New Legislation Update

Take-Away: What follows is a short update on reported adopted and pending legislation from a few weeks ago.

Principal Residence Exemption During Convalescence:  This Act [PA 133 of 2018] amends the General Property Act [MCL 211.7cc] to remove a requirement that a residence must be unoccupied in order for an individual who resides in a nursing home or assisted living facility to continue to claim the principal residence exemption (PRE) on their real property. The PRE exempts the real property from the 18-mill school operating levy. The amendment also allows the PRE exemption to continue in a situation where the individual resides in ‘any other location’ so long as that individual resides there solely for the purpose of  their ‘convalesce.’

Claiming PRE in Multiple States: The 2018 Act is not to be confused with regard to earlier changes to the PRE exemption rules in 2017. Those earlier legislative changes clarified the prohibition of an individual who claims a PRE on a Michigan residence while also claiming a substantially similar exemption, deduction,  or credit under the laws of another state. It also added criminal sanctions for an intentional violation of this one-PRE-per taxpayer rule.

• PA 121 of 2017 clarifies the law [MCL 211.7cc] to specify that if an individual has claimed a similar real  property tax exemption in another state, that individual: (i) could be denied a Michigan PRE for the current year and up to three years in the past; (ii) would not be able to rescind their other state exemption to in order to then qualify for the Michigan PRE for any of the years the Michigan PRE is denied; and (iii) the individual would be subject to a $500 penalty. This new provision is implemented by adding to the standard form PRE Affidavit ‘the owner has not claimed a substantially similar exemption, deduction or credit on property in another state.’
• PA 122 of 2017 amends the law  to add an offense of ‘claiming a substantially similar exemption, deduction or credit on real property in another state, which is prohibited by law.’ [MCL 211.7cc(3).] An individual who violates this provision with the intent to wrongfully obtain or attempt to obtain an Michigan PRE will be guilty of a misdemeanor, which is punishable either by imprisonment not to exceed one year, or by a fine of not more than $5,000, or public service of not more than 1,500 hours, or both.

Those folks who have a client with condos in Florida, Arizona, Texas, or elsewhere will want to confirm that the client is not ‘double-dipping’ on the PRE in both states.

Exempt Property Allowance: A decedent’s spouse, and/or children is provided an exempt property allowance under the Michigan Estates and Protected Individual’s Code [EPIC.] It is one of a handful of allowances that can be claimed against the decedent’s probate estate. The exempt property allowance, which is adjusted annually in amount, is currently $15,000. [MCL 700.2404.] A perceived problem arose in 2015 when the Michigan Court of Appeals issued a decision that said that a parent could not deprive a child of the right to claim an exempt property allowance from the deceased parent’s estate. Estate of Jajuga. This was the outcome, even when the parent expressly disinherited that child in their Will. This Act [PA 143, 2018, effective August 8, 2018] permits a parent to disinherit a child and also deprive that child of the right to claim allowances otherwise permitted under EPIC.

While the amount of the exempt property allowance is a relatively small $15,000, the receipt of even that amount (or an allocable portion of it)  could disrupt a disabled child’s entitlement to receive governmental benefits.

Physician Orders for Scope of Treatment (POST) Forms: A POST form is not the same thing as a patient advocate designation. The POST form gives specific instructions for the care of a seriously ill patient and is intended to be used for patients for whom death within a year is foreseeable, though not inevitable. A series of laws were enacted to provide the patient with the option to express through a POST form their intent with regard to medical care during their serious illness and their the end of life. [PA 154 of 2017, amends MCL 333.5671-5685.] The Act directs that this ‘form’ to be created by the Michigan Department of Health and Human Services. The form, which is to be signed by both the patient or the patient’s representative and attending health professional, will contain a list of the treatments that may be administered outside of a hospital setting. Once the form is signed, it then becomes part of the patient’s medical records. EPIC was also amended to authorize a court appointed guardian to sign a POST form on behalf of a ward.

If end-of-life treatment is a concern to a client they may want to revisit and update their durable powers of attorney for health care to address their patient advocate’s authority to sign a POST form so there is no confusion on the patient advocate’s authority to do so.