The issues in this newly released opinion from the Michigan Supreme Court are whether proceeds from either life insurance or retirement accounts (aka “qualified plans “) paid over to a trust which became irrevocable upon the death of the settlor are reachable by the deceased settlor’s creditors?
The answer, as to both types of assets, is: No, they are not.
The MSC construes the applicable Michigan statutes in coming to a unanimous decision.
To my thinking, the laws they cite do not obviously say what the MSC finds them to say – which maybe explains the contorted history of this case. The trial court found that the life insurance proceeds could be reached by creditors, but the retirement funds could not. The Michigan Court of Appeals held that both forms of assets could be reached by creditors.
Now we know:
Neither life insurance proceeds paid to a trust that became irrevocable when the settlor died, nor retirement funds paid to a trust that became irrevocable when the settlor died, are reachable by creditors of said deceased settlor.
And since the outcome is good for most people, including estate planning lawyers – albeit bad for creditors – who’s complaining?
To Read In Re Fowler Trust, click on the name.
A Three Peat
I blogged about this case twice before.
To read the post about the Court of Appeals decision regarding creditor rights click here: Lessons in Collections from a Mercy Murder Drama
The post concerning the lurid and tragic details underlying the case are discussed in my post: What I read is Love
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