HOUSE BILL No. 6716

 

November 19, 2008, Introduced by Rep. Schuitmaker and referred to the Committee on Judiciary.

 

     A bill to amend 1998 PA 386, entitled

 

"Estates and protected individuals code,"

 

by amending sections 1103, 1104, 1105, 1106, 1107, 1201, 1209,

 

1210, 1212, 1214, 1308, 1403, 1507, 2705, 2722, 2901, 3104, 3403,

 

3703, 3705, 3713, 3715, 3801, 3803, 3805, 3915, 5407, 5421, 7101,

 

7102, 7103, 7104, 7105, 7201, 7202, 7203, 7204, 7205, 7206, 7207,

 

7301, 7302, 7303, 7304, 7305, 7401, 7402, 7403, 7404, 7405, 7406,

 

7407, 7410, 7501, 7502, 7503, 7504, 7505, 7506, 7507, and 7508 (MCL

 

700.1103, 700.1104, 700.1105, 700.1106, 700.1107, 700.1201,

 

700.1209, 700.1210, 700.1212, 700.1214, 700.1308, 700.1403,

 

700.1507, 700.2705, 700.2722, 700.2901, 700.3104, 700.3403,

 

700.3703, 700.3705, 700.3713, 700.3715, 700.3801, 700.3803,

 

700.3805, 700.3915, 700.5407, 700.5421, 700.7101, 700.7102,

 

700.7103, 700.7104, 700.7105, 700.7201, 700.7202, 700.7203,

 

700.7204, 700.7205, 700.7206, 700.7207, 700.7301, 700.7302,

 

700.7303, 700.7304, 700.7305, 700.7401, 700.7402, 700.7403,

 

700.7404, 700.7405, 700.7406, 700.7407, 700.7410, 700.7501,

 

700.7502, 700.7503, 700.7504, 700.7505, 700.7506, 700.7507, and

 

700.7508), sections 1103 and 7503 as amended by 2000 PA 177,

 

section 1104 as amended by 2006 PA 299, sections 1105, 3803, 7303,

 

and 7406 as amended and section 7410 as added by 2004 PA 314,

 

section 1106 as amended by 2004 PA 532, sections 1107, 1214, 7206,

 

7501, and 7507 as amended by 2000 PA 54, section 3705 as amended by

 

2004 PA 481, sections 3715, 7401, 7502, and 7508 as amended by 2005

 

PA 204, and section 3805 as amended by 2007 PA 73, by amending the

 

heading of article VII and the headings of parts 1, 2, 3, 4, and 5

 

of article VII, by adding sections 7107, 7108, 7109, 7110, 7111,

 

7112, 7113, 7208, 7209, 7210, 7211, 7411, 7412, 7413, 7414, 7415,

 

7416, 7417, 8201, 8202, 8204, and 8206, and by adding parts 6, 7,

 

8, and 9 to article VII; and to repeal acts and parts of acts.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 1103. As used in this act:

 

     (a) "Agent" includes, but is not limited to, an attorney-in-

 

fact under a durable or nondurable power of attorney and an

 

individual authorized to make decisions as a patient advocate

 

concerning another's health care.

 

     (b) "Application" means a written request to the probate

 

register for an order of informal probate or informal appointment

 

under part 3 of article III.

 

     (c) "Attorney" means, if appointed to represent a child under

 

the provisions referenced in section 5213, an attorney serving as

 

the child's legal advocate in the manner defined and described in

 

section 13a of chapter XIIA of the probate code of 1939, 1939 PA

 

288, MCL 712A.13a.

 

     (d) "Beneficiary" includes, but is not limited to, the

 

following:

 

     (i) In relation to a trust, beneficiary, a person that is an

 

interested a trust beneficiary as defined in section 7103.

 

     (ii) In relation to a charitable trust, a person that is

 

entitled to enforce the trust.

 

     (iii) In relation to a beneficiary of a beneficiary designation,

 

a person that is a beneficiary of an insurance or annuity policy,

 

of an account with POD designation, of a security registered in

 

beneficiary form (TOD), of a pension, profit-sharing, retirement,

 

or similar benefit plan, or of another nonprobate transfer at

 

death.

 

     (iv) In relation to a beneficiary designated in a governing

 

instrument, a person that is a grantee of a deed, devisee, trust

 

beneficiary, beneficiary of a beneficiary designation, donee,

 

appointee, taker in default of a power of appointment, or person in

 

whose favor a power of attorney or power held in an individual,

 

fiduciary, or representative capacity is exercised.

 

     (e) "Beneficiary designation" means the naming in a governing

 

instrument of a beneficiary of an insurance or annuity policy, of

 

an account with POD designation, of a security registered in

 

beneficiary form (TOD), of a pension, profit-sharing, retirement,

 

or similar benefit plan, or of another nonprobate transfer at

 

death.

 

     (f) "Child" includes, but is not limited to, an individual

 

entitled to take as a child under this act by intestate succession

 

from the parent whose relationship is involved. Child does not

 

include an individual who is only a stepchild, a foster child, or a

 

grandchild or more remote descendant.

 

     (g) "Claim" includes, but is not limited to, in respect to a

 

decedent's or protected individual's estate, a liability of the

 

decedent or protected individual, whether arising in contract,

 

tort, or otherwise, and a liability of the estate that arises at or

 

after the decedent's death or after a conservator's appointment,

 

including funeral and burial expenses and costs and expenses of

 

administration. Claim does not include an estate or inheritance

 

tax, or a demand or dispute regarding a decedent's or protected

 

individual's title to specific property alleged to be included in

 

the estate.

 

     (h) "Conservator" means a person appointed by a court to

 

manage a protected individual's estate.

 

     (i) "Cost-of-living adjustment factor" means a fraction, the

 

numerator of which is the United States consumer price index for

 

the prior calendar year and the denominator of which is the United

 

States consumer price index for 1997. As used in this subdivision,

 

"United States consumer price index" means the annual average of

 

the United States consumer price index for all urban consumers as

 

defined and reported by the United States department of labor,

 

bureau of labor statistics, or its successor agency, and as

 

certified by the state treasurer.

 

     (j) "Court" means the probate court or, when applicable, the

 

family division of circuit court.

 

     (k) "Current trust beneficiary" means a beneficiary about

 

which either of the following is true:

 

     (i) The beneficiary has a current right to receive all or a

 

portion of the income, if any, of the trust property.

 

     (ii) The beneficiary is currently eligible to receive all or a

 

portion of a mandatory or discretionary distribution of income or

 

principal.

 

     (k) (l) "Descendant" means, in relation to an individual, all

 

of his or her descendants of all generations, with the relationship

 

of parent and child at each generation being determined by the

 

definitions of child and parent contained in this act.

 

     (l) (m) "Devise" means, when used as a noun, a testamentary

 

disposition of real or personal property and, when used as a verb,

 

to dispose of real or personal property by will.

 

     (m) (n) "Devisee" means a person designated in a will to

 

receive a devise. For the purposes of article II, for a devise to a

 

trustee of an existing trust or to a trustee under a will, the

 

trustee is a devisee and a beneficiary is not.

 

     (n) (o) "Disability" means cause for a protective order as

 

described in section 5401.

 

     (o) (p) "Distributee" means a person that receives a

 

decedent's property from the decedent's personal representative or

 

trust property from the trustee other than as a creditor or

 

purchaser. A testamentary trustee is a distributee only to the

 

extent that distributed property or an increment of the distributed

 

property remains in the trustee's hands. A testamentary trust

 

beneficiary to whom the trustee distributes property received from

 

a personal representative is a distributee of the personal

 

representative. For the purposes of this subdivision, "testamentary

 

trustee" includes a trustee to whom property is transferred by will

 

to the extent of the devised property.

 

     Sec. 1104. As used in this act:

 

     (a) "Environmental law" means a federal, state, or local law,

 

rule, regulation, or ordinance that relates to the protection of

 

the environment or human health.

 

     (b) "Estate" includes the property of the decedent, trust, or

 

other person whose affairs are subject to this act as the property

 

is originally constituted and as it exists throughout

 

administration. Estate also includes the rights described in

 

sections 3805, 3922, and 7502 7606 to collect from others amounts

 

necessary to pay claims, allowances, and taxes.

 

     (c) "Exempt property" means property of a decedent's estate

 

that is described in section 2404.

 

     (d) "Family allowance" means the allowance prescribed in

 

section 2403.

 

     (e) "Fiduciary" includes, but is not limited to, a personal

 

representative, guardian, conservator, trustee, plenary or

 

guardian, partial guardian, appointed as provided in chapter 6 of

 

the mental health code, 1974 PA 258, MCL 330.1600 to 330.1644, and

 

successor fiduciary.

 

     (f) "Financial institution" means an organization authorized

 

to do business under state or federal laws relating to a financial

 

institution and includes, but is not limited to, a bank, trust

 

company, savings bank, building and loan association, savings and

 

loan company or association, and credit union.

 

     (g) "Foreign personal representative" means a personal

 

representative appointed by another jurisdiction.

 

     (h) "Formal proceedings" means proceedings conducted before a

 

judge with notice to interested persons.

 

     (i) "Funeral establishment" means that term as defined in

 

section 1801 of the occupational code, 1980 PA 299, MCL 339.1801,

 

and the owners, employees, and agents of the funeral establishment.

 

     (j) "General personal representative" means a personal

 

representative other than a special personal representative.

 

     (k) "Governing instrument" means a deed; will; trust;

 

insurance or annuity policy; account with POD designation; security

 

registered in beneficiary form (TOD); pension, profit-sharing,

 

retirement, or similar benefit plan; instrument creating or

 

exercising a power of appointment or a power of attorney; or

 

dispositive, appointive, or nominative instrument of any similar

 

type.

 

     (l) "Guardian" means a person who has qualified as a guardian

 

of a minor or a legally incapacitated individual under a parental

 

or spousal nomination or a court appointment and includes a limited

 

guardian as described in sections 5205, 5206, and 5306. Guardian

 

does not include a guardian ad litem.

 

     (m) "Hazardous substance" means a substance defined as

 

hazardous or toxic or otherwise regulated by an environmental law.

