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Texas Tech Univ. School of Law

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Monday, September 16, 2013

Article on Decanting in Michigan

Michigan

James P. Spica (Dickinson Wright PLLC) recently published an article entitled, Spilt to Last: Longevity Planning for Tax Advantaged Trusts Under a New Statutory Decanting Regime in Michigan, 48 Real Prop., Trust & Est. L.J. 35 (Spring 2013).  Provided below is the synopsis of his article:

States considering decanting legislation may wish to note some special features of a tripartite decanting regime lately enacted in Michigan, under which a trustee can sometimes decant so as to extend the period for vesting of future interests in trust assets indefinitely.  Where a tax-advantaged perpetuity is prohibited by federal tax law, i.e., for trusts “grandfathered” under the Treasury’s generation-skipping transfer tax effective-date regulations, the Michigan regime is protective.  However, the regime also codifies common law principles regarding fiduciary special powers of appointment that may allow a trustee to extend the period for vesting of future interests in a grandfathered trust’s assets without threatening grandfathered status.  And where perpetuity is in point (because “grandfathered” status is not), the regime bolsters the anti-Delaware-tax-trap provision of Michigan’s perpetuities reform in light of the possibility that a trust may be created by the exercise of a nonfiduciary special power of appointment, thereby creating a decanting power in the appointive trustee that might be viewed as a “second power” for purposes of the “trap.”

http://lawprofessors.typepad.com/trusts_estates_prof/2013/09/article-on-decanting-in-michigan.html

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