Bill Summary – FastDemocracy

Legislative Analysis
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TRUST SETTLEMENT: REQUIREMENTS FOR
                                                                               http://www.house.mi.gov/hfa
NOTIFICATIONS AND OBJECTIONS
                                                                               Analysis available at
House Bill 6011 as introduced                                                  http://www.legislature.mi.gov
Sponsor: Rep. Penelope Tsernoglou
Committee: Judiciary
Complete to 12-4-24
SUMMARY:
        House Bill 6011 would add a new section to the Michigan Trust Code (Article 7 of the Estates
        and Protected Individuals Code) 1 creating additional requirements for the settlement of trust
        accounts. Under section 7201 of the code, trusts are not subject to continuing judicial
        supervision unless ordered by a court, but a trustee may request that a court review and settle
        any of the trustee’s accounts. In addition to these existing provisions, the bill would newly
        allow for a trustee to obtain a settlement of its accounts when any of the following occur:
            • A trust terminates under its own terms.
            • A trust terminates early under section 7414. 2
            • A trustee resigns or is removed.
            • A trustee seeks discharge of an interim accounting period (a financial reporting period
                shorter than a full fiscal year) when the trust is continuing.
                Settlement means, in reference to a decedent’s estate, the full process of administration,
                distribution (the process of transferring assets to designated beneficiaries), and closing.
                Trust means that term as defined by section 1107 of the Estates and Protected
                Individuals Code. 3
                Trustee means an original, additional, or successor trustee, whether or not appointed
                or confirmed by the court.
        Under the bill, a trustee proceeding with a settlement under any of the circumstances listed
        above would be required to provide all of the following to the qualified trust beneficiaries,
        any co-trustee of the trust, and the successor trustee (if applicable) within a reasonable time
        after the circumstance arises:
            • A statement showing the fair market value of the net assets to be distributed.
            • A report of the trust for the prior two years showing all receipts, disbursements, and
                 inventory value of the net assets.
            • An estimate for any items reasonably anticipated to be received or disbursed.
            • The amount of any fees remaining to be paid (including trustee fees).
            • Notice of all of the following:
                     o That the trust is terminating or that the trustee has resigned or been removed.
                     o The time period for which the trustee seeks discharge of its accounts.
1
  https://www.legislature.mi.gov/documents/mcl/pdf/mcl-386-1998-VII.pdf
2
  https://www.legislature.mi.gov/documents/mcl/pdf/mcl-700-7414.pdf
3
  https://www.legislature.mi.gov/documents/mcl/pdf/mcl-700-1107.pdf
House Fiscal Agency                                                                             Page 1 of 3
                      o A statement providing that claims against a trustee or contesting the validity of
                         a trust under sections 7604 4 and 7905 5 (if applicable) will be barred if no
                         objections are received within 45 days after the notice was sent.
             •    The name and mailing address of the trustee.
             •    The name and ephone number of a person that may be contacted for additional
                  information.
                  Qualified trust beneficiary means that term as defined by section 7103 of the Michigan
                  Trust Code. 6
         The bill would also allow the trustee to provide the information listed above to any other person
         the trustee reasonably believes may have an interest in the trust.
         Any recipient of the trust settlement notice would have 45 days to provide written notice to the
         trustee of an objection to a disclosed act or omission. If no written objection is provided within
         this time period, the trustee would have to proceed with the distribution of assets as provided
         in the trust (or to the successor trustee) within a reasonable period of time after the end of the
         45-day period. If a timely written objection to the trust settlement notice is received, the trustee
         or the objecting party could do either of the following (as well as charge any related expenses
         to the trust):
             • Submit the objection to the court for resolution.
             • Resolve the objection by a nonjudicial settlement agreement 7 or other written
                  agreement.
         The bill would permit any nonjudicial settlement agreement or other written agreement to
         include a release (a statement barring future claims against the trustee related to the trust), an
         indemnity clause (a statement that the trustee shall not be liable for any action related to the
         trust made in good faith), or both, on the part of the objecting party. Upon resolution of any
         objection to the trust settlement, the trustee would have to proceed with the distribution of the
         remaining trust assets as above. In addition, the bill would allow a successor trustee to rely on
         the statement or accounting received from the trustee for purposes of locating trust property
         pursuant to section 7813, 8 as well as rely on the written statement of a person receiving the
         trust settlement notice when determining that the person does not object to the notice.
         Finally, the bill would prohibit any person who received the trust settlement notice and either
         consented or failed to object to the notice from bringing a claim against the trustee related to
         the trustee’s final or interim accounts or challenging the validity of the trust as though a court
         had entered a final order approving the accounts.
         Proposed MCL 700.7908a
4
  https://www.legislature.mi.gov/documents/mcl/pdf/mcl-700-7604.pdf
5
  https://www.legislature.mi.gov/documents/mcl/pdf/mcl-700-7905.pdf
6
  https://www.legislature.mi.gov/documents/mcl/pdf/mcl-700-7103.pdf
7
  A nonjudicial settlement agreement is an agreement created between a trustee and another interested party to resolve
a trust dispute outside of court. These agreements may not violate a material purpose of the trust, may only be used to
resolve certain specific matters covered by MCL 700.7111, and may not be used to accomplish the termination or
modification of the trust.
8
  https://www.legislature.mi.gov/documents/mcl/pdf/mcl-700-7813.pdf
House Fiscal Agency                                                             HB 6011 as introduced      Page 2 of 3
FISCAL IMPACT:
       House Bill 6011 would have no fiscal impact on the state and could have an indeterminate
       fiscal impact on local courts if provisions of the bill result in an increase in caseloads and
       related administrative costs.
                                                          Legislative Analyst: Aaron A. Meek
                                                               Fiscal Analyst: Robin Risko
■ 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                                                  HB 6011 as introduced   Page 3 of 3
Statutes affected: 
House Introduced Bill: 700.1101, 700.8206