Why You May Need a Certificate of Trust When Selling Real Estate in Michigan

A last will and testament and a living trust are two of the most common estate planning methods. A living trust is attractive for many because it provides for an efficient and effective disposition of assets to loved ones, and unlike a will a living trust avoids probate court.

Once a trust is established it must be funded. Funding a trust is the process of transferring ownership of assets from the individual(s) who established the trust to the trustee of the trust, which involves titling assets in the name of the trustee. In almost all cases, the person who establishes and funds the trust also names himself or herself the trustee who has the right to manage all of the money, property, and assets that are placed inside of the living trust.

One asset that many people put in their trusts is real estate, be it a primary residence, vacant land, or otherwise. In Michigan, to the extent that a trustee decides to sell real estate that is part of a living trust, a certificate of trust will be required at or before the real estate closing.

What is a Certificate of Trust in Michigan?

Up until a few years ago, there were two different types of certificates of trust used in Michigan. One type was used for real estate transactions and the other was used mainly for financial transactions involving a trust.

Each type was governed by a different set of laws with quite different requirements. While each set of laws  used the term “certificate of trust existence and authority,” one set was found in the statutes relating to Conveyances of Real Property and the other set was in the Michigan Trust Code.  In 2018, as discussed below, Michigan law changed to harmonize the two statutes, simplifying our laws, reducing costs, errors, and confusion.

New legislation was signed into law in 2018 that, in essence, consolidated the two types of certificates of trust into one. Pursuant to the current law, a certificate of trust must include:

  • The name of the trust, the date of the trust, and the date of each operative trust instrument.
  • The name and address of each current trustee.
  • The powers of the trustee relating to the purposes for which the certificate of trust is offered.
  • The revocability or irrevocability of the trust and the identity of any person holding the power to revoke the trust.
  • The authority of co-trustees to sign on behalf of the trust or otherwise authenticate on behalf of the trust and whether all or less than all co-trustees are required to exercise the trustee powers.
  • A statement that the trust has not been revoked, modified or amended in any manner that would cause the representations included in the certificate of trust to be incorrect.

The certificate of trust may be signed or otherwise authenticated by the settlor, any trustee (including a successor trustee), or an attorney for the settlor or the trustee.

Do You Need a Certificate of Trust?

If you have a living trust, a certificate of trust will help the trustee open new financial accounts without needing to provide the entire trust. To the extent that real estate is in your trust, and you desire to sell it, the title company will require you to have a certificate of trust. Often, trustees are unaware of the need for a certificate of trust as part of the sale and are left scrambling in final days prior to the closing. If you are about to sell real estate titled in your name as trustee, you should obtain a certificate of trust early in the process to eliminate the stress and possible delays caused by not having the proper paperwork.

Even if you have a certificate of trust, it may need updating depending on when it was created. Because of the requirements imposed by the new statute, many certificates of trust that were created prior to 2018 are invalid. Additionally, since trustees and their addresses change from time to time, older certificates of trust are often out of date.

If you require assistance, the experienced trusts and estates and real estate lawyers at Fraser Trebilcock can provide the guidance you need. Please contact us.

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Chair of Fraser Trebilcock’s Trusts and Estates Department, attorney Marlaine C. Teahan is a Fellow of the American College of Trust and Estate Counsel, and is the past Chair of the Probate and Estate Planning Section of the State Bar of Michigan. For help getting necessary legal authority for your loved one’s COVID-19 vaccine consent form, contact Marlaine at 517.290.0057 (cell) or mteahan@fraserlawfirm.com.

MRA Orders Largest Marijuana Product Recall in Michigan History

Michigan’s Marijuana Regulatory Agency (MRA) issued its largest marijuana recall ever on November 17 because of concerns over safety tests conducted by two companies.

Most products containing marijuana flower that had passed safety testing at Viridis Laboratories, LLC and Viridis North, LLC between August 10 and November 16 were recalled in a move that reportedly affected products sold at over 400 retail locations. The affected retailers were outlined in a 31-page Public Health and Safety Bulletin issued by the MRA. The recall did not impact inhalable marijuana concentrate products such as vape carts, live resin, distillate, and cannabis concentrate.

