MI HB5110

Allows trustees to convert income trusts to unitrusts, convert unitrusts back to income trusts, and change unitrust calculation percentages or methods by adopting a written policy and providing notice to beneficiaries.

Requires trustees to send written notice to qualified beneficiaries at least 30 days before implementing changes, allowing beneficiaries to object; objections may be contested in court.

Limits unitrust rates to 3-5% and restricts valuation methods for trusts with special tax benefits (such as qualified marital deduction trusts or generation-skipping transfer tax-exempt trusts) or trusts without an independent trustee.

Establishes mandatory provisions for unitrust policies including the unitrust rate, method for determining asset values, and the period used for calculations (calendar year, quarterly, or other periods).

Applies to trusts administered in Michigan unless the trust terms explicitly prohibit unitrust conversion or exclude specific trusts such as charitable remainder trusts, qualified personal residence trusts, or certain other federally-defined trust types.