Can a Trustee Modify a Trust in Michigan?

Michigan families use trusts for real estate, retirement accounts, and heirlooms. When circumstances evolve, trustees may need to amend documents. With over 30 years of experience, Bassett Murray Law Group, PLLC ensures that plans stay flexible.

This article examines the circumstances under which trustees can modify a trust, the legal boundaries governing such modifications, and the instances where court approval is required.

Trust Modification in Michigan

A trust is a written set of instructions that moves legal ownership of assets from the person who creates the trust (the settlor) to a trustee who manages those assets for beneficiaries.

The trustee’s powers come from the document itself and from Michigan’s Estates and Protected Individuals Code, often called EPIC.

Under EPIC, a trustee may act only as far as the trust or the statute lets them, so the first step in any analysis is reading the trust language with care.

Types of Trusts and Their Modifiability

Michigan recognizes many kinds of trusts, yet they fall into two broad camps when it comes to changing terms.

Revocable Trusts

The settlor usually keeps full power to amend or revoke a revocable trust. MCL 700.7602 states that unless the writing explicitly states it is irrevocable, the settlor may modify it. Trusts created before April 1, 2010, or by certain powers of appointment, may differ, so the date and origin matter.

How does the settlor make a change? The trust may list a method, such as signing a short amendment and delivering it to the trustee. If the document is silent, the settlor can still amend it by a new writing that clearly shows intent, as outlined in MCL 700.7602(3).

Irrevocable Trusts

These trusts are more difficult to adjust because the settlor has relinquished control over them. Even so, change is not off the table. Beneficiaries can consent to modifications, the court can approve updates, and Michigan permits “decanting,” which involves pouring assets into a new trust with improved terms. We walk through each path below.

Circumstances Where a Trustee Can Change a Trust

A trustee’s direct power to alter a trust is narrow, but a few situations open the door.

Power of Appointment

Some trusts grant the trustee a power of appointment, allowing them to adjust distributions or even add and remove beneficiaries. If that power exists, the trustee must follow any limits written in the document and act with loyalty to all beneficiaries.

Trust Protector

Modern documents sometimes name a trust protector, an independent person who may approve or veto changes proposed by the trustee. When a protector signs off, the trustee gains authority that would not exist otherwise.

Judicial Modification

A trustee may petition the probate court under MCL 700.7411 or 700.7412 to amend an irrevocable trust when its purpose is frustrated, administration is impractical or wasteful, or everyone with an interest agrees and the change fits the trust’s material purpose. If the trust is too small to justify costs, the court may even end it under MCL 700.7414.

Nonjudicial Settlement Agreements

All qualified beneficiaries and the trustee may sign a binding agreement on matters that a court could approve, as allowed by MCL 700.7111. The agreement cannot violate a material purpose; however, it can help smooth out language conflicts, clarify powers, or modify administrative rules.

Trust Reformation

When a drafting mistake blocks the settlor’s true intent, anyone involved may ask the court to reform the writing under MCL 700.7415. Clear and convincing evidence is required, such as correspondence or the preparer’s notes.

Trust Decanting

Michigan gives trustees a decanting tool in MCL 700.7820a and 556.115a. If the trustee holds discretion to distribute principal, they may move assets into a new trust with updated terms that still benefit the same people. Notice rules apply, and tax consequences must be reviewed first.

Trustee’s Duties and Limitations

Even when a lawful path exists, the trustee must respect fiduciary duties. Loyalty, impartiality, and prudence are key themes found in MCL 700.7801 and MCL 700.7814. Breaching those duties risks personal liability.

The statute listing trustee powers, MCL 700.7817, is lengthy but focuses on management acts, such as investing, selling, and settling claims.

It rarely grants power to rewrite who gets what. If the trust does not explicitly allow for a change, the trustee should seek the beneficiaries’ consent or court approval before taking any modifying step.

Facing Trust-Related Questions? Contact Bassett Murray Law Group, PLLC Today.

Our team at Bassett Murray Law Group, PLLC, has guided Michigan families through trust creation, modification, and administration for decades. We know the statutes, the court procedures, and the human stories behind them.

If you have doubts about whether a trustee may change a trust, need to fix outdated terms, or seek to protect a beneficiary’s share, reach out. We are invested in improving lives.

Call us at 734-930-9200 in Ann Arbor or 231-427-2292 for our Petoskey office, or visit our contact page to schedule a conversation. We look forward to helping you build security that adapts as life unfolds.