The value of the recalled marijuana products is estimated to be in the tens of millions of dollars and affected more than half the current stock for many retailers, according to multiple media reports.

The investigation is ongoing and additional findings may be released by the MRA at a later date.

The reasoning for the recall was “inaccurate and/or unreliable” microbial lab test results according to the MRA, although further details were not released by the agency. Microbial testing is required of cannabis products with the hope of eliminating products containing high levels of mold, bacteria, and yeast. Having a high level of those substances can lead to an increased risk of illness for users, including cases of E. coli and salmonella.

A large state recall mandated by the MRA also occurred in August 2020 after a marijuana flower failed safety and compliance testing for both mold and yeast.

What retailers and consumers should do with recalled products

Retailers are directed to properly dispose of any recalled products in adherence to MRA guidelines and along with processors must discontinue sales and transfers. Proof of product destruction must be sent to the MRA’s compliance email at MRA-Compliance@michigan.gov. Another option is for an affected product to be retested or sent back to the original licensee source.

Additionally, retailers must display recall notices in visible locations on their sales floors.

Customers who purchased the recalled product are expected to return those products to the retailer they purchased it from for disposal.

Product testing is at the heart of medical marijuana legislation

Proponents of a more heavily regulated medical marijuana market argue that a significant amount of marijuana sold in the state is done so illegally as part of an illicit market, which threatens the health and safety of consumers because there is no guarantee the products have been properly tested.

One of the outcomes of this debate is the recent introduction of bills in the Michigan Legislature that would limit the role and more heavily regulate caregivers in growing, storing, and distributing product.

Testing guidelines by the MRA are readily available online

The MRA has created and updated its Sampling and Testing Technical Guidance document for marijuana products. The basic tenet is that all sampling and analysis must be conducted by a laboratory licensed by the MRA and accredited to the International Organization for Standardization (ISO), ISO/IEC 17025:2017 by an International Laboratory Accreditation Cooperation (ILAC) recognized accreditation body or by an entity approved by the MRA.

Our team will continue to keep you updated on this recall and related news, and the progress of any legislation impacting the marijuana industry in Michigan. If you have any questions, please contact Paul Mallon or your Fraser Trebilcock attorney.

mallon-paulPaul C. Mallon, Jr.  is Shareholder and Chair of Fraser Trebilcock’s cannabis law practice. You can reach him at pmallon@fraserlawfirm.com or (313) 965-9043. 

October Updates: Legal and Regulatory Developments Impacting the Michigan Cannabis Industry

In a burgeoning industry such as legal cannabis in Michigan, one of the things you can count on is a frequently changing legal and regulatory landscape. There were several noteworthy developments in October that those competing in the industry should be aware of.

Michigan House Committee Advances Bills that Would Impose More Stringent Regulations on Medical Marijuana Caregivers

On October 26, 2021, the Michigan House of Representatives Regulatory Reform Committee approved a package of bills that would limit the amount of marijuana that caregivers could grow, store and distribute.

In a previous article, we outlined the key changes the new legislation would impose on caregivers, including the creation of a new specialty medical grower license that includes a variety of regulations, if signed into law. One change that was added to the bills before passage in the committee was adding language that allows unlicensed caregivers to serve up to five patients from their primary residence, but only allow them to grow 24 marijuana plants at their home. Beyond that, a specialty medical grower license would be required.

We will continue to keep you updated on this legislation as it moves to the full House for a vote.

Movements to Decriminalize Psychedelics Gain Momentum on a Local Level

Efforts to decriminalize the possession and use of naturally occurring psychedelics are gaining steam in Michigan.

Proposal E, which would decriminalize personal possession and therapeutic use of entheogenic plants by adults, is on the November 2nd ballot in Detroit.

In Grand Rapids, city commissioners recently voted to affirm a resolution that declares “support for state and federal legislative efforts that would decriminalize entheogenic plants and fungi.”

In Ann Arbor, the city council passed a resolution to make enforcement of laws prohibiting certain psychedelics a low priority.

There are also efforts to decriminalize psychedelics taking place at the state level. Senate Bill 631 has been introduced which would decriminalize entheogenic plants and fungi across Michigan.

