Military Law Issues
Wills and Trusts
This webpage provides general will and trust information. In particular, emphasis is on Michigan information concerning wills and trusts due to my living in Michigan and drafting wills and trusts in that state. Consult an attorney for your state. This information is not to be considered an attorney-client relationship. Wills should be customized to your particular situation.
Wills are a method to dictate the division of your property following your death, and are an important part of estate planning, but the will must be valid at your death. A will must be read to be determined if is valid, as a will only speaks at the death of the signer (the testator) and has no effect until the testator is dead. If a will is not valid, then state intestate procedures may apply or the will may be determined to be only partially valid, and partial intestate procedures apply. In Michigan, intestate procedures are covered in MCL 700.2101-2114. If the will is valid then the will is entered into probate. Only an original will can be entered into probate. A copy cannot be entered into probate, as it is assumed that if the original cannot be found then the original was purposely destroyed by the testator.
Wills should be stored in a readily accessible location where they can be easily retrieved upon death, such as a desk drawer. Do not place in a safety deposit box, as a safety deposit box is sealed upon the death of the holder and is not unsealed until too late for the will to be retrieved and rea2d. Wills can be filed with the probate court, but then it is difficult to change or destroy the will if the testator changes his mind later. It is advised to file the will in a desk drawer in a sealed envelope clearly marked as a will. Do not give the will to another person to hold.
Will Changes/ alterations:
If the testator later decides to change his will after it has been drafted, do not cross out and make a pen change. All changes must be made with the same procedures as the original signing as the will. Thus it is strongly advised that a will be drafted by an attorney and that all changes be made by an attorney. Small errors can invalidate a will and can result in state intestacy procedures (statutory taking procedures without consideration of the will).
Defects in the will can be changed by a codicil, a change to the will with the same formal procedures as a will. However, to make intentions clear, it is advisable to redo the entire will rather than make changes to the will with a codicil.
Reasons for will:
1. avoid probate decisions- determine who receives. However, a will only affects property that goes into probate. If an estate is properly designed, much if not all of the property may not even go into probate and the will may not affect that property.
2. Costs reduced
3. Not public
4. Avoid estate tax
5. Control assets
6. Ease changing beneficiaries
7. Avoid creditors- watch fraudulent transfers
8. Avoid election by surviving spouse
9. Lessen possibility of will contest
10. Tax and estate planning
11. Reduce conflicts
12. Leave property in trust
13. Name conservator or guardian to avoid fight
14. Instructions on how to be buried or cremated
15. Instructions on how pets to be taken care of
16. Name executor to administer estate and how to administer
Prerequisites for valid will:
In Michigan, the testator must be 18 years or older and have sufficient mental capacity. MCL 700.2501
Sound mind- Must have the ability to understand that he/she is making a will and know the objects of his/her bounty. In Michigan, there is a fourfold test of sufficient mental capacity:
1. Ability to understand that he or she is providing for the disposition of his or her property after death.
2. The individual has the ability to know the nature and extent of his or her property.
3. The individual knows the natural objects of his or her bounty.
4. The individual has the ability to understand in a reasonable manner the general nature and effect of his or her act in signing the will. MCL 700.2501
The testator must know what he/she is signing, and the nature and extent of his/her property. He/she doesn’t need to know ages and number grandchildren, etc. The testator can be in a nursing home, be committed, etc. as long as he/she has a lucid moment when signing and has testamentary capacity at that moment. It may be advisable to have a medical person present to be able to testify if need be concerning the capacity at that moment.
The testator must simultaneously hold these elements in his/her mind and be able to make reasonable judgments.
There must be compliance with statutory formalities as to ceremony and signing.
Ceremony. There must be ceremonial procedures that are observed.
Will must be in writing- no oral will (noncupative). In Michigan, the will must be in writing, signed by testator or other person in testator's conscious presence and by his direction, and signed by 2 other witnesses or by testator's acknowledgment of the signature or acknowledgment of will. In Michigan, but not in all states, a holographic will (hand written) is valid if it is dated, whether witnessed or not, if the signature and material portions are in the testator's handwriting. Extrinsic evidence can be used to establish the holographic will. MCL 700.2502. Procedures for international wills are contained in MCL 700.2951 et seq.
A will should be witnessed by 2 witnesses- MCL 700.2502. If no witnesses, then need to prove by extrinsic evidence for a holographic will. The witnesses in Michigan do not need to be disinterested parties. MCL 700.2505. The best procedure is to use a self proving affidavit where the witness signatures are notarized so the witnesses do not have to be located during the probate procedure. Provisions for self proving affidavit are in MCL700.2504. If there is no self proving affidavit, at least one of the witnesses will need to be located during probate, and they must testify that they were witnesses, were competent, and of age, and signed the document, and witnessed the testator sign the document.
