Trust Decanting Requirements in Michigan
At a glance
| Governing law and available decanting route | Two routes: Michigan Trust Code MCL 700.7820a distributes all/part under a “discretionary trust provision” to second trust without materially changing beneficial interests; Powers of Appointment Act MCL 556.115a appoints all/part subject to presently exercisable discretionary income/principal power to second-trust trustee. Both are distribution routes, not direct first-trust textual modification (§§ 700.7820a(1), 556.115a(1)) |
|---|---|
| First-trust scope, state connection, retroactivity, and opt-out | Both require irrevocable first trust and yield to express contrary first-trust terms. MTC route has incapacity/authorized-agent rule for revocation; POA Act separately defines irrevocability. Neither states separate Michigan situs, governing-law, creation-date, or retroactivity test; § 556.115a declares codification of common law before December 28, 2012 (§§ 700.7820a(1),(3)(a), (10)(a), 556.112(p), 556.115a(1),(8)-(9)) |
| Authorized fiduciary and required distribution power | Trustee only. MTC route: trust has any “discretionary trust provision” over property; settlor-trustee cannot exercise over own portion unless acting fiduciary when creating first trust. POA route: presently exercisable discretionary income/principal power to/for ≥1 beneficiaries; timeliness depends only on trustee's best-interests judgment (§§ 700.7103(d), 700.7820a(1),(4), 556.115a(1),(3)(a)) |
| Expanded, limited, mandatory, and ascertainable-standard branches | MTC route covers discretion whether or not terms state a standard, but bars material beneficial-interest change. POA route excludes power limited by definite ascertainable standard; best-interests/welfare/comfort/happiness/ general-development instructions alone are not such standards. No mandatory- distribution or special-needs branch (§§ 700.7103(d), 700.7820a(1)(a), 556.115a(1),(3)(a)-(b)) |
| Beneficiary, vested-interest, and power-of-appointment changes | MTC route: no material change to beneficial interests. POA route: second- trust beneficiaries limited to current permissible appointees, possibly fewer; preserves stated § 2503(c) remainder timing, marital/charitable income, annuity/unitrust/general-appointment interests, and sole beneficiary's current withdrawal power. May grant second-trust permissible appointee special/general appointment power reaching non-first-trust beneficiaries (§§ 700.7820a(1), 556.115a(1)-(2)) |
| Second-trust terms, duration, governing law, and administration | Same trustee allowed; second trust may use first or another instrument, including trustee-created exercise instrument. Both permit later-discovered- asset and limited indemnification terms. MTC route permits longer duration solely from changed remoteness law without material-interest/compensation change and applies POA Act timing; POA route applies § 556.124. No separate situs/governing-law limit stated (§§ 700.7820a(3),(5)-(6),(8), 556.115a(2),(4), 556.124) |
| Tax, charitable, special-needs, compensation, and other guardrails | MTC route keeps second instrument consistent with intended tax-benefit planning (excluding grantor status), bars unconsented compensation/method or transfer fee, reduced care, expanded exoneration, and diminished fiduciary direction/removal power; permits limited indemnity. POA route protects § 2503(c) remainder timing, marital/charitable interests, current withdrawal, and limited indemnity; transfer fee counts as compensation-rate change. No special-needs or charitable-trust exclusion (§§ 700.7820a(1)-(2),(6),(10)(b), 556.115a(1)-(2),(5)) |
| Notice, recipients, consent, waiver, objection, and representation | MTC route: no settlor/beneficiary/court consent; written notice to all living settlors and qualified trust beneficiaries ≥63 days before exercise, including proposed exercise instrument; all may waive period in writing. POA route has no exercise-specific advance notice; second trust is new irrevocable trust for general § 700.7814(2)(c) 63-day-after-knowledge notice and continuation for advance compensation-change notice; beneficiary may waive general information. No decanting-specific representation rule (§§ 700.7820a(7), 556.115a(5), 700.7814(2),(5)) |
| Exercise instrument, court review, effectiveness, and remedies | MTC route uses written distribution instrument; no signature, acknowledgment, trust-record, or public filing stated, and expressly needs no court. POA power uses written instrument sufficient to pass interest and compliant with creating instrument; it may create second trust. Neither supplies special court-review, saving, defect, reliance, or limitations rules; each permits limited first- trustee indemnity (§§ 700.7820a(1),(5)-(7), 556.115(2), 556.115a(2)(d),(4)) |
Requirements one by one
Michigan supplies two different further-trust powers
MCL § 700.7820a covers any discretionary trust provision, whether or not the trust supplies a standard. The second trust may change administration but cannot materially change beneficial interests, and it must remain consistent with express or evident tax-benefit planning.
