Michigan Laws 556.123 – General powers; creditors’ rights in appointable interests
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Terms Used In Michigan Laws 556.123
- 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
- Equitable: Pertaining to civil suits in "equity" rather than in "law." In English legal history, the courts of "law" could order the payment of damages and could afford no other remedy. See damages. A separate court of "equity" could order someone to do something or to cease to do something. See, e.g., injunction. In American jurisprudence, the federal courts have both legal and equitable power, but the distinction is still an important one. For example, a trial by jury is normally available in "law" cases but not in "equity" cases. Source: U.S. Courts
- General power: means a power, the permissible appointees of which include the donee, his or her estate, his or her creditors, or the creditors of his or her estate. 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.
- person: may extend and be applied to bodies politic and corporate, as well as to individuals. See Michigan Laws 8.3l
- Power: means a power of appointment over property. See Michigan Laws 556.112
- Power of appointment: means a power created or reserved by a person having property subject to his or her disposition that enables the donee of the power to designate, within any limits that may be prescribed, the transferees of the property or the shares or the interests in which it shall be received. See Michigan Laws 556.112
- Property: means any legal or equitable interest in real or personal property, including choses in action. See Michigan Laws 556.112
- Release: means renunciation, relinquishment, surrender, refusal to accept, and any other form of release. See Michigan Laws 556.112
(1) If a donee has a general power of appointment, any interest that the donee has power to appoint or has appointed is to be treated as property of the donee for the purposes of satisfying claims of the donee’s creditors, as provided in this section.
(2) If a donee has an unexercised general power of appointment and the donee can presently exercise such a power, any creditor of the donee may by appropriate proceedings reach any interest that the donee could appoint, to the extent that the donee’s individual assets are insufficient to satisfy the creditor’s claim. If the donee has exercised the power, the creditor can reach the appointed interests to the same extent that under the law relating to fraudulent conveyances the creditor could reach property that the donee has owned and transferred.
(3) If a donee has at the time of his or her death a general power of appointment, whether or not he or she exercises the power, the personal representative or other legal representative of the donee may reach on behalf of creditors any interest that the donee could have appointed to the extent that the claim of a creditor has been filed and allowed in the donee’s estate but not paid because the assets of the estate are insufficient.
(4) Under a general assignment by a donee for the benefit of the donee’s creditors, the assignee may exercise any right that a creditor of the donee would have under subsection (2).
(5) A purchaser without actual notice and for a valuable consideration of any interest in property, legal or equitable, takes the interest free of any rights that the donee’s estate or a creditor of the donee has under this section.
(6) If more than 1 person is the donee of a general power of appointment, it shall be presumed that the interests of the donees in the property subject to the power are equally owned among them unless the creating instrument indicates otherwise.
(7) The lapse, release, waiver, or disclaimer of a power of appointment given to a donee by a donor is not a gift, conveyance, transfer, or assignment of property by the donee.