Legislative Analysis
Phone: (517) 373-8080
POWERS OF APPOINTMENT
http://www.house.mi.gov/hfa
House Bill 4863 as reported from committee Analysis available at
Sponsor: Rep. Jim Haadsma http://www.legislature.mi.gov
House Bill 4864 as reported from committee
Sponsor: Rep. Douglas C. Wozniak
Committee: Judiciary
Complete to 1-16-24
SUMMARY:
House Bill 4863 would amend the Powers of Appointment Act as follows:
1. The act now provides that, to the extent that certain specified conditions are met, 1 the
length of the period during which the vesting of a future interest may be suspended or
postponed by the exercise of a power is determined, from the time of the creation of the
power or, for a general power presently exercisable, the effective date of the instrument of
exercise, under the Personal Property Trust Perpetuities Act 2 or section 5(2) of the Uniform
Statutory Rule Against Perpetuities. 3
The bill would remove the language italicized above. For purposes of this provision, which
applies whether the applicable period is finite or infinite, the bill would provide that a trust
that is created by the exercise of a power of appointment is created when the power has
been irrevocably exercised or when a revocable exercise becomes irrevocable.
2. The act also currently provides both of the following:
The period during which the vesting of a future interest may be suspended or postponed
by the exercise of a power of appointment begins on the effective date of the instrument
of exercise in the case of a general power presently exercisable, and in all other
situations, at the time of the creation of the power.
In determining the period during which the vesting of a future interest may be
suspended or postponed by the exercise of a power of appointment, if a second power
is created by the exercise of a first power and the first power is a presently exercisable
general power, the second power is considered to have been created on the effective
date of the instrument of exercise.
1
Those conditions are: An instrument exercises a power of appointment to subject property to, or create, a trust that
is either revocable on or created after May 28, 2008; the appointive property is personal property; and the trust is not
a special appointee trust.
2
http://legislature.mi.gov/doc.aspx?mcl-Act-148-of-2008
3
http://legislature.mi.gov/doc.aspx?mcl-554-75 Section 5(2) of the Uniform Statutory Rule Against Perpetuities
would be amended by House Bill 4864, as described below.
House Fiscal Agency Page 1 of 3
 The bill would replace “the period” with “any finite period” and delete “suspended or” in
the places indicated with italics above.
3. The act now allows a trustee with a presently exercisable discretionary power to make
distributions of income or principal of an irrevocable trust to or for the benefit of one or
more beneficiaries of the trust to exercise the power by appointing all or part of the property
subject to the power in favor of the trustee of a second trust, unless the terms of the first
trust expressly provide otherwise and provided that certain conditions are satisfied. Among
other things, the second trust may provide a special or general power of appointment,
including a power to appoint trust property to persons who are not beneficiaries of the first
trust, to one or more of the beneficiaries of the second trust.
The bill would add that the beneficiaries of the second trust must be permissible appointees
of the trustee’s presently exercisable discretionary distribution power over the first trust.
MCL 556.115a and 556.124
House Bill 4864 would amend the Uniform Statutory Rule Against Perpetuities.
For purposes of the act, a nonvested property interest or a power of appointment arising from
a transfer of property to a previously funded trust or other existing property arrangement is
created when the nonvested property interest or power of appointment in the original
contribution was created.
The bill would amend section 5(2) to add that, despite the above provision, section 2 of the act4
is applicable to an interest or power of appointment created, or to which property is subjected,
by the exercise of a second power that is subject to section 2(1) of the Personal Property Trust
Perpetuities Act, 5 but only to the extent of the exercise of the second power, and instead of
using a period of 90 years to determine whether section 2(1)(b), (2)(b), or (3)(b) of the act is
satisfied, or whether to reform a disposition under section 4 of the act, 6 a period of 360 years
must be used. 7
MCL 554.73 and 554.75
BRIEF DISCUSSION:
According to House committee testimony, House Bills 4863 and 4864 are related to changes
made to the Personal Property Trust Perpetuities Act by 2022 PA 154. 8 The bills would make
4
http://legislature.mi.gov/doc.aspx?mcl-554-72
5
http://legislature.mi.gov/doc.aspx?mcl-554-92
6
http://legislature.mi.gov/doc.aspx?mcl-554-74
7
The bill revises this provision in current law (which is not now specified to be an exception to the provision regarding
the creation of a nonvested property interest or power of appointment as described above): “Section 2 is applicable to
an interest or power of appointment to which the Personal Property Trust Perpetuities Act... applies if the interest or
power was created, or property was made subject to the interest or power, by the exercise of a second power. If section
2 is applicable to an interest or power under this subsection, it applies only to the extent of the exercise of the second
power, and instead of using a period of 90 years to determine whether section 2(1)(b), (2)(b), or (3)(b) is satisfied, or
whether to reform a disposition under section 4, a period of 360 years shall be used.”
8
http://legislature.mi.gov/doc.aspx?2021-HB-4619
House Fiscal Agency HBs 4863 and 4864 as reported Page 2 of 3
 technical changes to ensure that Michigan-based trusts can use a tool commonly known as the
Delaware tax trap to limit a trust’s exposure to the federal generation-skipping transfer tax. As
described in committee, the bills would add language to the Powers of Appointment Act and
the Uniform Statutory Rule Against Perpetuities to make explicit how certain provisions
function in relation to other provisions of those acts, the Personal Property Trust Perpetuities
Act, and the common law. The bills would not change the meaning of the amended acts as
determined under the judicial rules for interpreting laws passed by the legislature. However,
not all professionals who must deal with the acts are trained in those rules, so it has been
suggested that the acts be amended to provide clearer guideposts as to what they mean, and
how they should be applied, in coordination with one another and the other law described
above. Supporters argued that the bills will ensure that Michigan-based lending institutions and
trust advisors remain attractive options for Michiganders who want to establish trusts, noting
that, in the absence of these technical fixes, they may either wind up engaged in costly litigation
to resolve trust issues in the courts or feel the need to seek options for establishing a trust in
another state.
FISCAL IMPACT:
The bill would not have a fiscal impact on the state or on local units of government.
POSITIONS:
A representative of the Probate and Estate Planning Section of the State Bar of Michigan
testified in support of the bills. (10-18-23)
The Department of Attorney General indicated support for the bills. (10-25-23)
Legislative Analyst: Rick Yuille
Fiscal Analyst: Marcus Coffin
■ This analysis was prepared by nonpartisan House Fiscal Agency staff for use by House members in their
deliberations and does not constitute an official statement of legislative intent.
House Fiscal Agency HBs 4863 and 4864 as reported Page 3 of 3


Statutes affected:
Substitute (H-1): 554.73, 554.75
House Introduced Bill: 554.73, 554.75