 

     (n) "Heir" means, except as controlled by section 2720, a

 

person, including the surviving spouse or the state, that is

 

entitled under the statutes of intestate succession to a decedent's

 

property.

 

     (o) "Homestead allowance" means the allowance prescribed in

 

section 2402.

 

     Sec. 1105. As used in this act:

 

     (a) "Incapacitated individual" means an individual who is

 

impaired by reason of mental illness, mental deficiency, physical

 

illness or disability, chronic use of drugs, chronic intoxication,

 

or other cause, not including minority, to the extent of lacking

 

sufficient understanding or capacity to make or communicate

 

informed decisions.

 

     (b) "Informal proceedings" means proceedings for probate of a

 

will or appointment of a personal representative conducted by the

 

probate register without notice to interested persons.

 

     (c) "Interested person" or "person interested in an estate"

 

includes, but is not limited to, the incumbent fiduciary; an heir,

 

devisee, child, spouse, creditor, and beneficiary and any other

 

person that has a property right in or claim against a trust estate

 

or the estate of a decedent, ward, or protected individual; a

 

person that has priority for appointment as personal

 

representative; and a fiduciary representing an interested person.

 

Identification of interested persons may vary from time to time and

 

shall be determined according to the particular purposes of, and

 

matter involved in, a proceeding, and by the supreme court rules.

 

     (d) "Interested trust beneficiary" means a person that has 1

 

or more of the following interests in the trust:

 

     (i) Life estate.

 

     (ii) Eligible recipient of a mandatory or discretionary

 

distribution by the trustee of income or principal.

 

     (iii) Eligible recipient of a mandatory or discretionary

 

distribution by the trustee of income or principal upon termination

 

of an interest of a person described in subparagraph (i) or (ii).

 

     (iv) Presently exercisable or testamentary general or special

 

power of appointment.

 

     (d) (e) "Issue" means an individual's descendant.

 

     (e) (f) "Joint tenants with the right of survivorship"

 

includes, but is not limited to, co-owners or ownership of property

 

held under circumstances that entitle 1 or more to the whole of the

 

property on the death of the other or others, but does not include

 

forms of co-ownership registration in which the underlying

 

ownership of each party is in proportion to that party's

 

contribution.

 

     (f) "Jurisdiction," with respect to a geographic area,

 

includes a county, state, or country.

 

     (g) "Lawyer-guardian ad litem" means an attorney appointed

 

under section 5213 or 5219 who has the powers and duties referenced

 

by and provided in section 5213.

 

     (h) "Lease" includes, but is not limited to, an oil, gas, or

 

other mineral lease.

 

     (i) "Legally incapacitated individual" means an individual,

 

other than a minor, for whom a guardian is appointed under this act

 

or an individual, other than a minor, who has been adjudged by a

 

court to be an incapacitated individual.

 

     (j) "Letters" includes, but is not limited to, letters

 

testamentary, letters of guardianship, letters of administration,

 

and letters of conservatorship.

 

     Sec. 1106. As used in this act:

 

     (a) "Mental health professional" means an individual who is

 

trained and experienced in the area of mental illness or

 

developmental disabilities and who is 1 of the following:

 

     (i) A physician who is licensed to practice medicine or

 

osteopathic medicine and surgery in this state under article 15 of

 

the public health code, 1978 PA 368, MCL 333.16101 to 333.18838.

 

     (ii) A psychologist licensed to practice in this state under

 

article 15 of the public health code, 1978 PA 368, MCL 333.16101 to

 

333.18838.

 

     (iii) A registered professional nurse licensed to practice in

 

this state under article 15 of the public health code, 1978 PA 368,

 

MCL 333.16101 to 333.18838.

 

     (iv) Until July 1, 2005, a social worker registered as a

 

certified social worker under article 15 of the public health code,

 

1978 PA 368, MCL 333.16101 to 333.18838. Beginning July 1, 2005, a

 

A licensed master's social worker licensed under article 15 of the

 

public health code, 1978 PA 368, MCL 333.16101 to 333.18838.

 

     (v) A physician's assistant licensed to practice in this state

 

under article 15 of the public health code, 1978 PA 368, MCL

 

333.16101 to 333.18838.

 

     (vi) A licensed professional counselor licensed under part 181

 

of the public health code, 1978 PA 368, MCL 333.18101 to 333.18117.

 

     (b) "Michigan prudent investor rule" means the fiduciary

 

investment and management rule prescribed by part 5 of this

 

article.

 

     (c) "Minor" means an individual who is less than 18 years of

 

age.

 

     (d) "Minor ward" means a minor for whom a guardian is

 

appointed solely because of minority.

 

     (e) "Money" means legal tender or a note, draft, certificate

 

of deposit, stock, bond, check, or credit card.

 

     (f) "Mortgage" means a conveyance, agreement, or arrangement

 

in which property is encumbered or used as security.

 

     (g) "Nonresident decedent" means a decedent who was domiciled

 

in another jurisdiction at the time of his or her death.

 

     (h) "Organization" means a corporation, business trust,

 

estate, trust, partnership, limited liability company, association,

 

or joint venture; , association, limited liability company,

 

government, governmental subdivision, or agency, or

 

instrumentality; public corporation; or another legal or commercial

 

entity.

 

     (i) "Parent" includes, but is not limited to, an individual

 

entitled to take, or who would be entitled to take, as a parent

 

under this act by intestate succession from a child who dies

 

without a will and whose relationship is in question. Parent does

 

not include an individual who is only a stepparent, foster parent,

 

or grandparent.

 

     (j) "Partial guardian" means that term as defined in section

 

600 of the mental health code, 1974 PA 258, MCL 330.1600.

 

     (k) (j) "Patient advocate" means an individual designated to

 

exercise powers concerning another individual's care, custody, and

 

medical or mental health treatment or authorized to make an

 

anatomical gift on behalf of another individual, or both, as

 

provided in section 5506.

 

     (l) (k) "Patient advocate designation" means the written

 

document executed and with the effect as described in sections 5506

 

to 5515.

 

     (m) (l) "Payor" means a trustee, insurer, business entity,

 

employer, government, governmental subdivision or agency, or other

 

person authorized or obligated by law or a governing instrument to

 

make payments.

 

     (n) (m) "Person" means an individual or an organization.

 

     (o) (n) "Personal representative" includes, but is not limited

 

to, an executor, administrator, successor personal representative,

 

and special personal representative, and any other person, other

 

than a trustee of a trust subject to article VII, who performs

 

substantially the same function under the law governing that

 

person's status.

 

     (p) (o) "Petition" means a written request to the court for an

 

order after notice.

 

     (q) "Plenary guardian" means that term as defined in section

 

600 of the mental health code, 1974 PA 258, MCL 330.1600.

 

     (r) (p) "Proceeding" includes an application and a petition,

 

and may be an action at law or a suit in equity. A proceeding may

 

be denominated a civil action under court rules.

 

     (s) (q) "Professional conservator" means a person that

 

provides conservatorship services for a fee. Professional

 

conservator does not include a person who is an individual who is

 

related to all but 2 of the protected individuals for whom he or

 

she is appointed as conservator.

 

     (t) (r) "Professional guardian" means a person that provides

 

guardianship services for a fee. Professional guardian does not

 

include a person who is an individual who is related to all but 2

 

of the wards for whom he or she is appointed as guardian.

 

     (u) (s) "Property" means anything that may be the subject of

 

ownership, and includes both real and personal property or an

 

interest in real or personal property.

 

     (v) (t) "Protected individual" means a minor or other

 

individual for whom a conservator has been appointed or other

 

protective order has been made as provided in part 4 of article V.

 

     (w) (u) "Protective proceeding" means a proceeding under the

 

provisions of part 4 of article V.

 

     Sec. 1107. As used in this act:

 

     (a) "Register" or "probate register" means the official of the

 

court designated to perform the functions of register as provided

 

in section 1304.

 

     (b) "Revised judicature act of 1961" means the revised

 

judicature act of 1961, 1961 PA 236, MCL 600.101 to 600.9948

 

600.9947.

 

     (c) "Security" includes, but is not limited to, a note, stock,

 

treasury stock, bond, debenture, evidence of indebtedness,

 

certificate of interest or participation in an oil, gas, or mining

 

title or lease or in payments out of production under such a title

 

or lease, collateral trust certificate, transferable share, voting

 

trust certificate, or interest in a regulated investment company or

 

other entity generally referred to as a mutual fund or, in general,

 

an interest or instrument commonly known as a security, or a

 

certificate of interest or participation for, a temporary or

 

interim certificate, receipt, or certificate of deposit for, or any

 

warrant or right to subscribe to or purchase any of the items

 

listed in this subdivision.

 

     (d) "Settlement" means, in reference to a decedent's estate,

 

the full process of administration, distribution, and closing.

 

     (e) "Special personal representative" means a personal

 

representative as described by sections 3614 to 3618.

 

     (f) "State" means a state of the United States, the District

 

of Columbia, the Commonwealth of Puerto Rico, or a territory or

 

insular possession subject to the jurisdiction of the United

 

States.

 

     (g) "Successor" means a person, other than a creditor, who is

 

entitled to property of a decedent under the decedent's will or

 

this act.

 

     (h) "Successor personal representative" means a personal

 

representative, other than a special personal representative, who

 

is appointed to succeed a previously appointed personal

 

representative.

 

     (i) "Supervised administration" means the proceedings

 

described in part 5 of article III.

 

     (j) "Survive" means that an individual neither predeceases an

 

event, including the death of another individual, nor is considered

 

to predecease an event under section 2104 or 2702.

 

     (k) "Terms of a trust" or "terms of the trust" means the

 

manifestation of the settlor's intent regarding a trust's

 

provisions as expressed in the terms of the trust or as may be

 

established by other evidence that would be admissible in a

 

judicial proceeding.

 

     (l) (k) "Testacy proceeding" means a proceeding to establish a

 

will or determine intestacy.

 

     (m) (l) "Testator" includes an individual of either sex gender.

