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Committee hears technical and substantive explanations for Unitrust Act and perpetuities fixes
Summary
Sponsors and legal experts told the House Judiciary Committee that House Bills 4033 and 4034 would let trustees elect unitrust treatment and fix references to Michigan's perpetuities rules; committee adopted a substitute to HB 4034 by roll call.
Representative Sarah Wozniak introduced two related probate bills to the House Judiciary Committee on the committee's first business of the day, saying the measures were refined with stakeholder input and had broad prior support in the House.
Wozniak said House Bill 4033 would create a Unitrust Act to allow trustees to elect unitrust treatment, and House Bill 4034 would make technical corrections to Michigan's statutory rule against perpetuities. "This is not the first go round with these bills," Representative Sarah Wozniak said. "House Bill 4,033 was passed 109 to nothing, and 4,034 was passed 102 to nothing" last term.
Attorney James Spica, who advised the committee as a testifier with specialized trust practice experience, told the committee the bills address different problems and should not be tied together. "They don't have to do with one another — that enacting section is an error," Spica said, referring to language in the substitute adopted by the committee.
Spica described the policy aim of HB 4033 as reconciling modern total-return investing with older trust instruments that separate "income" and "remainder" beneficiaries. "The act will allow a trustee who is energetic enough in seeking economic returns for beneficiaries ... to elect to treat the trust as a unitrust," he said, explaining that a unitrust makes distributions based on periodically determined trust value rather than cash income. He said adopting a unitrust option would bring Michigan in line with about 36 other states and would not force trustees to use the statute.
On HB 4034, Spica said the bill clarifies how the Uniform Statutory Rule Against Perpetuities interacts with Michigan's Personal Property Trust Perpetuities Act (2008) and a 2022 amendment that affected step-up-in-basis tax treatment. He described HB 4034 as a technical change that makes the cross-reference clearer for practitioners.
Chair Leitner allowed committee debate and then called a roll to adopt substitute H-1 to House Bill 4034. The clerk reported 9 ayes, 0 nays, 0 passes; the substitute was adopted. The committee did not take a final roll-call vote on either bill during the hearing.
Why it matters: Supporters said the Unitrust Act would give trustees a statutory option to better pursue total return investments without breaching fiduciary duties as older trust language is written. Supporters framed HB 4034 as technical cleanup to ensure practitioners can apply recent changes to Michigan's perpetuities framework.
Background and next steps: Testimony referenced the Uniform Fiduciary Income and Principal Act (article 3) and the Uniform Statutory Rule Against Perpetuities (Uniform Law Commission). Spica identified himself as immediate past chair of the probate and estate planning section (a voluntary practitioners' section) and as a Uniform Law Commissioner. Representative Wozniak asked the committee to vote the bills out when ready; no final committee passage of HB 4033 was recorded in the transcript.
