In Re FOWLER ESTATE; In Re FOWLER TRUST
Key claim: Assets of a trust that was revocable at the settlor’s death—including post-death 401(k) and life-insurance proceeds—are generally subject to creditor claims under MCL 700.7605(1), but 401(k) payments are exempt under MCL 700.7605(2) and life-insurance proceeds are exempt under MCL 700.7605(4) when they would not have been reachable if paid other than to the settlor’s estate.
Abstract
Michigan Supreme Court opinion decided 2026-07-20. Michigan Supreme Court Lansing, Michigan
Syllabus Chief Justice: Justices: Megan K. Cavanagh Brian K. Zahra Richard H. Bernstein Elizabeth M. Welch Kyra H. Bolden Kimberly A. Thomas Noah P. Hood
This syllabus constitutes no part of the opinion of the Court but has been Reporter of Decisions: prepared by the Reporter of Decisions for the convenience of the reader. Kimberly K. Muschong
In re FOWLER ESTATE
In re FOWLER TRUST
Docket Nos. 167501, 167502, and 167503. Argued on application for leave to appeal
November 6, 2025. Decided July 20, 2026.
At issue in these consolidated appeals is whether life insurance proceeds and 401(k)
proceeds paid into a revocable trust after the settlor’s death are subject to creditor claims under
MCL 700.7506(1)(b) and MCL 700.7605(1) of the Estates and Protected Individuals Code (EPIC),
MCL 700.1101 et seq. In 2018, Jennifer Fowler killed her mother, Helen Fowler, and herself.
Julie Brooks, as personal representative of Helen’s estate, filed a wrongful-death suit against
Jennifer’s estate, and the trial court awarded judgment in favor of Helen’s estate, which sought to
collect the judgment from Jennifer’s estate in the St. Clair Probate Court. Shellie Spacil, as trustee
of Jennifer’s revocable trust—which was the named beneficiary for Jennifer’s 401(k) account and
life insurance policy—filed suit in the probate court, seeking a declaratory judgment regarding
whether the 401(k) and life insurance proceeds could be used to satisfy the wrongful-death
judgment. The probate court, John D. Tomlinson, J., held that the life insurance proceeds were
subject to creditor claims under MCL 700.7605(1) and were not exempt either under MCL
700.7605(4) or under MCL 500.2207(2) of the Insurance Code, but that the 401(k) proceeds were
exempt under MCL 700.7605(2).
Both parties appealed, and the Court of Appeals, JANSEN, P.J., and REDFORD and D. H.
SAWYER, JJ., affirmed with respect to the life insurance proceeds but reversed with respect to the
401(k) proceeds, holding that the exemptions from creditor claims set forth in MCL 700.7605(2)
and (4) and MCL 500.2207(2) did not apply. ___ Mich App ___ (July 18, 2024) (Docket Nos.
365600, 365603, and 365610). Jennifer’s trust sought leave to appeal in the Supreme Court, which
ordered oral argument on the application. ___ Mich ___; 18 NW3d 286 (2025). After oral
argument, the Supreme Court ordered the parties to file supplemental briefs addressing, in part,
“whether MCL 700.7605(1) applies to property paid into an irrevocable trust where the trust was
revocable at the settlor’s death.” ___ Mich ___; 30 NW3d 616 (2026).
In a unanimous opinion by Justice THOMAS, the Supreme Court, in lieu of granting leave
to appeal, held:
The assets of a trust—including assets payable to the trust upon the death of the settlor— are, barring applicability of an exception stated in MCL 700.7605(2) through (4), subject to the claims of creditors under MCL 700.7605(1) where the trust was established as a revocable trust but was rendered irrevocable by the death of the settlor. Therefore, all the property held and proceeds received by Jennifer’s trust were generally subject to creditor claims that could not be satisfied by her estate. However, the 401(k) proceeds were exempt from creditor claims as a payment from a qualifying retirement plan under MCL 700.7605(2), and the life insurance proceeds were exempt under MCL 700.7605(4) because the proceeds would not have been subject to creditor claims if paid “other than to the settlor’s estate.”
1. Notwithstanding that a single-settlor revocable trust becomes irrevocable upon the
settlor’s death, the assets of Jennifer’s trust, including proceeds paid into the trust following her death, were subject to creditor claims as property of a revocable trust under MCL 700.7506(1)(b) and MCL 700.7605(1). MCL 700.7506(1)(b) provides, in part, that after the death of a settlor, the property of a trust that at the settlor’s death was revocable by the settlor is subject to expenses, claims, and allowances as provided in MCL 700.7605. In turn, under MCL 700.7605(1)(b), the property of a trust over which the settlor has the right, at his or her death, to revoke the trust is subject to creditor claims. The text of the statutes, relevant commentary, and underlying law showed that the Legislature’s purpose in enacting MCL 700.7506(1)(b) and MCL 700.7605(1) was to codify the liability of a revocable trust used as a will substitute for the debts of a deceased settlor. Accordingly, the text of the statutes relies on a trust’s status as a “revocable trust” at the time of the decedent’s death. Because Jennifer’s trust was revocable until her death, all the property held or proceeds received by the trust were subject to creditor claims, subject to the exceptions stated in MCL 700.7605(2) through (4).
2. Under MCL 700.7605(2), “all payments from . . . [a 401(k) plan] . . . shall not be
considered to be a trust described in” MCL 700.7605(1). The disbursement of funds in the 401(k) plan to Jennifer’s trust was a “payment[] from” a 401(k) plan. Reading MCL 700.7605(1) and (2) together, the intent of the Legislature was to treat “all payments from” a 401(k) plan as not part of a revocable trust liable for creditor and other claims. Because MCL 700.7605(2)’s exemption from MCL 700.7605(1) declares that “all payments from” a 401(k) plan “shall not be considered to be a trust described in” MCL 700.7605(1), the Legislature exempted such payments from the claims of creditors of a deceased settlor. Accordingly, the disbursement from Jennifer’s 401(k) plan to her revocable trust was necessarily one of those payments exempt from creditor claims.
3. MCL 700.7605(4) provides that certain property shall not be considered trust property
available for the payment of a claim against the settlor’s estate under MCL 700.7605(1), including property “held or received by a trust” that would not have been subject to such claims “if it had been paid . . . other than to the settlor’s estate.” MCL 500.2207(2) places life insurance proceeds outside the reach of an insured-decedent’s creditors unless the proceeds are paid to their estate (i.e., to “the insured” or their “executors or administrators”). The life insurance proceeds payable to Jennifer’s trust therefore fell within MCL 700.7605(4)’s exemption for trust proceeds that would be outside the reach of creditors if “paid . . . other than to the settlor’s estate.” The Supreme Court rejected the argument of Helen’s estate that, because a trust is administered, the trustee of a trust was necessarily an “administrator” within the meaning of MCL 500.2207(2). While MCL 500.2207(2) uses the antiquated terms “executors or administrators,” the Legislature in EPIC has supplanted these terms with unified use of the term “personal representative,” which encompasses all those performing the same function as an executor or administrator “other than a trustee of a t
Why this matters
Assets of a trust that was revocable at the settlor’s death—including post-death 401(k) and life-insurance proceeds—are generally subject to creditor claims under MCL 700.7605(1), but 401(k) payments are exempt under MCL 700.7605(2) and life-insurance proceeds are exempt under MCL 700.7605(4) when they would not have been reachable if paid other than to the settlor’s estate.