 

     (n) (m) "Trust" includes, but is not limited to, an express

 

trust, private or charitable, with additions to the trust, wherever

 

and however created. Trust includes, but is not limited to, a trust

 

created or determined by judgment or decree under which the trust

 

is to be administered in the manner of an express trust. Trust does

 

not include a constructive trust or a resulting trust,

 

conservatorship, personal representative, custodial arrangement

 

under the Michigan uniform transfers to minors act, 1998 PA 433,

 

MCL 554.521 to 554.552, business trust providing for a certificate

 

to be issued to a beneficiary, common trust fund, voting trust,

 

security arrangement, liquidation trust, or trust for the primary

 

purpose of paying debts, dividends, interest, salaries, wages,

 

profits, pensions, or employee benefits of any kind, or another

 

arrangement under which a person is a nominee or escrowee for

 

another.

 

     (o) (n) "Trustee" includes an original, additional, or

 

successor trustee, whether or not appointed or confirmed by the

 

court.

 

     Sec. 1201. This act shall be liberally construed and applied

 

to promote its underlying purposes and policies, which include all

 

of the following:

 

     (a) To simplify and clarify the law concerning the affairs of

 

decedents, missing individuals, protected individuals, minors, and

 

legally incapacitated individuals.

 

     (b) To discover and make effective a decedent's intent in

 

distribution of the decedent's property.

 

     (c) To promote a speedy and efficient system for liquidating a

 

decedent's estate and making distribution to the decedent's

 

successors.

 

     (d) To facilitate use and enforcement of certain trusts.

 

     (d) (e) To make the law uniform among the various

 

jurisdictions, both within and outside of this state.

 

     Sec. 1209. For the purpose of granting consent or approval

 

with regard to the acts or accounts of a personal representative,

 

or trustee, including relief from liability or penalty for failure

 

to post bond , to register a trust, or to perform other duties, the

 

sole holder or all coholders of a presently exercisable or

 

testamentary general or special power of appointment, including 1

 

in the form of a power of amendment or revocation, are deemed to

 

act for beneficiaries to the extent their interests, as objects

 

permissible appointees, takers in default, or otherwise, are

 

subject to the power and to the extent there is no conflict of

 

interest between the holder and the persons represented. For the

 

purpose, however, of granting consent or approval to modification

 

or termination of a trust or to deviation from its terms, including

 

consent or approval to settlement agreements described in section

 

7207, only the holder or holders of a presently exercisable or

 

testamentary general power of appointment are deemed to act for

 

beneficiaries whose interests are subject to the power.

 

     Sec. 1210. (1) The specific dollar amounts stated in sections

 

2102, 2402, 2404, 2405, and 3983 apply to decedents who die before

 

January 1, 2001. For decedents who die after December 31, 2000,

 

these specific dollar amounts shall be multiplied by the cost-of-

 

living adjustment factor for the calendar year in which the

 

decedent dies.

 

     (2) Before February 1, 2001, and annually after 2001, the

 

department of treasury shall publish the cost-of-living adjustment

 

factor to be applied to the specific dollar amounts referred to in

 

subsection (1) for decedents who die during that calendar year and

 

in section 7414 for trusts the value of the property of which is

 

insufficient to justify the cost of administration. A product

 

resulting from application of the cost-of-living adjustment factor

 

to a specific dollar amount must shall be rounded to the nearest

 

$1,000.00 amount.

 

     Sec. 1212. (1) A fiduciary stands in a position of confidence

 

and trust with respect to each heir, devisee, beneficiary,

 

protected individual, or ward for whom the person is a fiduciary. A

 

fiduciary shall observe the standard of care described in section

 

7302 7803 and shall discharge all of the duties and obligations of

 

a confidential and fiduciary relationship, including the duties of

 

undivided loyalty; impartiality between heirs, devisees, and

 

beneficiaries; care and prudence in actions; and segregation of

 

assets held in the fiduciary capacity. With respect to investments,

 

a fiduciary shall conform to the Michigan prudent investor rule.

 

     (2) Except in response to legal process, in cases expressly

 

required by law, or in the necessary or proper administration of

 

the estate, a fiduciary shall not disclose facts or knowledge

 

pertaining to property in the fiduciary's possession or to the

 

affairs of those for whom the fiduciary is acting in any manner

 

without the consent of the heirs, devisees, beneficiaries,

 

protected individuals, or wards. The fiduciary of a minor or an

 

incapacitated individual may give this consent on behalf of that

 

individual. This subsection's restriction on disclosure does not

 

apply in an action or proceeding in which the fiduciary and the

 

fiduciary's heir, devisee, beneficiary, protected individual, or

 

ward are parties adverse to each other after the identity and

 

relationship is determined and established.

 

     Sec. 1214. Unless the governing instrument expressly

 

authorizes such a transaction or investment, unless authorized by

 

the court, except as provided in sections 3713, 5421, or 7802, or

 

except as provided in section 4405 of the banking code of 1999,

 

1999 PA 276, MCL 487.14405, a fiduciary in the fiduciary's personal

 

capacity shall not engage in a transaction with the estate that the

 

fiduciary represents and shall not invest estate money in a

 

company, corporation, or association with which the fiduciary is

 

affiliated, other than as a bondholder or minority stockholder. A

 

fiduciary in the fiduciary's personal capacity shall not personally

 

derive a profit from the purchase, sale, or transfer of the

 

estate's property. A fiduciary's deposit of money in a bank or

 

trust company, in which the fiduciary is interested as an officer,

 

director, or stockholder, does not constitute a violation of this

 

section.

 

     Sec. 1308. (1) A fiduciary is liable for a loss to an estate

 

that arises from embezzlement by the fiduciary; for a loss through

 

commingling estate money with the fiduciary's money; for negligence

 

in the handling of an estate; for wanton and willful mishandling of

 

an estate; for loss through self-dealing; for failure to account

 

for an estate; for failure to terminate the estate when it is ready

 

for termination; and for misfeasance, malfeasance, nonfeasance, or

 

other breach of duty.

 

     (1) A violation by a fiduciary of a duty the fiduciary owes to

 

an heir, devisee, beneficiary, protected individual, or ward for

 

whom the person is a fiduciary is a breach of duty. To remedy a

 

breach of duty that has occurred or may occur, the court may do any

 

of the following:

 

     (a) Compel the fiduciary to perform the fiduciary's duties.

 

     (b) Enjoin the fiduciary from committing a breach of duty.

 

     (c) Compel the fiduciary to redress a breach of duty by paying

 

money, restoring property, or other means.

 

     (d) Order a fiduciary to account.

 

     (e) Appoint a special fiduciary to take possession of the

 

estate's, ward's, protected individual's, or trust property and

 

administer the property.

 

     (f) Suspend the fiduciary.

 

     (g) Remove the fiduciary as provided in this act.

 

     (h) For a fiduciary otherwise entitled to compensation, reduce

 

or deny compensation to the fiduciary.

 

     (i) Subject to other provisions of this act protecting persons

 

dealing with a fiduciary, void an act of the fiduciary, impose a

 

lien or a constructive trust on property, or trace property

 

wrongfully disposed of and recover the property or its proceeds.

 

     (2) In response to an interested person's petition or on its

 

own motion, the court may at any time order a fiduciary of an

 

estate under its jurisdiction to file an accounting. After due

 

hearing on the accounting, the court shall enter an order that

 

agrees with the law and the facts of the case.

 

     Sec. 1403. In a formal proceeding that involves a trust or an

 

estate of a decedent, minor, protected individual, or incapacitated

 

individual or in a judicially supervised settlement relating to

 

such matters, the following apply:

 

     (a) An interest to be affected shall be described in pleadings

 

that give reasonable information to owners by name or class, by

 

reference to the instrument that creates the interests, or in

 

another appropriate manner.

 

     (b) A person is bound by an order binding others in each of

 

the following cases:

 

     (i) An order that binds the sole holder or all coholders of a

 

power of revocation or amendment or a presently exercisable or

 

testamentary general or special power of appointment , including

 

one in the form of a power of amendment, binds another person to

 

the extent the person's interest, as an object a permissible

 

appointee, taker in default, or otherwise, is subject to the power.

 

     (ii) To the extent there is no conflict of interest between the

 

persons represented, an as follows:

 

     (A) An order that binds a conservator, plenary guardian, or

 

partial guardian binds the person whose estate that the

 

conservator, plenary guardian, or partial guardian controls. ; an

 

     (B) An order that binds an agent under a durable power of

 

attorney having authority to act binds the principal if a

 

conservator, plenary guardian, or partial guardian has not been

 

appointed.

 

     (C) An order that binds a guardian having authority to act

 

with respect to the matter binds the ward if no a conservator of

 

the ward's estate has not been appointed and no agent under a

 

durable power of attorney has authority to act. ; an

 

     (D) An order that binds a trustee binds beneficiaries of the

 

trust. in proceedings to probate a will, to establish or add to a

 

trust, or to review an act or account of a prior fiduciary, or in

 

proceedings that involve a creditor or another third party; and an

 

     (E) An order that binds a personal representative binds a

 

person interested in the undistributed assets of a decedent's

 

estate in an action or proceeding by or against the estate. If

 

there is no conflict of interest and a conservator or guardian has

 

not been appointed, a parent may represent his or her minor child.

 

     (F) An order that binds a parent who represents his or her

 

minor or unborn child binds that minor or unborn child if a

 

conservator or plenary guardian has not been appointed.

 

     (iii) An unborn or unascertained person who is not otherwise

 

represented is bound by an order to the extent the person's

 

interest is adequately represented by another party that has a

 

substantially identical interest in the proceeding. A minor,

 

incapacitated, or unborn individual or a person whose identity or

 

location is unknown and not reasonably ascertainable and who is not

 

otherwise represented is bound by an order that binds another party

 

that has a substantially identical interest in the proceeding, but

 

only to the extent there is no conflict of interest between the

 

representation and the person represented.

 

     (c) Notice is required as follows:

 

     (i) Notice as prescribed by section 1401 shall be given to

 

every interested person or to one who can bind an interested person

 

as described in subdivision (b)(i) or (ii). Notice may be given both

 

to a person and to another who may bind the person.

 

     (ii) Notice is given to an unborn or unascertained person, who

 

is not represented under subdivision (b)(i) or (ii), by giving notice

 

to all known persons whose interests in the proceedings are

 

substantially identical to those of the unborn or unascertained

 

person.

