A New Trust Direction

By Jeanne E. Murphy posted 03-04-2019 14:20


Effective March 29, 2019, “trust directors” will replace “trust protectors” under EPIC, thanks to legislation drafted by James Spica. 2018 PA 663 imports the Uniform Directed Trust Act (with some changes) into EPIC at MCL 700.7703a. The purpose of the UDTA, according to Mark Harder, is “to bring some order and certainty to the law governing . . . trust protectors, trust advisors, or trust directors, . . . arrangements [with] the common feature of granting someone other than a trustee a power over some part of the administration of a trust.”

MCL 700.7703a changes the scope of the trust protector’s (to become the trust director’s) duties to trust beneficiaries as well as the circumstances in which a trustee can be liable for following direction by the trust protector/director.

Some other features of the new statute include the following:

  • Nonmodifiable provisions ensure trust directors have minimum fiduciary obligations, MCL 700.7703a(4), (5), and (8).
  • Trustees must abide by the trust director’s direction.
  • Trustees who follow the direction of the trust director are excused from liability if the direction is within the scope of the trust director’s power of direction.
  • Powers the trust director does not possess include some powers of appointment, powers to remove and appoint trustees and trust directors, and powers to direct held by the settlor who has a power to revoke the trust. For others powers, see MCL 700.7703a(1).

This new legislation will apply to existing trusts with powers to direct, but it will not apply to actions that predate March 29, 2019 (the effective date of 2018 PA 663).

If you are a member of the Probate and Estate Planning Section of the State Bar, see Jim Spica’s article in the Michigan Probate & Estate Planning Journal for a comprehensive discussion of the statute. Mark Harder has also provided excellent commentary on MCL 700.7703a.