Divide (Trustees) and Conquer

By Jeanne E. Murphy posted 06-10-2019 09:53

  

Effective March 29, 2019, Michigan has a new legislative scheme for separating trustees’ powers, duties, and liabilities. 2018 PA 662 added MCL 700.7703b to the Michigan Trust Code. This new section allows the duties of distribution and investment to be assigned to a separate trustee or trustees and provides for a “resultant trustee” to have any remaining powers, duties, and liabilities.

Michigan is in the forefront of trust law with this new legislation. No other state has a similar provision. Some features of the legislation include the following:

  • Separate trustees are generally not cotrustees (but see MCL 700.7703b(2)(c)).
  • If a trust has a sole beneficiary, that beneficiary cannot serve as the sole separate trustee for either the distribution or investment function or as the resultant trustee.
  • Separate trustees are subject to the settlor’s or trust director’s direction.
  • Separate trustees do not have a duty to monitor the other trustees.
  • Generally, there is no liability for a separate trustee for the acts of other separate trustees (but see MCL 700.7703b(9)(a), (c), (d)).

Due to the limitation of liability for each separate trustee, institutions and individuals may be more likely to serve as trustees in one of the new narrow roles.

For a complete rundown of the new legislation, see Mark Harder's commentary. 

 

 

0 comments
59 views

Permalink