 

     (d) At any point in a proceeding, the court may appoint a

 

guardian ad litem to represent the interest of a minor, an

 

incapacitated individual, an unborn or unascertained person, or a

 

person whose identity or address is unknown, if the court

 

determines that representation of the interest otherwise would be

 

inadequate. If not precluded by a conflict of interest, a guardian

 

ad litem may be appointed to represent several persons or

 

interests. The court shall set out the reasons for appointing a

 

guardian ad litem as a part of the record of the proceeding. If he

 

or she accepts the appointment, the guardian ad litem shall report

 

of his or her investigation and recommendation concerning the

 

matters for which he or she is appointed in writing or recorded

 

testimony. In making recommendations, a guardian ad litem may

 

consider the general benefit accruing to living members of the

 

individual's family. After the attorney general files an appearance

 

as required by law in an estate proceeding on behalf of an unknown

 

or unascertained heir at law, the attorney general represents the

 

interest of the heir at law, and the court shall not appoint a

 

guardian ad litem. If a guardian ad litem was previously appointed

 

for the interest, the appointment of the guardian ad litem

 

terminates.

 

     Sec. 1507. If a fiduciary estate has 2 or more beneficiaries,

 

the fiduciary shall act impartially in investing, and managing, and

 

distributing the fiduciary assets, and shall take into account any

 

differing interests of the beneficiaries.

 

     Sec. 2705. A The meaning and legal effect of a governing

 

instrument's meaning and legal effect instrument other than a trust

 

are determined by the local law of the state selected in the

 

governing instrument, unless the application of that law is

 

contrary to the provisions relating to the elective share described

 

in part 2 of this article, the provisions relating to exempt

 

property and allowances described in part 4 of this article, or

 

another public policy of this state otherwise applicable to the

 

disposition.

 

     Sec. 2722. (1) Subject Except as provided by another statute

 

and subject to subsection (3), if a trust is for a specific lawful

 

noncharitable purpose or for lawful noncharitable purposes to be

 

selected by the trustee, and if there is no definite or definitely

 

ascertainable beneficiary designated, the trust may be performed by

 

the trustee for 21 years, but no longer, whether or not the terms

 

of the trust contemplate a longer duration.

 

     (2) Subject to this subsection and subsection (3), a trust for

 

the care of a designated domestic or pet animal is valid. The trust

 

terminates when no living animal is covered by the trust. A

 

governing instrument shall be liberally construed to bring the

 

transfer within this subsection, to presume against the merely

 

precatory or honorary nature of the disposition, and to carry out

 

the general intent of the transferor. Extrinsic evidence is

 

admissible in determining the transferor's intent.

 

     (3) In addition to the provisions of subsection (1) or (2), a

 

trust covered by either of those subsections is subject to the

 

following provisions:

 

     (a) Except as expressly provided otherwise in the trust

 

instrument terms of the trust, no portion of the principal or

 

income may be converted to the use of the trustee or to a use other

 

than for the trust's purposes or for the benefit of a covered

 

animal.

 

     (b) Upon termination, the trustee shall transfer the

 

unexpended trust property in the following order:

 

     (i) As directed in the trust instrument terms of the trust.

 

     (ii) To the settlor, if then living.

 

     (iii) (ii) If the trust was created in a nonresiduary clause in

 

the transferor's will or in a codicil to the transferor's will,

 

under the residuary clause in the transferor's will.

 

     (iv) (iii) If no taker is produced by the application of

 

subparagraph (i), or (ii), or (iii), to the transferor's heirs under

 

section 2720.

 

     (c) For the purposes of sections 2714 to 2716, the residuary

 

clause is treated as creating a future interest under the terms of

 

a trust.

 

     (d) The intended use of the principal or income can may be

 

enforced by an individual designated for that purpose in the trust

 

instrument terms of the trust or, if none, by an individual

 

appointed by a court upon petition to it by an individual. A person

 

having an interest in the welfare of the animal may request the

 

court to appoint a person to enforce the trust or remove a person

 

appointed.

 

     (e) Except as ordered by the court or required by the trust

 

instrument terms of the trust, no filing, report, registration,

 

periodic accounting, separate maintenance of funds, appointment, or

 

fee is required by reason of the existence of the fiduciary

 

relationship of the trustee.

 

     (f) The court may reduce the amount of the property

 

transferred if it determines that that amount substantially exceeds

 

the amount required for the intended use. The amount of the

 

reduction, if any, passes as unexpended trust property under

 

subdivision (b).

 

     (g) If a trustee is not designated or no designated trustee is

 

willing or able to serve, the court shall name a trustee. The court

 

may order the transfer of the property to another trustee if the

 

transfer is necessary to ensure that the intended use is carried

 

out, and if a successor trustee is not designated in the trust

 

instrument terms of the trust or if no designated successor trustee

 

agrees to serve or is able to serve. The court may also make other

 

orders and determinations as are advisable to carry out the intent

 

of the transferor and the purpose of this section.

 

     (h) The trust is not subject to the uniform statutory rule

 

against perpetuities, 1988 PA 418, MCL 554.71 to 554.78.

 

     Sec. 2901. (1) This part shall be known and may be cited as

 

the "disclaimer of property interests law".

 

     (2) As used in this part:

 

     (a) "Agent" means an agent or attorney in fact acting under a

 

written power of attorney and within the scope of his, her, or its

 

authority.

 

     (b) "Disclaimable interest" includes, but is not limited to,

 

property, the right to receive or control property, and a power of

 

appointment. Disclaimable interest does not include an interest

 

retained by or conferred upon the disclaimant by the disclaimant at

 

the creation of the interest. For purposes of this definition, the

 

survivorship interest in joint property is not considered to be an

 

interest retained or conferred upon the disclaimant even if the

 

disclaimant created the joint property.

 

     (c) "Effective date of a governing instrument other than a

 

will or testamentary trust" means the date on which a property

 

right vests or a contract right arises, even though either right is

 

subject to divestment.

 

     (d) "Fiduciary" includes, but is not limited to, an agent, a

 

conservator, a guardian if no conservator has been appointed, a

 

guardian ad litem, a personal representative, a trustee, a probate

 

court acting through a protective order under this act, and a

 

temporary, successor, or foreign fiduciary.

 

     (e) "Fiduciary power" means a management power relating to the

 

administration or management of assets similar to those powers

 

granted to a personal representative in section 3715 and a trustee

 

in section 7401 sections 7816 and 7817, and granted by law to a

 

fiduciary or conferred upon a fiduciary in a governing instrument.

 

     (f) "Governing instrument" means a deed, assignment, bill of

 

sale, will, trust, beneficiary designation, contract, instrument

 

creating or exercising a power of appointment or a power of

 

attorney, or another instrument under which property devolves, a

 

property right is created, or a contract right is created.

 

Governing instrument includes the provable terms of an oral

 

contract or arrangement under which property devolves or a property

 

right is created.

 

     (g) "Joint property" means property that is owned by 2 or more

 

persons with rights of survivorship, and includes a tenancy by the

 

entireties in real property, a tenancy in personal property as

 

provided in section 1 of 1927 PA 212, MCL 557.151, a joint tenancy,

 

a joint tenancy with rights of survivorship, and a joint life

 

estate with contingent remainder in fee. For purposes of this part,

 

joint property is considered to consist of a present interest and a

 

future interest. The future interest is the right of survivorship.

 

     (h) "Person" includes an entity and an individual, but does

 

not include a fiduciary, an estate, or a trust.

 

     (i) "Property" means anything that may be the subject of

 

ownership. Property includes both real and personal property and an

 

interest in property, including a present interest; a future

 

interest; a legal interest; an equitable interest; an interest

 

acquired by testate succession, by intestate or other statutory

 

succession, by succession to a disclaimed interest, or by lapse or

 

release of a power of appointment; or an interest that may be

 

otherwise acquired under a governing instrument.

 

     (j) "Trust" means a fiduciary relationship with respect to

 

property that subjects the person who holds title to the property

 

to equitable duties to deal with the property for the benefit of

 

another person, which fiduciary relationship arises as a result of

 

a manifestation of an intention to create it. Trust includes an

 

express trust, private or charitable, with additions to the trust,

 

whether created by will or other than by will, and includes a trust

 

created by statute, judgment, or decree under which the trust is to

 

be administered in the manner of an express trust. Trust does not

 

include a constructive trust or a resulting trust.

 

     Sec. 3104. (1) Except as otherwise provided in subsection (2),

 

a proceeding to enforce a claim against a decedent's estate or the

 

decedent's successors shall not be revived or commenced before the

 

appointment of a personal representative. After the appointment and

 

until distribution, a proceeding or action to enforce a claim

 

against the estate is governed by the procedure prescribed by this

 

article. After distribution, a creditor whose claim has not been

 

barred may recover from the distributees as provided in section

 

3955 or from a former personal representative individually liable

 

as provided in section 3956.

 

     (2) This act does not apply to a proceeding by a secured

 

creditor of the decedent to enforce the creditor's right to the

 

creditor's security except as provided in part 8 of article III and

 

part 5 6 of article VII.

 

     Sec. 3403. (1) Upon commencement of a formal testacy

 

proceeding, the court shall fix a time and place of hearing. The

 

petitioner shall give notice in the manner prescribed by section

 

1401 to each of the following persons:

 

     (a) The decedent's heirs.

 

     (b) The devisees and personal representatives named in a will

 

that is being, or has been, probated or offered for informal or

 

formal probate in the county, or that is known by the petitioner to

 

have been probated or offered for informal or formal probate

 

elsewhere.

 

     (c) A personal representative of the decedent whose

 

appointment has not been terminated.

 

     (d) A person who has filed a demand for notice under section

 

3205.

 

     (e) The trustee of a trust described in section 7501(1)

 

7605(1) as to which the decedent was settlor.

 

     (2) Notice may be given to other persons. In addition, the

 

petitioner shall give notice by publication to each unknown person

 

and to each known person whose address is unknown who has an

 

interest in the matters being litigated. If the proceeding involves

 

a request for appointment of a personal representative and it

 

appears that the deceased died intestate without leaving a known

 

heir, the petitioner shall give notice to the attorney general,

 

public administration division.