MCL § 556.115a is a power-of-appointment route for a presently exercisable discretionary income-or-principal power. A definite ascertainable standard does not qualify, while best-interests, welfare, comfort, happiness, or general- development language alone does not become such a standard.
“A power to make distributions is not discretionary if it is limited by a definite and ascertainable standard.” — MCL § 556.115a(3)(b)
The two routes protect beneficial terms differently
The MTC route uses one overall test: no material change in beneficial interests. The Powers of Appointment Act instead limits second-trust beneficiaries to the current permissible appointees, permits fewer of them, and separately protects § 2503(c) remainder timing, specified marital or charitable interests, and the sole eligible beneficiary's present withdrawal power.
That broader route may grant a special or general power of appointment to a second-trust beneficiary. The current statute allows the power to reach people outside the first trust; pending HB 4408 would require the power holder to have been a permissible appointee of the original discretionary power.
The MTC route has the advance-notice procedure
The MTC trustee can act without settlor, beneficiary, or court consent after written notice to every living settlor and qualified trust beneficiary no later than 63 days before exercise. The notice includes the proposed exercise instrument, and all recipients can waive the period in writing.
The Powers of Appointment Act route has no comparable exercise-specific advance notice. It instead treats the second trust as both a new irrevocable trust for the general post-creation notice in MCL § 700.7814(2)(c) and a continuation for advance notice of a compensation-method or rate change.
The instruments and permitted second-trust terms also differ
The MTC route says only that the distribution occurs by written instrument; it does not add a signature, acknowledgment, trust-record filing, or public-filing requirement. The powers route uses the general written-instrument rule in MCL § 556.115(2), including compliance with the creating instrument's manner, time, and conditions. Under either route, the first trustee may also serve the second trust, and the exercise instrument itself may create the second trust.
Both routes permit terms allocating later-discovered assets and indemnifying the first trustee subject to MCL § 700.7908. The MTC route also blocks unconsented compensation increases or transfer charges, a lower standard of care, expanded exoneration, and diminished fiduciary direction or removal authority.
What trips people up
The 63-day advance notice belongs to MCL § 700.7820a; it should not be copied wholesale onto MCL § 556.115a. Conversely, a trustee cannot use the material- interest test to bypass the second route's stricter definition of a presently exercisable discretionary power.
The MTC's irrevocability rule accounts for incapacity. A settlor's incapacity negates a revocation power unless a serving authorized agent, conservator, or plenary guardian can exercise it. The same section generally bars a settlor- trustee from exercising over that settlor's portion unless the trustee acted in a fiduciary capacity when creating the first trust.
Common questions
May the first trustee also serve the second trust?
Yes. Both statutes expressly permit the same trustee, and both allow the second trust to sit under the first instrument or another instrument created by the trustee.
Where do later-discovered assets go?
Both statutes allow the second-trust instrument to keep those assets in a continuing first trust or place them in the second trust when the first trust terminates.
Is HB 4408 current law?
No. It passed the House and remains in a Senate committee. The current MCL text continues to govern unless and until the bill is enacted and effective.
Statutes and sources
- MCL §§ 700.7103(d), (g) and 700.7814(2), (5) — discretionary provision, qualified beneficiaries, new-irrevocable-trust notice, compensation notice, and general information waiver. Official Act 386 text (accessed September 12, 2026).
- MCL § 700.7820a — materially-unchanged-beneficial-interests route, prohibitions, second-trust terms, 63-day notice, duration, and definitions. Official Act 386 text (accessed September 12, 2026).
- MCL § 556.115(2) and § 556.115a — general exercise formality and presently- exercisable discretionary-power route. Official Act 224 text (accessed September 12, 2026).
- MCL § 556.124 — current future-interest and perpetuity timing rules that HB 4408 would amend. Official Act 224 text (accessed September 12, 2026).
- MCL § 700.7908 — limit incorporated into both routes' indemnification authority. Official Act 386 text (accessed September 12, 2026).
- MI HB 4408 (2025-2026) — House-passed proposal amending MCL 556.115a and 556.124; current action table and official documents. Official bill page (checked September 12, 2026).
Source links
Every statute quoted above, linked, with the date we checked it.
What does Michigan law mean for your facts?
You just read the general rule. Ask your own question and see which parts of current Michigan law apply to your situation, with citations you can check.
Opens in Ezel Pro.
- Starts from the statutes this survey is built on
- Cites every source it relies on, so you can verify it
- Chat, drafting and research in one workspace