involuntary transfer of a trust beneficiary's interest.
(l) (k) "Support provision" means a provision in a trust that provides the trustee shall distribute income or principal or both for the health, education, support, or maintenance of a trust beneficiary, or language of similar import. A provision in a trust that provides a trustee has discretion whether to distribute income or principal or both for these purposes or to select from among a class of beneficiaries to receive distributions under the trust provision is not a support provision, but rather is a discretionary trust provision.
(m) (l) "Trust beneficiary" means a person to whom 1 or both of the following apply:
(i) The person has a present or future beneficial interest in a trust, vested or contingent.
(ii) The person holds a power of appointment over trust property in a capacity other than that of trustee or trust director.
(n) (m) "Trust director" means that term as defined in section 7703a.
(o) (n) "Trust instrument" means a governing instrument that contains the terms of the trust, including any amendment to a term of the trust.
Sec. 7110. (1) A Subject to subsection (2), a charitable organization expressly named in the terms of a trust designated to receive distributions under the terms of a charitable trust has the rights of a qualified trust beneficiary under this article if 1 or more of the following are applicable apply to the charitable organization on the date the charitable organization's qualification is being determined:
(a) The charitable organization is a distributee or permissible distributee of trust income or principal.
(b) The charitable organization would be a distributee or permissible distributee of trust income or principal on the termination of the interests of other distributees or permissible distributees then receiving or eligible to receive distributions.
(c) The charitable organization would be a distributee or permissible distributee of trust income or principal if the trust terminated on that date.
(2) If a charitable organization that is not described in subsection (1)(a) on the date of the organization's qualification is described in subsection (1)(b) or (c) on that date, that organization does not then have the rights of a qualified trust beneficiary if, as of the time of the creation of the trust, the probability of the organization's interest's ever becoming possessory was so low, or the expected time of its becoming possessory, if at all, so distant as to make it seem likely, in light of the terms of the trust, that the settlor's intent in creating the organization's interest was primarily to avoid the imposition of a resulting trust.
(3) (2) A person appointed to enforce a trust created for the care of an animal under section 7408 or another noncharitable trust under section 7409 has the rights of a qualified trust beneficiary under this article.
(4) (3) During the nondisclosure period of a trust described in section 7409a, a person granted a nondisclosure correlative right or protection power over the trust has the rights of a qualified trust beneficiary under this article.
(5) (4) The attorney general of this state has the following rights with respect to a charitable trust having its principal place of administration in this state:
(a) The rights provided in the supervision of trustees for charitable purposes act, 1961 PA 101, MCL 14.251 to 14.266.
(b) The right to notice of any judicial proceeding and any nonjudicial settlement agreement under section 7111.