 

     (3) If it appears by the petition or otherwise that the fact

 

of the decedent's death may be in doubt, or on the written demand

 

of an interested person, a copy of the notice of the hearing on the

 

petition shall be sent by registered mail to the alleged decedent

 

at his or her last known address. The court shall direct the

 

petitioner to report the results of, or make and report back

 

concerning, a reasonably diligent search for the alleged decedent

 

in any manner that may seem advisable, including by any of the

 

following methods:

 

     (a) Inserting in 1 or more suitable periodicals a notice

 

requesting information from anyone having knowledge of the alleged

 

decedent's whereabouts.

 

     (b) Notifying law enforcement officials and public welfare

 

agencies in appropriate locations of the alleged decedent's

 

disappearance.

 

     (c) Engaging an investigator's services.

 

     (4) The costs of a search conducted under subsection (3) shall

 

be paid by the petitioner if there is no administration or by the

 

decedent's estate if there is administration.

 

     Sec. 3703. (1) A personal representative is a fiduciary who

 

shall observe the standard of care applicable to a trustee as

 

described by section 7302 7803. A personal representative is under

 

a duty to settle and distribute the decedent's estate in accordance

 

with the terms of a probated and effective will and this act, and

 

as expeditiously and efficiently as is consistent with the best

 

interests of the estate. The personal representative shall use the

 

authority conferred by this act, the terms of the will, if any, and

 

an order in a proceeding to which the personal representative is

 

party for the best interests of claimants whose claims have been

 

allowed and of successors to the estate.

 

     (2) A personal representative shall not be surcharged for acts

 

of administration or distribution if the conduct in question was

 

authorized at the time. Subject to other obligations of

 

administration, an informally probated will is authority to

 

administer and distribute the estate according to the will's terms.

 

Whether issued in an informal or formal proceeding, an order of

 

appointment of a personal representative is authority to distribute

 

apparently intestate property to the decedent's heirs if, at the

 

time of distribution, the personal representative is not aware of a

 

pending testacy proceeding, a proceeding to vacate an order entered

 

in an earlier testacy proceeding, a formal proceeding questioning

 

the personal representative's appointment or fitness to continue,

 

or a supervised administration proceeding. Nothing in this section

 

affects the personal representative's duty to administer and

 

distribute the estate in accordance with the rights of a claimant

 

whose claim has been allowed, the surviving spouse, a minor or

 

dependent child, or a pretermitted child of the decedent as

 

described elsewhere in this act.

 

     (3) Except as to a proceeding that does not survive the

 

decedent's death, a personal representative of a decedent domiciled

 

in this state at death has the same standing to sue and be sued in

 

the courts of this state and the courts of another jurisdiction as

 

the decedent had immediately prior to death.

 

     (4) The personal representative shall keep each presumptive

 

distributee informed of the estate settlement. Until a

 

beneficiary's share is fully distributed, the personal

 

representative shall annually, and upon completion of the estate

 

settlement, account to each beneficiary by supplying a statement of

 

the activities of the estate and of the personal representative,

 

specifying all receipts and disbursements and identifying property

 

belonging to the estate.

 

     Sec. 3705. (1) Not later than 28 days after a personal

 

representative's appointment or other time specified by court rule,

 

the personal representative, except a special personal

 

representative, shall give notice of the appointment to the

 

decedent's heirs and devisees, except those who have executed a

 

written waiver of notice, including, if there has been no formal

 

testacy proceeding and if the personal representative is appointed

 

on the assumption that the decedent died intestate, the devisees in

 

a will mentioned in the application for appointment of a personal

 

representative and to the trustee of a trust described in section

 

7501(1) 7605(1) as to which the decedent was settlor. The personal

 

representative shall give the notice by personal service or by

 

ordinary first-class mail to each person required to receive notice

 

under this subsection whose address is reasonably available to the

 

personal representative. However, the personal representative is

 

not required to notify a person who was adjudicated in a prior

 

formal testacy proceeding to have no interest in the estate. The

 

notice required under this subsection must be in a form approved by

 

the supreme court and must include all of the following

 

information:

 

     (a) That the court will not supervise the personal

 

representative. This statement shall not be included if the

 

appointment is made in a supervised proceeding under part 5 of this

 

article.

 

     (b) That, unless a person files a written objection to the

 

appointment of the person named as personal representative in the

 

notice or files a demand that bond or higher bond be posted, the

 

person named in the notice is the personal representative without

 

bond or with bond in the amount shown in the notice. This statement

 

shall not be included if the personal representative is appointed

 

in a formal appointment proceeding.

 

     (c) The name and address of the person appointed as the

 

estate's personal representative.

 

     (d) That, during the course of administering the estate, the

 

personal representative must provide all interested persons with

 

all of the following:

 

     (i) A copy of the petition for the personal representative's

 

appointment and a copy of the will, if any, with the notice.

 

     (ii) A copy of the inventory.

 

     (iii) A copy of the settlement petition or of the closing

 

statement.

 

     (iv) Unless waived, a copy of the account, including, but not

 

limited to, fiduciary fees and attorney fees charged to the estate.

 

     (e) That an interested person may petition the court for a

 

court hearing on any matter at any time during the estate's

 

administration, including, but not limited to, distribution of

 

assets and expenses of administration.

 

     (f) That federal and Michigan estate taxes, if any, must be

 

paid within 9 months after the date of the decedent's death or

 

another time period specified by law, to avoid penalties.

 

     (g) That, if the estate is not settled within 1 year after the

 

personal representative's appointment, within 28 days after the

 

anniversary of the appointment, the personal representative must

 

file with the court and send to each interested person a notice

 

that the estate remains under administration and must specify the

 

reason for the continuation of settlement proceedings. If such a

 

notice is not received, an interested person may petition the court

 

for a hearing on the necessity for continued administration or for

 

closure of the estate.

 

     (h) The identity and location of the court where papers

 

relating to the estate are on file.

 

     (2) The personal representative's failure to give the

 

information required by subsection (1) is a breach of the personal

 

representative's duty to the persons concerned, but does not affect

 

the validity of the personal representative's appointment, powers,

 

or other duties. A personal representative may inform other persons

 

of the appointment by delivery or ordinary first-class mail.

 

     (3) A personal representative shall also give notice that

 

includes the information described in subsection (1) to the

 

attorney general, public administration division, under any of the

 

following circumstances:

 

     (a) It appears from the petition that the decedent died

 

intestate without leaving a known heir.

 

     (b) In the administration of an intestate estate, it appears

 

that the decedent did not leave a known heir.

 

     (c) In the administration of a testate estate, it appears that

 

devisees of the purported will would not be entitled to share in

 

the estate but for the terms of the will and that the decedent died

 

without leaving a known heir.

 

     (4) If notice is required to be given to the attorney general

 

under subsection (3), the attorney general, representing the this

 

state, has all the rights of an heir to be heard and to contest the

 

validity of a claim, the appointment of a personal representative,

 

an action of the personal representative, an order, an appointment,

 

or an instrument purporting to be a decedent's contract or will,

 

and has all the rights granted or accruing to an heir,

 

representative, or creditor by a law relating to the settlement of

 

a testate or intestate estate in court, or by way of rehearing or

 

appeal.

 

     (5) Within 28 days after the personal representative's

 

appointment or another time specified by court rule, the personal

 

representative, except a special personal representative, shall

 

notify the decedent's surviving spouse, if any, of the spouse's

 

right to election under part 2 of article II and of the time within

 

which the election must be exercised.

 

     (6) Except as otherwise provided in this subsection, at the

 

same time the notice required by subsection (1) is given, the

 

personal representative shall give notice to the friend of the

 

court for the county in which the estate is being administered,

 

which notice identifies the decedent's surviving spouse and the

 

individuals who are, for a testate estate, the devisees or, for an

 

intestate estate, the heirs. The personal representative is not

 

required to notify the friend of the court of a devise to a trustee

 

of an existing trust or to a trustee under the will. A personal

 

representative incurs no obligation or liability to the friend of

 

the court or to another person for an error or omission made in

 

good faith compliance with this subsection.

 

     Sec. 3713. (1) A sale, or encumbrance, to the personal

 

representative, the personal representative's spouse, agent, or

 

attorney, or a corporation or trust or other transaction involving

 

the investment or management of estate property in which the

 

personal representative has a substantial beneficial interest , or

 

a transaction that is otherwise affected by a substantial conflict

 

of interest on the part of the personal representative, between the

 

personal representative's fiduciary and personal interests is

 

voidable by an interested person except a person who consents after

 

fair disclosure, unless any of the following are true:

 

     (a) The will or a contract entered into by the decedent

 

expressly authorized the transaction.

 

     (b) The transaction is approved by the court after notice to

 

interested persons.

 

     (c) The transaction involves a contract entered into or claim

 

acquired by the personal representative before the person became or

 

contemplated becoming personal representative.

 

     (d) (c) The transaction is otherwise permitted by statute.

 

     (2) A sale, encumbrance, or other transaction involving the

 

investment or management of trust property is presumed to be

 

affected by a conflict between personal and fiduciary interests if

 

it is entered into by the personal representative with any of the

 

following:

 

     (a) The personal representative's spouse.

 

     (b) The personal representative's descendant, sibling, or

 

parent or the spouse of the personal representative's descendant,

 

sibling, or parent.

 

     (c) An agent or attorney of the personal representative.

 

     (d) A corporation or other person or enterprise in which the

 

personal representative, or a person that owns a significant

 

interest in the personal representative, has an interest that might

 

affect the personal representative's best judgment.

 

     (3) A transaction not concerning estate property in which the

 

personal representative engages in the personal representative's

 

individual capacity involves a conflict between personal and

 

fiduciary interests if the transaction concerns an opportunity

 

properly belonging to the estate.

 

     (4) An investment by a personal representative in securities

 

of an investment company or investment trust to which the personal

 

representative, or its affiliate, provides services in a capacity

 

other than as personal representative is not presumed to be

 

affected by a conflict between personal and fiduciary interests if

 

the investment otherwise complies with the Michigan prudent

 

investor rule. In addition to its compensation for acting as

 

personal representative, the personal representative may be

 

compensated by the investment company or investment trust for

 

providing those services out of fees charged to the estate. If the

 

personal representative receives compensation from the investment

 

company or investment trust for providing investment advisory or

 

investment management services, the personal representative shall

 

at least annually notify the interested persons of the rate and

 

method by which that compensation was determined.