Provisions in will: A simple statutory will for Michigan is provided in MCL 700,2519.
1. Dispositive provisions- who gets what
2. Residuary clause- what happens to the left over property
3. Executor- who is the executor. In Michigan this person is called the personal representative. Priorities for the personal representative are in MCL 700.3203. Qualifications are in MCL 700,3601.
4. Bond waiver for executor MCL 700.3603
5. Tax payment instructions
6. Provisions for minors
7. Properly signed
8. Attestation clause
9. Self proving affidavit MCL 700.2504
10. Definitional section
Probate Procedure: See MCL 700.3301 for informal probate and MCL 700.3401 for formal probate.
Look at probate estate. Look at specific bequests .
General bequests- give to someone general property
Specific – “my” or specific property
Residuary- left over assets MCL 700.2604
If no residuary then passes intestate. MCL 700.2101 et seq.
5. Abatement-Not enough assets for bequests, so gifts must be cut down in particular sequences. MCL 700.3902
Surviving Spouse provisions- MCL 700.2201 et seq.
Divorced spouse is out of will, same as predeceased- MCL 700.2801. In Michigan, this can also include a bigamous spouse, a spouse willfully absent for one year or more before the death, deserted the decedent, or willfully neglected or refused to provide support to decedent. MCL 700.2801, 700.2807
Caused death- no taking under the will. In Michigan, the felonious and intentional killing or conviction for abuse, neglect, or exploitation of decedent forfeits benefits under will. MCL 700.2803
Simultaneous death- In Michigan, must survive decedent by 120 hours. MCL 700.2104
Elective share- In Michigan, surviving spouse can make a decision within 63 days to: 1. take intestate share under MCL 700.2102. 2. dower right under MCL 558.1-558.29. If testate, the spouse files an election within 63 days to: 1. abide by will, 2. dower right under MCL 558.1-558.29, or 3. take elective share of 1/2 of amount would have received if intestate, reduced by 1/2 of all property derived by spouse by any means other than testate or intestate succession. MCL 700.2202- 700.2503
Surviving children- In Michigan, afterborn children in gestation at death of decedent treated as living at time if they survive for 120 hours or more after birth. MCL 700.2108 Omitted children in Michigan are covered in MCL 700.2302
Ademption- In Michigan, ademption is covered by MCL 700.2606 and 700.2608.
Cy pres- intent of testator in giving to charity. MCL 700.7413
Contractual wills- MCl 700.2514
Antilapse- Lapse procedures are in the code. MCL 700.2716.
Separate writing- MCL 700.2513
Mention letter in will and transfer as per letter
Not for real estate.
Writing doesn’t have to witnessed
Marking by tape- not valid. Must be in will or in letter mentioned in will.
Disclaimer to Taking- MCL 700.2902
Must be in writing
Delivered to personal representative or trustee.
Must do before receives property or interest
Treat as predeceased so goes to descendants of disclaimant under anti-lapse.
Must do within 9 months for tax purposes and must do before events in MCL 700.2910.
Can be fraudulent conveyance if attempt to disclaim to avoid creditor.
Trust included in will- MCL 700.2511
Pour over will- assets from estate to trust.
Use to avoid placing assets forgotten into probate.
Revocation of Will: MCL 700.2507 et seq.
Provision in new will to revoke all prior wills.
If no revocation provision, then revokes only inconsistent provisions.
Cancel or destroy will by act or testator. Must be
witnessed in same manner as making will. Testator must be competent.
Revoke by physical act- tear up, burn, shred, draw lines through, write void or cancelled on top (some not good if in margin) Tearing, burning must go across written part.
Partially revoked by law- divorce, murder. MCL 700.2803 MCL 700.2801
Will contests- Grounds for contesting the will: MCL 700.3407.
Lack of testator capacity
No testator intent
Insane Delusion v. False Belief
Fraud in the inducement- telling testator something false causing change in will.
Primary factor in contesting.
Messes with mind- not threatening physical harm.
Untraditional disposition- disturb taking of close
Opportunity and access- close proximity to testator
Relationship between testator and alleged undue
influencer-confidential relationship and take advantage
Testator susceptible and ability to resist- rely on
Connection between will and alleged undue
Burden on person trying to contest will. Chances of
winning not great.
