Michigan Laws 556.122 – Special power; passing on donee’s default
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Terms Used In Michigan Laws 556.122
- Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
- Creating instrument: means a deed, will, trust agreement, or other writing or document that creates or reserves a power. See Michigan Laws 556.112
- Donee: The recipient of a gift.
- Donee: means a person to whom a power is granted or reserved. See Michigan Laws 556.112
- Donor: The person who makes a gift.
- Donor: means a person who creates or reserves a power. See Michigan Laws 556.112
- Gift: A voluntary transfer or conveyance of property without consideration, or for less than full and adequate consideration based on fair market value.
- Gift in default: means a transfer to a person designated in the creating instrument as the transferee of property if a power is not exercised or is released. See Michigan Laws 556.112
- Per stirpes: The legal means by which the children of a decedent, upon the death of an ancestor at a level above that of the decedent, receive by right of representation the share of the ancestor
- Power: means a power of appointment over property. See Michigan Laws 556.112
- Release: means renunciation, relinquishment, surrender, refusal to accept, and any other form of release. See Michigan Laws 556.112
- Special power: means a power, the permissible appointees of which do not include the donee, his or her estate, his or her creditors, or the creditors of his or her estate. See Michigan Laws 556.112
- Trust: means that term as defined in section 2901 of EPIC, MCL 700. See Michigan Laws 556.112
If the donee of a special power fails to exercise the power effectively or totally releases a releasable special power, the interests that might have been appointed under the power pass as follows:
(a) If the creating instrument contains an express gift in default, then in accordance with the terms of the gift.
(b) Except as provided in subdivision (d), if the creating instrument contains no express gift in default and does not clearly indicate that the permissible appointees are to take only if the donee exercises the power, then equally to the permissible appointees living at the time of the termination or release of the power, but if the power is to appoint among a class, such as “relatives”, “issue” or “heirs”, then to those persons in the closest degree of kinship or representing others in the same degree of kinship who would have taken had there been an express appointment per stirpes to the described class effective as of the termination or release of the power.
(c) Except as provided in subdivision (d), if the creating instrument contains no express gift in default and clearly indicates that the permissible appointees are to take only if the donee exercises the power, then by reversion to the donor or his or her estate. If the creating instrument expressly states that there is no reversion in the donor, then any language in the creating instrument indicating or stating that the permissible appointees are to take only if the donee exercises the power is to be disregarded and the interests shall pass under subdivision (b).
(d) If the power was created by the exercise of a discretionary power described in section 5a, then according to the provisions that governed the assets subject to the power under the first trust described in section 5a(1).