 

     (5) In voting shares of stock or in exercising powers of

 

control over similar interests in other forms of enterprise, the

 

personal representative shall act in the best interests of the

 

beneficiaries. If the estate is the sole owner of a corporation or

 

other form of enterprise, the personal representative shall elect

 

or appoint directors or other managers to manage the corporation or

 

enterprise in the best interest of the beneficiaries.

 

     (6) This section does not preclude the following transactions,

 

if fair to the beneficiaries:

 

     (a) An agreement between the personal representative and the

 

interested persons relating to the compensation of the personal

 

representative.

 

     (b) Payment of reasonable compensation to the personal

 

representative.

 

     (c) A transaction between the estate and another trust or

 

conservatorship of which the personal representative is a fiduciary

 

or in which a beneficiary has an interest.

 

     (d) A deposit of trust money in a regulated financial service

 

institution operated by or affiliated with the personal

 

representative.

 

     (e) An advance by the personal representative of money for the

 

protection of the estate.

 

     Sec. 3715. Except as restricted or otherwise provided by the

 

will or by an order in a formal proceeding, and subject to the

 

priorities stated in section 3902, a personal representative,

 

acting reasonably for the benefit of interested persons, may

 

properly do any of the following:

 

     (a) Retain property owned by the decedent pending distribution

 

or liquidation, including property in which the personal

 

representative is personally interested or that is otherwise

 

improper for trust investment.

 

     (b) Receive property from a fiduciary or another source.

 

     (c) Perform, compromise, or refuse performance of a contract

 

of the decedent that continues as an estate obligation, as the

 

personal representative determines under the circumstances. If the

 

contract is for a conveyance of land and requires the giving of

 

warranties, the personal representative shall include in the deed

 

or other instrument of conveyance the required warranties. The

 

warranties are binding on the estate as though the decedent made

 

them but do not bind the personal representative except in a

 

fiduciary capacity. In performing an enforceable contract by the

 

decedent to convey or lease land, the personal representative,

 

among other possible courses of action, may do any of the

 

following:

 

     (i) Execute and deliver a deed of conveyance for cash payment

 

of the amount remaining due or for the purchaser's note for the

 

amount remaining due secured by a mortgage on the land.

 

     (ii) Deliver a deed in escrow with directions that the

 

proceeds, when paid in accordance with the escrow agreement, be

 

paid to the decedent's successors, as designated in the escrow

 

agreement.

 

     (d) If, in the judgment of the personal representative, the

 

decedent would have wanted the pledge satisfied under the

 

circumstances, satisfy a written charitable pledge of the decedent

 

irrespective of whether the pledge constitutes a binding obligation

 

of the decedent or is properly presented as a claim.

 

     (e) If funds are not needed to meet a debt or expenses

 

currently payable and are not immediately distributable, deposit or

 

invest liquid assets of the estate, including funds received from

 

the sale of other property, in accordance with the Michigan prudent

 

investor rule.

 

     (f) Acquire or dispose of property, including land in this or

 

another state, for cash or on credit, at public or private sale;

 

and manage, develop, improve, exchange, partition, change the

 

character of, or abandon estate property.

 

     (g) Make an ordinary or extraordinary repair or alteration in

 

a building or other structure, demolish an improvement, or raze an

 

existing or erect a new party wall or building.

 

     (h) Subdivide, develop, or dedicate land to public use, make

 

or obtain the vacation of a plat or adjust a boundary, adjust a

 

difference in valuation on exchange or partition by giving or

 

receiving consideration, or dedicate an easement to public use

 

without consideration.

 

     (i) Enter into a lease as lessor or lessee for any purpose,

 

with or without an option to purchase or renew, for a term within

 

or extending beyond the period of administration.

 

     (j) Enter into a lease or arrangement for exploration and

 

removal of minerals or another natural resource, or enter into a

 

pooling or unitization agreement.

 

     (k) Abandon property when, in the opinion of the personal

 

representative, it is valueless, or is so encumbered or in such a

 

condition as to be of no benefit to the estate.

 

     (l) Vote stocks or another security in person or by general or

 

limited proxy.

 

     (m) Pay a call, assessment, or other amount chargeable or

 

accruing against or on account of a security, unless barred by a

 

provision relating to claims.

 

     (n) Hold a security in the name of a nominee or in other form

 

without disclosure of the estate's interest. However, the personal

 

representative is liable for an act of the nominee in connection

 

with the security so held.

 

     (o) Insure the estate property against damage, loss, and

 

liability and insure the personal representative against liability

 

as to third persons.

 

     (p) Borrow money property with or without security to be

 

repaid from the estate property or otherwise, and advance money for

 

the estate's protection.

 

     (q) Effect a fair and reasonable compromise with a debtor or

 

obligor, or extend, renew, or in any manner modify the terms of an

 

obligation owing to the estate. If the personal representative

 

holds a mortgage, pledge, or other lien upon another person's

 

property, the personal representative may, in lieu of foreclosure,

 

accept a conveyance or transfer of encumbered property from the

 

property's owner in satisfaction of the indebtedness secured by

 

lien.

 

     (r) Pay a tax, an assessment, the personal representative's

 

compensation, or another expense incident to the estate's

 

administration.

 

     (s) Sell or exercise a stock subscription or conversion right.

 

     (t) Consent, directly or through a committee or other agent,

 

to the reorganization, consolidation, merger, dissolution, or

 

liquidation of a corporation or other business enterprise.

 

     (u) Allocate items of income or expense to either estate

 

income or principal, as permitted or provided by law.

 

     (v) Employ, and pay reasonable compensation for reasonably

 

necessary services performed by, a person, including, but not

 

limited to, an auditor, investment advisor, or agent, even if the

 

person is associated with the personal representative, to advise or

 

assist the personal representative in the performance of

 

administrative duties; act on such a person's recommendations

 

without independent investigation; and, instead of acting

 

personally, employ 1 or more agents to perform an act of

 

administration, whether or not discretionary.

 

     (w) Employ an attorney to perform necessary legal services or

 

to advise or assist the personal representative in the performance

 

of the personal representative's administrative duties, even if the

 

attorney is associated with the personal representative, and act

 

without independent investigation upon the attorney's

 

recommendation. An attorney employed under this subdivision shall

 

receive reasonable compensation for his or her employment.

 

     (x) Prosecute or defend a claim or proceeding in any

 

jurisdiction for the protection of the estate and of the personal

 

representative in the performance of the personal representative's

 

duties.

 

     (y) Sell, mortgage, or lease estate property or an interest in

 

estate property for cash, credit, or part cash and part credit, and

 

with or without security for unpaid balances.

 

     (z) Continue a business or venture in which the decedent was

 

engaged at the time of death as a sole proprietor or a general

 

partner, including continuation as a general partner by a personal

 

representative that is a corporation, in any of the following

 

manners:

 

     (i) In the same business form for a period of not more than 4

 

months after the date of appointment of a general personal

 

representative if continuation is a reasonable means of preserving

 

the value of the business, including goodwill.

 

     (ii) In the same business form for an additional period of time

 

if approved by court order in a formal proceeding to which the

 

persons interested in the estate are parties.

 

     (iii) Throughout the period of administration if the personal

 

representative incorporates the business or converts the business

 

to a limited liability company and if none of the probable

 

distributees of the business who are competent adults object to its

 

incorporation or conversion and its retention in the estate.

 

     (aa) Change the form of a business or venture in which the

 

decedent was engaged at the time of death through incorporation or

 

formation as a limited liability company or other entity offering

 

protection against or limiting exposure to liabilities.

 

     (bb) Provide for the personal representative's exoneration

 

from personal liability in a contract entered into on the estate's

 

behalf.

 

     (cc) Respond to an environmental concern or hazard affecting

 

estate property as provided in section 3722.

 

     (dd) Satisfy and settle claims and distribute the estate as

 

provided in this act.

 

     (ee) Make, revise, or revoke an available allocation, consent,

 

or election in connection with a tax matter as appropriate in order

 

to carry out the decedent's estate planning objectives and to

 

reduce the overall burden of taxation, both in the present and in

 

the future. This authority includes, but is not limited to, all of

 

the following:

 

     (i) Electing to take expenses as estate tax or income tax

 

deductions.

 

     (ii) Electing to allocate the exemption from the tax on

 

generation skipping transfers among transfers subject to estate or

 

gift tax.

 

     (iii) Electing to have all or a portion of a transfer for a

 

spouse's benefit qualify for the marital deduction.

 

     (iv) Electing the date of death or an alternate valuation date

 

for federal estate tax purposes.

 

     (v) Excluding or including property from the gross estate for

 

federal estate tax purposes.

 

     (vi) Valuing property for federal estate tax purposes.

 

     (vii) Joining with the surviving spouse or the surviving

 

spouse's personal representative in the execution and filing of a

 

joint income tax return and consenting to a gift tax return filed

 

by the surviving spouse or the surviving spouse's personal

 

representative.

 

     (ff) Divide portions of the estate, including portions to be

 

allocated into trust, into 2 or more separate portions or trusts

 

with substantially identical terms and conditions, and allocate

 

property between them, in order to simplify administration for

 

generation skipping transfer tax purposes, to segregate property

 

for management purposes, or to meet another estate or trust

 

objective.

 

     Sec. 3801. (1) Unless notice has already been given, upon

 

appointment a personal representative shall publish, and a special

 

personal representative may publish, a notice as provided by

 

supreme court rule notifying estate creditors to present their

 

claims within 4 months after the date of the notice's publication

 

or be forever barred. A personal representative who has published

 

notice shall also send, within the time prescribed in subsection

 

(2), a copy of the notice or a similar notice to each estate

 

creditor whom the personal representative knows at the time of

 

publication or during the 4 months following publication and to the

 

trustee of a trust described in section 7501(1) 7605(1) as to which

 

the decedent is settlor. For purposes of this section, the personal

 

representative knows a creditor of the decedent if the personal

 

representative has actual notice of the creditor or the creditor's

 

existence is reasonably ascertainable by the personal

 

representative based on an investigation of the decedent's

 

available records for the 2 years immediately preceding death and

 

mail following death.

