Estate Planning Q & A

Principle Residence Exemption

Q: How long may a Principle Residence Exemption (PRE) apply?

A: Pursuant to MCL 211.7cc(4), PREs may remain in effect "until December 31 of the year in which the property is transferred or … is no longer a principal residence … or the owner is no longer entitled to an exemption." This clarification is based on Campbell v Michigan Dept of Treasury Michigan Court of Appeals No 350248 (02/04/20). The Michigan Appeals Court held that the December 31st language modifies all three connecting phrases in MCL 211.7cc(4), not only the language referencing December 31st. Section 211.7cc

Trusts created in other jurisdictions

Q: I moved back to Michigan from Texas, is my trust created in Texas valid in Michigan?

A: Pursuant to MCL 700.7403: A trust not created by will is validly created if its creation complies with the law of the jurisdiction in which the trust instrument was executed or the law of a jurisdiction to which, at the time of creation, any of the following applied: (a) The settlor was domiciled, had a place of abode, or was a national in the jurisdiction. (b) A trustee was domiciled or had a place of business in the jurisdiction. (c) Any trust property was located in the jurisdiction.

Nonademption

Q: Does Nonademption only apply to Wills? What if a person’s trust provides that an item be given to charity but was sold during the decedent’s lifetime? EPIC Section 700.2606 is limited to wills and indicates if a specifically bequeathed property is no longer owned by the decedent at the time of death, the gift may not necessarily fail and in some situations, a different item may have to be given to the applicable entity. 

A: See MCL 700.7112 which states: “The rules of construction in sections 2605 to 2608 that apply in this state to the interpretation of and disposition of property by will also apply as appropriate to the interpretation of the terms of a trust and the disposition of the trust property.”