Key Congressional House Committee Approved Bill to Federally Legalize Marijuana

While it happened in September (September 30), it’s worth noting in this October update that the U.S. House of Representatives Judiciary Committee approved the Marijuana Opportunity, Reinvestment and Expungement Act, which would federally legalize marijuana and promote social equity.

The bill would:

  • Remove marijuana from the Controlled Substances Act (CSA),
  • Enable people with cannabis convictions to have their records expunged
  • Create a federal tax on marijuana to support community reinvestment and other programs

The passage of the bill came one week after the full House of Representatives voted in favor of a defense spending bill that includes an amendment that would protect banks that serve cannabis businesses in states where they legally operate from being penalized by federal regulators.

We will continue to keep you apprised of further legal and regulatory developments. In the meantime, if you have any questions or require assistance, please contact Paul Mallon or your Fraser Trebilcock attorney.

mallon-paulPaul C. Mallon, Jr.  is Shareholder and Chair of Fraser Trebilcock’s cannabis law practice. You can reach him at pmallon@fraserlawfirm.com or (313) 965-9043. 

IRS Announces 2022 Increase for Health FSAs

The IRS has just released its 2022 annual inflation adjustments, in which it announced that the Code section 125 dollar limitation on voluntary employee salary reductions to health flexible spending arrangements (health FSAs) is increasing to $2,850.

The IRS annual inflation adjustments for more than 60 tax provisions, including health FSAs, qualified transportation fringe benefits, adoption assistance, medical savings accounts, and qualified small employer HRAs, can be found in Rev. Proc. 2021-45.

With regard to the health FSA increase for 2022, Rev. Proc. 2021-45 reiterates that cafeteria plans can be written to allow carryovers of unused health FSA amounts up to a maximum of $570. However, by way of temporary relief and if the cafeteria plan was amended, leftover amounts in the dependent care FSA and/or the health FSA can be carried over from the 2021 plan year to the 2022 plan year. This is allowed under Notice 2021-15 and was previously described in our March 8, 2021 Client Alert.

Although open enrollment season is about to be in full swing for most, employers should ensure that their salary reduction agreements, plan documents, and related enrollment materials are updated to reflect any changes in benefits for the upcoming plan year.

This alert serves as a general summary, and does not constitute legal guidance. Please contact us with any specific questions.

Elizabeth H. Latchana specializes in employee health and welfare benefits. Recognized for her outstanding legal work, in both 2019 and 2015, Beth was selected as “Lawyer of the Year” in Lansing for Employee Benefits (ERISA) Law by Best Lawyers, and in 2017 as one of the Top 30 “Women in the Law” by Michigan Lawyers Weekly. Contact her for more information on this reminder or other matters at 517.377.0826 or elatchana@fraserlawfirm.com.

Brian T. Gallagher is an attorney at Fraser Trebilcock specializing in ERISA, Employee Benefits, and Deferred and Executive Compensation. He can be reached at (517) 377-0886 or bgallagher@fraserlawfirm.com.

Fewer Vehicles on the Road, Yet More Fatalities in 2020

While the early months of the pandemic saw a significant decrease of vehicles on the road, traffic fatalities in Michigan and nationally increased during 2020.

Data from the U.S. Department of Transportation’s National Highway Traffic Safety Administration and the Michigan Office of Highway Safety Planning indicate that 2020 saw the largest number of auto accident fatalities nationally since 2007.

In Michigan, 1,083 people died in car crashes, an approximately 10 percent rise relative to 2019. Nationally, an estimated 38,860 people died in car crashes in 2020—a 7.2 percent increase compared to 2019.

According to data from the Governors Highway Safety Association, pedestrian fatalities involving vehicles also rose to 6,721 nationally in 2020, a 4.8 percent increase from 2019. In Michigan, pedestrian accidents increased 17 percent in 2020 relative to 2019.

The increase in auto accident and pedestrian deaths occurred despite the fact that vehicle miles traveled in the U.S. decreased by 13.2 percent in 2020, according to the National Highway Traffic Safety Administration (NHTSA). In addition, traffic accidents were down. In Michigan, there were 245,432 accidents in 2020 compared to 314,377 in 2019.

With more Americans working from home and spending less time driving on the roads, why did auto accident fatalities surge higher?