Mistake- Mistake in the Inducement-thought child killed- courts won’t change.
Duress: Connotes direct use of violence, threats of brutality, or withholding food or medicine.
TRUSTS. MCL 700.7101 et seq.
Settlor-> Trustee (legal title)-> beneficiary (equitable title)
Why create trust?
Protection of loved ones
Minors or incompetent persons
Spendthrift MCL 700.7504
Eliminate influence of friends, relatives
Management of trust assets to preserve assets
Flexibility of distribution of assets
Blind trusts to prevent conflicts of interest
Don’t want income stuck in trust- high income tax in
Charitable trust- control how use MCL 700.7405
Asset protection and estate planning
Continue business after death.
Create Trust- MCL 700.7401 et seq
Inter vivos v. will: Transfer property to someone who holds as trustee for benefit of someone else.
Valid trust: MCL 700.7402
Trust terms control.
Can trump Trust Code by provisions in trust, except maybe
validity of trust
Competent- Not the same as commitment MCL 700.7402.
for mental health reasons.
Revocable same as for will MCL 700.7601
Irrevocable- need to understand effect on future financial security and anyone dependent on you- higher level of understanding.
Statute of frauds compliance. Part performance may take out of statute of frauds
Purpose- can’t be illegal purpose MCL 700.7404
Property- dry or unfunded trust only comes into being when trustee receives property, but can’t be created earlier.
Precatory language- I wish, I recommend, not binding- must be mandatory language or doesn’t create trust.
Watch fraudulent conveyance-
Life insurance trust-
Honorary Trust for Pets- MCL 700.2722
Trustee- but doesn’t fail for want of trustee. If dies, alternate. MCL 700.7704
Trustee must have duties.
Trustee doesn’t have to be bonded. MCL 700.7702
No oath required- but executor of will has oath.
Liability of trustee- MCL 700.7901 et seq
Nonliability- beneficiary consent-
Exulpation- MCL 700.7908
Breach of trust- MCL 700.7901
Remedies for breach of trust- MCL 700.7902
Limitation of liability- MCL 700.7910
Duty to inform and account- MCL 700.7814
Certification of trust- MCL 700.7913
Discretionary powers- MCL 700.7815
Discretionary powers unless trust says so.
Standard of care- prudent investor- MCL 700.7803
Transfer to minors through uniform transfers to minor-
Trustee can’t be sole beneficiary- MCL 700.7402
merger when legal and equitable titles merge so no longer have trust.
Must have beneficiary unless charitable or pet trust. MCL 700.7402
Rule against perpetuities- can’t violate. Dynasty trust- goes on forever, can only be created in states without rule against perpetuities. MCL 700.7402
Must vest within 21 years of lives in being (age + 21).
Written- Michigan will allow an oral trust if term established only by clear and convincing evidence. MCL 700.7407
Trust not subject to court jurisdiction, unless petition. MCL 700.7201
Trust must keep beneficiaries informed MCL 700.7814
Petition court for accounting-
Honorary trust- For pets MCL 700.2722
Charitable trust- MCL 700.7405
Revocation or modification- Common law- irrevocable unless stated. In Michigan- revocable unless said. MCL 700.7602
Reasons for revocable trusts-
Only goes to probate when can’t determine who receives.
Still need will as backup since trust may not be valid.
Pour over trust.
Revocable can amend as long as competent.
Irrevocable can be amended. MCL 700.7411
Consent of all beneficiaries and settler
Modification by court- MCL 700.7411
Parents can bind children even though they don’t consent.
If everyone consents can terminate trust, but settler must be alive unless court.so orders
Change Trusts: MCL 700.7410
Combination of trusts- MCL 700.7417
Division of trusts- MCL 700.7417
Uneconomically low value- MCL 700.7414
Challenge Trust- same as for wills. Procedures in Michigan MCL700.7604
Must be aggrieved person to challenge trust
Contest revocable trust- MCL700.7604
No anti-lapse in trust code
Claims against revocable trust-
Trustee can cut off claims of creditors.
Notice to creditors, claimants, heirs, spouse, and beneficiaries-
When settler dies, subject to debts if estate can’t cover debts and estate probated. Must exhaust assets of estate first. MCL 700.7606
Claims of creditors- MCL 700.7606
Trustee liability- MCL 700.7815
Provisions for trust:
Trustee and successor
Bond for trustee
Provision to select successor trustee
Rule against perpetuities saving provision
Tangible personal property
Revocable or irrevocable
Power of appointment-general or specific