Michigan Laws 700.1049 – Power or capacity of trust beneficiary to transfer income; attachment; assignment; claim or action against trustee; disclaiming interest in trust
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Terms Used In Michigan Laws 700.1049
- Attachment: A procedure by which a person's property is seized to pay judgments levied by the court.
- Beneficiary: A person who is entitled to receive the benefits or proceeds of a will, trust, insurance policy, retirement plan, annuity, or other contract. Source: OCC
- Claim: means a right to payment, whether or not the right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured. 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
- Lien: A claim against real or personal property in satisfaction of a debt.
- 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 disposition: means , subject to subparagraphs (iii) and (iv), a disposition after which both subparagraphs (i) and (ii) apply to the subject property:
(i) The subject property is owned by 1 or more trustees at least 1 of whom is a qualified trustee. See Michigan Laws 700.1042Trust beneficiary: 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 Trustee: A person or institution holding and administering property in trust.
(1) A trust beneficiary does not have the power or capacity to transfer any of the income from a trust or portion of a trust that is a qualified disposition by his or her order, voluntary or involuntary, or by an order or direction of a court.
(2) Except as otherwise provided in this act, the interest of a beneficiary in a trust or portion of a trust that is a qualified disposition is not subject to a process of attachment issued against the beneficiary, and may not be taken in execution under any form of legal process directed against the beneficiary, trustee, trust estate, or any part of the income of the trust estate, but the whole of the trust estate and the income of the trust estate must go to and be applied by the trustee solely for the benefit of the beneficiary, free, clear, and discharged of and from all obligations of the beneficiary.
(3) The trustee of a qualified disposition shall disregard and oppose an assignment or other act, voluntary or involuntary, that is attempted contrary to this section. The trustee is entitled to reimbursement for all attorney fees, costs, and expenses associated with carrying out this duty, and the amount of the attorney fees, costs, and expenses is a lien against the property that is the subject of the qualified disposition. A trustee is not liable, and a trust beneficiary or any successor trust beneficiary does not have a claim or cause of action against a trustee, for a breach of this duty unless the trustee’s breach was in bad faith or the result of reckless indifference to the purposes of the trust or the interests of the trust beneficiaries.
(4) This section does not prohibit a beneficiary from disclaiming an interest in a trust or portion of a trust that is a qualified disposition or from exercising a power of appointment.