There is not a single definitive reason for this dichotomy, although NHTSA data shows that occupant ejection rose by 20 percent and speeding related crashes increased by 11 percent.

Alcohol-related crashes also increased (fatal crashes involving alcohol were up 9 percent in 2020 compared to 2019 according to NHTSA) and several studies show that alcohol consumption broadly increased with the pandemic in 2020. Pandemics such as COVID-19 can cause many medical, psychological, and sociological problems, including increased alcohol consumption and related harms from such consumption

Additional evidence that more careless drivers may have been on the road in 2020 is the fact that there was a 4 percent increase in fatal crashes among those properly wearing seat belts, compared to a 16 percent increase in those who did not, according to Michigan Office of Highway Safety Planning data. NHTSA figures also revealed that the number of traffic tickets for speeding issued by law enforcement agencies increased in most states, and states such as Iowa and Ohio saw 101 percent and 61 percent increases, respectively, in the number of drivers ticketed for driving over 100 miles per hour.

In June, the Michigan State Police announced a partnership with five other states for a regional traffic safety campaign known as “Great Lakes, High Stakes.” It announced that the campaign was being undertaken in light of the fact that “law enforcement agencies across the nation have reported an alarming rise in speeding and fatal crashes” since the COVID-19 pandemic began.

Priorities for Staying Safe on the Roads

The biggest tragedy resulting from auto accidents is the loss of life, and the medical challenges that serious auto accidents can cause. This also leads to a financial burden on our society where devastating injuries can adversely affect an individual’s pocketbook and ability to work.

Eliminating distracted driving is one of the most effective ways to reduce vehicle accidents and increase driver and pedestrian safety. In 2019, distracted driving crashes killed 3,142 people in the United States, according to the NHTSA.

There are currently a trio of bills in Michigan—House Bills 42774278 and 4279—pending before the Michigan House of Representatives, that seek to impose penalties on drivers for engaging in distracted driving pertaining to cell phone and other mobile device usage. They would ban the ability to use handheld devices beyond just texting and driving and include more specific types of device usage, including social media, video streaming and more.

To help reduce distracted driving, consider:

  • Placing your cell phone out of sight to prevent unsafe usage or connect it to your vehicle’s connected car system for hands-free usage only.
  • Programming your destination using navigation before starting to drive.
  • Pulling over if you must call or text.
  • Asking passengers for help. Passengers themselves can warn a driver about unsafe distracted driving
  • Activating the Do Not Disturb feature on devices.

Another concern in the months ahead is the danger that driving on Michigan’s wintry roads can bring. Here is a short list of winter driving tips from AAA Michigan, which are particularly important for inexperienced drivers:

  • Accelerate and decelerate slowly on icy roads.
  • Maintain safe distance with other cars (approximately six seconds for braking).
  • Remember that it’s not easy to bring a car to a complete stop on wintry roads.
  • Do not try to accelerate up hills, which can cause wheels to spin and lose traction.

And don’t forget that it’s deer season in Michigan. During the next couple of months there will be thousands of deer/car accidents in both rural and suburban Michigan. In fact, statistics suggest that there will be over 50,000 deer/car accidents during the 2020 calendar year. The Michigan State Police report that 80% of these accidents will occur between dawn and dusk, but they are not limited to rural areas. Indeed, for example in the Lansing area alone, Meridian Township had 129 car/deer accidents, and Delta Township had 128 deer/car accidents in 2018. Simply stated, if you drive enough, there is an excellent chance that at some point in time you will be involved in a car/deer accident. For tips on how to drive safely during deer season, and what to do if you have an unfortunate encounter with a deer, check out our previous article on the topic: “Fall in Michigan: Safely Handling Deer/Automobile Accidents.”

By driving defensively and safely on the roads, we can all contribute to lowering the state’s auto fatality rate.

Fraser Trebilcock Shareholder Gary C. Rogers has firsthand experience with car/deer accidents, having been involved in four himself; Gary is recognized as one of the top civil defense attorneys in the area of automobile related cases, and he has co-written Michigan No-Fault Law-The Insurers’ Perspective, a handbook for handling claims under Michigan’s No-Fault Automobile legislation. Gary can be reached at grogers@fraserlawfirm.com or (517) 377-0828.