 

     (2) Notice to a known creditor of the estate shall be given

 

within the following time limits:

 

     (a) Within 4 months after the date of the publication of

 

notice to creditors.

 

     (b) If the personal representative first knows of an estate

 

creditor less than 28 days before the expiration of the time limit

 

in subdivision (a), within 28 days after the personal

 

representative first knows of the creditor.

 

     (3) If the personal representative or the attorney for the

 

estate in good faith believes that notice to a creditor of the

 

estate is or may be required by this section, and if the personal

 

representative gives notice based on that belief, neither the

 

personal representative nor the attorney is liable to any person

 

for having given notice.

 

     (4) If the personal representative or the attorney for the

 

estate in good faith believes that notice to a person is not

 

required by this section and if the personal representative fails

 

to give notice to that person based on that belief, neither the

 

personal representative nor the attorney is personally liable to

 

any person for the failure to give notice. Liability, if any, for

 

failure to give notice is on the estate.

 

     Sec. 3803. (1) A claim against a decedent's estate that arose

 

before the decedent's death, including a claim of this state or a

 

subdivision of this state, whether due or to become due, absolute

 

or contingent, liquidated or unliquidated, or based on contract,

 

tort, or another legal basis, if not barred earlier by another

 

statute of limitations or nonclaim statute, is barred against the

 

estate, the personal representative, the decedent's heirs and

 

devisees, and nonprobate transferees of the decedent unless

 

presented within 1 of the following time limits:

 

     (a) If notice is given in compliance with section 3801 or 7504

 

7608, within 4 months after the date of the publication of notice

 

to creditors, except that a claim barred by a statute at the

 

decedent's domicile before the publication for claims in this state

 

is also barred in this state.

 

     (b) For a creditor known to the personal representative at the

 

time of publication or during the 4 months following publication,

 

within 1 month after the subsequent sending of notice or 4 months

 

after the date of the publication of notice to creditors, whichever

 

is later.

 

     (c) If the notice requirements of section 3801 or 7504 7608

 

have not been met, within 3 years after the decedent's death.

 

     (2) A claim against a decedent's estate that arises at or

 

after the decedent's death, including a claim of this state or a

 

subdivision of this state, whether due or to become due, absolute

 

or contingent, liquidated or unliquidated, or based on contract,

 

tort, or another legal basis, is barred against the estate, the

 

personal representative, and the decedent's heirs and devisees,

 

unless presented within 1 of the following time limits:

 

     (a) For a claim based on a contract with the personal

 

representative, within 4 months after performance by the personal

 

representative is due.

 

     (b) For a claim to which subdivision (a) does not apply,

 

within 4 months after the claim arises or the time specified in

 

subsection (1)(a), whichever is later.

 

     (3) This section does not affect or prevent any of the

 

following:

 

     (a) A proceeding to enforce a mortgage, pledge, or other lien

 

on estate property.

 

     (b) A proceeding to establish the decedent's or the personal

 

representative's liability for which the decedent or the personal

 

representative is protected by liability insurance to the insurance

 

protection limits only.

 

     (c) Collection of compensation for services rendered and

 

reimbursement of expenses advanced by the personal representative

 

or by an attorney, auditor, investment adviser, or other

 

specialized agent or assistant for the personal representative of

 

the estate.

 

     Sec. 3805. (1) If the applicable estate property is

 

insufficient to pay all claims and allowances in full, the personal

 

representative shall make payment in the following order of

 

priority:

 

     (a) Costs and expenses of administration.

 

     (b) Reasonable funeral and burial expenses.

 

     (c) Homestead allowance.

 

     (d) Family allowance.

 

     (e) Exempt property.

 

     (f) Debts and taxes with priority under federal law,

 

including, but not limited to, medical assistance payments that are

 

subject to adjustment or recovery from an estate under section 1917

 

of the social security act, 42 USC 1396p.

 

     (g) Reasonable and necessary medical and hospital expenses of

 

the decedent's last illness, including a compensation of persons

 

attending the decedent.

 

     (h) Debts and taxes with priority under other laws of this

 

state.

 

     (i) All other claims.

 

     (2) A preference shall not be given in the payment of a claim

 

over another claim of the same class, and a claim due and payable

 

is not entitled to a preference over a claim not due.

 

     (3) If there are insufficient assets to pay all claims in full

 

or to satisfy homestead allowance, family allowance, and exempt

 

property, the personal representative shall certify the amount and

 

nature of the deficiency to the trustee of a trust described in

 

section 7501(1) 7605(1) for payment by the trustee in accordance

 

with section 7502 7606. If the personal representative is aware of

 

other nonprobate transfers that may be liable for claims and

 

allowances, then, unless the will provides otherwise, the personal

 

representative shall proceed to collect the deficiency in a manner

 

reasonable under the circumstances so that each nonprobate

 

transfer, including those made under a trust described in section

 

7501(1) 7605(1), bears a proportionate share or equitable share of

 

the total burden.

 

     Sec. 3915. (1) Before distributing to a trustee, the personal

 

representative may require that the trust be registered if the

 

state in which it is to be administered provides for registration

 

and that the trustee inform the beneficiaries as provided in

 

section 7303 7814.

 

     (2) If the trust instrument does terms of the trust do not

 

excuse the trustee from giving bond, or if the trustee is not a

 

regulated financial service institution qualified to do trust

 

business in this state, the personal representative may petition

 

the appropriate court to require that the trustee post bond if the

 

personal representative apprehends that distribution might

 

jeopardize the interests of persons who are not able to protect

 

themselves, and the reasonably believes that a bond is needed to

 

protect the interests of the beneficiaries. A personal

 

representative may withhold distribution until the court acts on

 

the petition.

 

     (3) An inference of negligence on the personal

 

representative's part shall not be drawn from failure to exercise

 

the authority conferred by subsections (1) and (2).

 

     (4) If it becomes necessary or convenient in the settlement or

 

distribution of a decedent's estate to appoint a trustee to take

 

charge of or invest and distribute a portion of the estate, the

 

court may appoint a trustee upon the request of the personal

 

representative or another interested person.

 

     Sec. 5407. (1) The court shall exercise the authority

 

conferred in this part to encourage the development of maximum

 

self-reliance and independence of a protected individual and shall

 

make protective orders only to the extent necessitated by the

 

protected individual's mental and adaptive limitations and other

 

conditions warranting the procedure. Accordingly, the court may

 

authorize a protected individual to function without the consent or

 

supervision of the individual's conservator in handling part of his

 

or her money or property, including authorizing the individual to

 

maintain an account with a financial institution. To the extent the

 

individual is authorized to function autonomously, a person may

 

deal with the individual as though the individual is mentally

 

competent.

 

     (2) The court has the following powers that may be exercised

 

directly or through a conservator in respect to a protected

 

individual's estate and business affairs:

 

     (a) While a petition for a conservator's appointment or

 

another protective order is pending and after preliminary hearing

 

and without notice to others, the court has the power to preserve

 

and apply property of the individual to be protected as may be

 

required for the support of the individual or the individual's

 

dependents.

 

     (b) After hearing and upon determining that a basis for an

 

appointment or other protective order exists with respect to a

 

minor without other disability, the court has all those powers over

 

the minor's estate and business affairs that are or may be

 

necessary for the best interests of the minor and members of the

 

minor's immediate family.

 

     (c) After hearing and upon determining that a basis for an

 

appointment or other protective order exists with respect to an

 

individual for a reason other than minority, the court, for the

 

benefit of the individual and members of the individual's immediate

 

family, has all the powers over the estate and business affairs

 

that the individual could exercise if present and not under

 

disability, except the power to make a will. Those powers include,

 

but are not limited to, all of the following:

 

     (i) To make gifts.

 

     (ii) To convey or release a contingent or expectant interest in

 

property including marital property rights and a right of

 

survivorship incident to joint tenancy or tenancy by the entirety.

 

     (iii) To exercise or release a power held by the protected

 

individual as trustee, personal representative, custodian for a

 

minor, conservator, or donee of a power of appointment.

 

     (iv) To enter into a contract.

 

     (v) To create a revocable or irrevocable trust of estate

 

property that may extend beyond the disability or life of the

 

protected individual.

 

     (vi) To exercise an option of the protected individual to

 

purchase securities or other property.

 

     (vii) To exercise a right to elect an option and change a

 

beneficiary under an insurance or annuity policy and to surrender

 

the policy for its cash value.

 

     (viii) To exercise a right to an elective share in the estate of

 

the individual's deceased spouse.

 

     (ix) To renounce or disclaim an interest by testate or

 

intestate succession or by inter vivos transfer.

 

     (3) The court may exercise or direct the exercise of the

 

following powers only if satisfied, after the notice and hearing,

 

that it is in the protected individual's best interests and that

 

the individual either is incapable of consenting or has consented

 

to the proposed exercise of the power:

 

     (a) To exercise or release a power of appointment of which the

 

protected individual is donee.

 

     (b) To renounce or disclaim an interest.

 

     (c) To make a gift in trust or otherwise exceeding 20% of a

 

year's income of the estate.

 

     (d) To change a beneficiary under an insurance and annuity

 

policy.

 

     (4) A determination that a basis for a conservator's

 

appointment or another protective order exists has no effect on the

 

protected individual's capacity.

 

     Sec. 5421. (1) A sale, or encumbrance, to a conservator, to

 

the conservator's spouse, agent, or attorney, or to a corporation,

 

trust, or other organization or other transaction involving the

 

investment or management of estate property in which the

 

conservator has a substantial beneficial interest , or a

 

transaction involving the estate being administered by the

 

conservator that or that is otherwise affected by a substantial

 

conflict between the conservator's fiduciary and personal

 

interests, is voidable unless the any of the following are true:

 

     (a) The transaction is approved by the court after notice as

 

directed by the court.

 

     (b) The transaction involves a contract entered into or claim

 

acquired by the conservator before the person became or

 

contemplated becoming conservator.

 

     (c) The transaction is otherwise permitted by statute.

 

     (2) A sale, encumbrance, or other transaction involving the

 

investment or management of trust property is presumed to be

 

affected by a conflict between personal and fiduciary interests if

 

it is entered into by the conservator with any of the following:

 

     (a) The conservator's spouse.

