Michigan Court of Appeals Holds that a Discretionary Trust is Not Subject to SCFRA Reimbursement Suit
28/02/11 09:35
The State Correctional Facility Reimbursement Act or SCFRA provides that the State Treasurer can bring suit to attach a prisoner’s assests to pay for the cost of incarceration.
In 1989, the Michigan Supreme Court ruled that a discretionary trust was exempt from attachment under the related Mental Health Reimbursement Act. Miller v Dep’t of Mental Health, 432 Mich 426, 430; 442 NW2d 617 (1989). In State Treasurer v Isabelle Skaff Trust, Court of Appeals No. 291306, the Court of Appeals applied that ruling to SCFRA and held that a properly drafted discretionary trust could avoid SCFRA liability as well.
The decision should be consulted carefully in drafting any such trust, but the discretionary trust appears to be the best option out there for a family member to provide some support to a prisoner/relative without just gifting the money to the state. The State Treasurer will be challenging any such trust and they should be drafted by an expert.
Congratulations to must friend and colleague Patrick Levine Rose over at michapp.com for noticing this important, but unpublished ruling. Note because the ruling is not published, it is not binding on subsequent panels, but it appears the best strategy so far for preserving some assets for a prisoner’s community based reintegration.
In 1989, the Michigan Supreme Court ruled that a discretionary trust was exempt from attachment under the related Mental Health Reimbursement Act. Miller v Dep’t of Mental Health, 432 Mich 426, 430; 442 NW2d 617 (1989). In State Treasurer v Isabelle Skaff Trust, Court of Appeals No. 291306, the Court of Appeals applied that ruling to SCFRA and held that a properly drafted discretionary trust could avoid SCFRA liability as well.
The decision should be consulted carefully in drafting any such trust, but the discretionary trust appears to be the best option out there for a family member to provide some support to a prisoner/relative without just gifting the money to the state. The State Treasurer will be challenging any such trust and they should be drafted by an expert.
Congratulations to must friend and colleague Patrick Levine Rose over at michapp.com for noticing this important, but unpublished ruling. Note because the ruling is not published, it is not binding on subsequent panels, but it appears the best strategy so far for preserving some assets for a prisoner’s community based reintegration.