Michigan Laws 700.1044 – Powers and rights of transferor
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Terms Used In Michigan Laws 700.1044
- Advisor: means a person who is given authority by the terms of a trust instrument to remove, appoint, or both, 1 or more trustees or to direct, consent to, approve, or veto a trustee's actual or proposed investment or distribution decisions. See Michigan Laws 700.1042
- Annuity: A periodic (usually annual) payment of a fixed sum of money for either the life of the recipient or for a fixed number of years. A series of payments under a contract from an insurance company, a trust company, or an individual. Annuity payments are made at regular intervals over a period of more than one full year.
- Discretionary trust provision: means that term as defined in section 7103 of the estates and protected individuals code, 1998 PA 386, MCL 700. See Michigan Laws 700.1042
- Disposition: means a transfer of property that either creates a new fiduciary relation between at least 1 trustee and a trust beneficiary or newly subjects property to a preexisting fiduciary relation between at least 1 trustee and a trust beneficiary. See Michigan Laws 700.1042
- Grantor: The person who establishes a trust and places property into it.
- grantor: may be construed as including every person from or by whom any estate in lands passes in or by any deed. See Michigan Laws 8.3e
- Organization: means that term as defined in section 1106 of the estates and protected individuals code, 1998 PA 386, MCL 700. See Michigan Laws 700.1042
- Property: means that term as defined in section 1106 of the estates and protected individuals code, 1998 PA 386, MCL 700. See Michigan Laws 700.1042
- Qualified trustee: means a person, other than the transferor, who meets all of the following conditions:
(i) For an individual, the individual is a resident of this state or, in all other cases, is authorized by the law of this state to act as a trustee and whose activities are subject to supervision by the department of insurance and financial services, the Federal Deposit Insurance Corporation, the Comptroller of the Currency, or the Office of Thrift Supervision. See Michigan Laws 700.1042Real property: Land, and all immovable fixtures erected on, growing on, or affixed to the land. Remainder: An interest in property that takes effect in the future at a specified time or after the occurrence of some event, such as the death of a life tenant. Retirement benefit: means an interest in 1 of the following types of assets if payable to a trust as a beneficiary or owned by the trust: a qualified or nonqualified annuity; a benefit under a qualified or nonqualified plan of deferred compensation; any account in, or benefit payable under, any pension, profit-sharing, stock bonus, or other qualified retirement plan; any individual retirement account or trust; and all benefits under a plan or arrangement that is established under section 401, 403, 408, 408A, or 457 or a similar provision of the internal revenue code of 1986, 26 USC 401, 403, 408, 408A, and 457. See Michigan Laws 700.1042 Special power of appointment: means a special power as defined in section 2 of the powers of appointment act of 1967, 1967 PA 224, MCL 556. See Michigan Laws 700.1042 Support provision: means that term as defined in section 7103 of the estates and protected individuals code, 1998 PA 386, MCL 700. See Michigan Laws 700.1042 Transferor: means any of the following, as applicable:
(i) A person and, for more than 1 owner of undivided interests, each of several persons, who, as a beneficial owner of certain property, or as the holder of a general power of appointment over certain property, directly or indirectly, makes a disposition of the property or causes a disposition to be made. See Michigan Laws 700.1042Trust instrument: means an instrument appointing a qualified trustee or qualified trustees for the property that is the subject of a disposition to which all of the following apply:
(i) The instrument expressly incorporates the law of this state to govern the validity, construction, and administration of the trust. See Michigan Laws 700.1042Trustee: A person or institution holding and administering property in trust. Veto: The procedure established under the Constitution by which the President/Governor refuses to approve a bill or joint resolution and thus prevents its enactment into law. A regular veto occurs when the President/Governor returns the legislation to the house in which it originated. The President/Governor usually returns a vetoed bill with a message indicating his reasons for rejecting the measure. In Congress, the veto can be overridden only by a two-thirds vote in both the Senate and the House.
(1) A transferor has only the powers and rights that are conferred by the trust instrument. Except as otherwise provided in subsection (2), a transferor does not have powers or rights with respect to the property that is the subject of a qualified disposition or the income from the property, and any agreement or understanding that purports to grant or permit the retention of any greater powers or rights is void.
(2) A trust instrument may provide for 1 or more of the following rights, powers, or interests, none of which grants or is considered, either alone or in any combination, a power to revoke a trust:
(a) The transferor’s power to direct the investment decisions of the trust.
(b) The transferor’s power to veto a distribution from the trust.
(c) A special power of appointment exercisable by will or other written instrument of the transferor effective only on the transferor’s death.
(d) The transferor’s potential or actual receipt of income, including rights to the income retained in the trust instrument.
(e) The transferor’s potential or actual receipt of income or principal from a charitable remainder unitrust or charitable remainder annuity trust as those terms are defined in section 664 of the internal revenue code of 1986, 26 USC 664; and the transferor’s right, at any time by written instrument delivered to the trustee, to release the transferor’s interest in the trust, in whole or in part, in favor of a charitable organization that has or charitable organizations that have a succeeding beneficial interest in the trust.
(f) The transferor’s potential or actual receipt of income or principal from a grantor retained annuity trust or grantor retained unitrust as those terms are described in section 2702 of the internal revenue code of 1986, 26 USC 2702, or the transferor’s receipt each year of a percentage, not to exceed 5%, as provided in the governing instrument of the initial value of the trust property which value may be described either as a percentage or a fixed amount or determined from time to time under the governing instrument.
(g) The transferor’s potential or actual receipt or use of principal if the potential or actual receipt or use of principal would be the result of a trustee’s acting under any of the following:
(i) A discretionary trust provision.
(ii) A support provision.
(iii) The direction of an advisor acting under a discretionary trust provision or support provision.
(h) The transferor’s right to remove a trustee or advisor and to appoint a new trustee or advisor.
(i) The transferor’s potential or actual use of real property held under a qualified personal residence trust within the meaning of that term as described in section 2702(c) of the internal revenue code of 1986, 26 USC 2702(c), or the transferor’s possession and enjoyment of a qualified annuity interest within the meaning of that term as described in 26 C.F.R. § 25.2702-5(c)(8).
(j) The transferor’s potential or actual receipt of income or principal to pay, in whole or in part, income taxes due on income of the trust if the potential or actual receipt of income or principal is under a provision in the trust instrument that expressly provides for the payment of those taxes and if the potential or actual receipt of income or principal would be the result of a qualified trustee‘s or qualified trustees’ acting in any of the following ways:
(i) In the qualified trustee’s or qualified trustees’ discretion or under a mandatory direction in the trust instrument.
(ii) At the direction of an advisor who is acting in the advisor’s discretion.
(k) After the transferor’s death, the power of a qualified trustee to pay the transferor’s debts, the expenses of administering the transferor’s estate, or any estate or inheritance tax imposed on or with respect to the transferor’s estate, without regard to the source of the payment.
(l) The transferor’s actual or potential receipt of a minimum required distribution as defined in 26 USC 4974(b) with respect to a retirement benefit.