 

     (b) The conservator's descendant, sibling, or parent or the

 

spouse of the conservator's descendant, sibling, or parent.

 

     (c) An agent or attorney of the conservator.

 

     (d) A corporation or other person or enterprise in which the

 

conservator, or a person that owns a significant interest in the

 

conservator, has an interest that might affect the conservator's

 

best judgment.

 

     (3) A transaction not concerning estate property in which the

 

conservator engages in the conservator's individual capacity

 

involves a conflict between personal and fiduciary interests if the

 

transaction concerns an opportunity properly belonging to the

 

estate.

 

     (4) An investment by a conservator in securities of an

 

investment company or investment trust to which the conservator, or

 

its affiliate, provides services in a capacity other than as

 

conservator is not presumed to be affected by a conflict between

 

personal and fiduciary interests if the investment otherwise

 

complies with the Michigan prudent investor rule. In addition to

 

its compensation for acting as conservator, the conservator may be

 

compensated by the investment company or investment trust for

 

providing those services out of fees charged to the estate. If the

 

conservator receives compensation from the investment company or

 

investment trust for providing investment advisory or investment

 

management services, the conservator shall at least annually notify

 

the interested persons of the rate and method by which that

 

compensation was determined.

 

     (5) In voting shares of stock or in exercising powers of

 

control over similar interests in other forms of enterprise, the

 

conservator shall act in the best interests of the estate. If the

 

estate is the sole owner of a corporation or other form of

 

enterprise, the conservator shall elect or appoint directors or

 

other managers to manage the corporation or enterprise in the best

 

interest of the estate.

 

     (6) This section does not preclude the following transactions,

 

if fair to the estate:

 

     (a) An agreement relating to the compensation of the

 

conservator.

 

     (b) Payment of reasonable compensation to the conservator.

 

     (c) A transaction between the estate and another trust or

 

conservatorship of which the conservator is a fiduciary or in which

 

the estate or protected individual has an interest.

 

     (d) A deposit of trust money in a regulated financial service

 

institution operated by or affiliated with the conservator.

 

     (e) An advance by the conservator of money for the protection

 

of the estate.

 

ARTICLE VII

 

TRUST ADMINISTRATION MICHIGAN TRUST CODE

 

PART 1

 

TRUST REGISTRATION

 

     Sec. 7101. (1) The trustee of a trust having its principal

 

place of administration in this state may register the trust in the

 

court at the place designated in the trust instrument or, if none

 

is designated, then at the principal place of administration. The

 

principal place of the trust's administration is the trustee's

 

usual place of business where the records pertaining to the trust

 

are kept or the trustee's residence if the trustee does not have

 

such a place of business. For a corporate trustee, the usual place

 

of business is the business location of the primary trust officer

 

for the trust.

 

     (2) For cotrustees, if not designated in the trust instrument,

 

the principal place of administration is 1 of the following:

 

     (a) If there is only 1 corporate cotrustee, the corporate

 

trustee's usual place of business.

 

     (b) If there is only 1 professional fiduciary who is an

 

individual and no corporate trustee, the professional fiduciary's

 

usual place of business or residence.

 

     (c) If (a) or (b) does not apply, the usual place of business

 

or residence of any of the cotrustees as agreed upon by them. This

 

article shall be known and may be cited as the "Michigan trust

 

code".

 

     Sec. 7102. (1) A trust is registered by the filing of a

 

statement that states the trustee's name and address and in which

 

the trustee acknowledges the trusteeship. The statement must

 

indicate if the trust has been registered elsewhere. The statement

 

must identify the trust in 1 of the following manners:

 

     (a) For a testamentary trust, by the name of the testator and

 

the date and place of domiciliary probate.

 

     (b) For a written inter vivos trust, by the name of each

 

settlor and the original trustee and the date of the trust

 

instrument and all amendments existing on the date of registration.

 

     (c) For an oral trust, by information identifying the settlor

 

or other source of money and describing the trust's time and manner

 

of creation and the trust's terms, including the subject matter,

 

beneficiaries, and time of performance.

 

     (2) The trust instrument and amendments are not required to be

 

filed with the court as part of the trust registration. If a trust

 

is registered elsewhere, registration in this state is ineffective

 

until the earlier registration is released by order of the court

 

where that registration occurred or by an instrument executed by

 

the trustee and all beneficiaries. The order or instrument shall be

 

filed with the registration in this state. This article applies to

 

trusts as defined in section 1107.

 

     Sec. 7103. (1) By registering a trust or accepting the

 

trusteeship of a registered trust, the trustee submits personally

 

to the court's jurisdiction in a proceeding under section 7201

 

relating to the trust that is initiated by an interested person

 

while the trust remains registered. Notice of a proceeding must be

 

given to the trustee in accordance with section 1401 at the

 

trustee's address as stated in the registration or as reported to

 

the court and to the trustee's address then known to the

 

petitioner.

 

     (2) To the extent of all beneficial interests in the trust and

 

if notice is given in accordance with section 1401, each

 

beneficiary of a trust properly registered in this state is subject

 

to the jurisdiction of the court of registration for the purposes

 

of a proceeding under section 7201. As used in this article:

 

     (a) "Action", with respect to a trustee or a trust protector,

 

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, 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).

 

     (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 upon consent of the

 

trustee or a person holding an adverse interest.

 

     (g) "Qualified trust beneficiary" means a trust beneficiary to

 

whom 1 or more of the following apply on the date the trust

 

beneficiary’s qualification is determined:

 

     (i) The trust beneficiary is a distributee or permissible

 

distributee of trust income or principal.

 

     (ii) 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

 

subparagraph (i) terminated on that date without causing the trust

 

to terminate.

 

     (iii) The trust beneficiary would be a distributee or

 

permissible distributee of trust income or principal if the trust

 

terminated on that date.

 

     (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.

 

     (i) "Settlor" means a person, including a testator, 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 shall not cause the holder of a power of

 

appointment to be treated as a settlor of the trust.

 

     (j) "Spendthrift provision" means a term of a trust that

 

restrains either the voluntary or involuntary transfer of a trust

 

beneficiary's interest.

 

     (k) "Support provision" means a provision in a trust that

 

provides the trustee shall distribute income or principal or both

 

for the health, education, maintenance, or support 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 pursuant to the

 

trust provision is not a support provision, but rather is a

 

discretionary trust provision.

 

     (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.

 

     (m) "Trust instrument" means a governing instrument that

 

contains the terms of the trust, including any amendment to a term

 

of the trust.

 

     (n) "Trust protector" means a person or committee of persons

 

appointed pursuant to the terms of the trust who has the power to

 

direct certain actions with respect to the trust. Trust protector

 

does not include either of the following:

 

     (i) The settlor of a trust that is currently revocable by the

 

settlor.

 

     (ii) The holder of a power of appointment.

 

     Sec. 7104. For purposes of a proceeding commenced by a trust

 

beneficiary before registration, a trustee of a trust that is not

 

registered in a proper place is subject to the personal

 

jurisdiction of a court in which the trust could have been

 

registered. In addition, a trustee who, within 28 days after

 

receipt of a written demand by a trust settlor or beneficiary,

 

fails to register a trust as required by the trust instrument is

 

subject to removal and denial of compensation or to surcharge as

 

the court may direct.

 

     (1) Subject to subsection (2), a person has knowledge of a

 

fact if 1 or more of the following apply:

 

     (a) The person has actual knowledge of it.

 

     (b) The person has received a notice or notification of it.

 

     (c) From all the facts and circumstances known to the person

 

at the time in question, the person has reason to know it.

 

     (2) An organization that conducts activities through employees

 

has notice or knowledge of a fact involving a trust only from the

 

time the information was received by an employee having

 

responsibility to act for the trust or from the time the

 

information would have been brought to the employee's attention if

 

the organization had exercised reasonable diligence. An

 

organization exercises reasonable diligence if it maintains

 

reasonable routines for communicating significant information to

 

the employee having responsibility to act for the trust and there

 

is reasonable compliance with the routines. Reasonable diligence

 

does not require an employee of the organization to communicate

 

information unless the communication is part of the individual's

 

regular duties or the individual knows a matter involving the trust

 

would be materially affected by the information.

 

     Sec. 7105. A foreign corporate trustee is required to qualify

 

as a foreign corporation doing business in this state if it

 

maintains a trust's principal place of administration within the

 

state. A foreign cotrustee is not required to qualify in this state

 

solely because its cotrustee maintains the principal place of

 

administration in this state. Unless otherwise doing business in

 

this state, local qualification by a foreign trustee, corporate or

 

individual, is not required for the trustee to receive distribution

 

from a local estate, to hold, invest in, manage, or acquire

 

property located in this state, or to maintain litigation. This

 

section does not affect a determination of what other acts require

 

qualification as doing business in this state.

 

     (1) Except as otherwise provided in the terms of the trust,

 

this article governs the duties and powers of a trustee, relations

 

among trustees, and the rights and interests of a trust

 

beneficiary.

 

     (2) The terms of a trust prevail over any provision of this

 

article except the following:

 

     (a) The requirements under section 7401 for creating a trust.

 

     (b) The duty of a trustee to administer a trust in accordance

 

with section 7801.

 

     (c) The requirement under section 7404 that the trust have a

 

purpose that is lawful, not contrary to public policy, and possible

 

to achieve.

 

     (d) The power of the court to modify or terminate a trust

 

under sections 7410, 7412(1) to (3), 7414(2), 7415, and 7416.

 

     (e) The effect of a spendthrift provision, a support

 

provision, and a discretionary trust provision on the rights of

 

certain creditors and assignees to reach a trust as provided in

 

part 5.

 

     (f) The power of the court under section 7702 to require,

 

dispense with, or modify or terminate a bond.

 

     (g) The power of the court under section 7708(2) to adjust a

 

trustee's compensation specified in the terms of the trust that is

 

unreasonably low or high.

 

     (h) The duty under section 7814(2)(a) to (c) to provide

 

beneficiaries with the terms of the trust and information about the

 

trust's property, and to notify qualified trust beneficiaries of an

 

irrevocable trust of the existence of the trust and the identity of

 

the trustee.

 

     (i) The effect of an exculpatory term under section 7908.

 

     (j) The rights under sections 7910 to 7913 of a person other