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HB 5877

Probate: other; prima facie evidence that transfer is made for value; modify to reflect repeal of the state real estate transfer tax act. Amends sec. 3912 of 1998 PA 386 (MCL 700.3912). TIE BAR WITH: HB 5880'26, HB 5874'26

2025-2026 Regular Session Introduced by Joe Aragona and 17 co-sponsors

HB 5877 clarifies that purchasers of estate-distributed property taken in kind may receive title free of estate interests, and that such transfers are not automatically for value.

REFERRED TO COMMITTEE ON GOVERNMENT OPERATIONS
#probate:other #taxation:staterealestatetransfer
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Bill Summary · HB 5877

Bill Summary – Michigan House Bill 5877 (2025-2026)

Overall purpose

HB 5877 amends the Estates and Protected Individuals Code (1998 PA 386) to address how transfers received by distributees or their transferees are treated for purposes of determining whether the transfer was for value. Specifically, it modifies prima facie evidence related to transfers that are exempt or not noted for value, in the context of estate distributions. The bill is tied to (i.e., cannot take effect unless) HB 5880 and a related set of bills (HB 5874 and HB 5877’s companion changes to related acts), and it contains an eventual 90-day post-enactment effective date.

Key provisions

  • Amends Sec. 3912 of 1998 PA 386 (MCL 700.3912) to address:

    • Purchasers or lenders who acquire property distributed in kind or a security interest in that property from a distributee who received a distribution instrument/deed from the personal representative, or from a transferee of such distributee, take title free of rights of any interested person in the estate and incur no personal liability to the estate or to interested persons.
    • This protection applies even if the distribution was not properly authorized or if the personal representative’s authority was terminated before execution.
    • The personal representative, including those who are the distributee themselves, is protected when executing a deed of distribution. A purchaser or lender does not need to inquire about the propriety of the distribution by the personal representative to receive protection, even if the same individual acts as personal representative and distributee or if the authority had terminated.
    • A recorded instrument described in this section that falls within exemptions listed in:
    • Section 5 of 1966 PA 135 (MCL 207.505) or
    • Section 6 of the State Real Estate Transfer Tax Act (formerly 1993 PA 330, MCL 207.526) is prima facie evidence that the transfer is made for value is not shown. In other words, the instrument’s recording does not necessarily establish that the transfer was for value.
    • Notwithstanding, the purchaser or lender still takes title free of the Michigan estate tax lien to the extent provided by Section 43 of the Michigan Estate Tax Act (1899 PA 188, MCL 205.243).

  • Effective date:

    • The act takes effect 90 days after enactment.

  • Enacting conditions (tie-bar):

    • HB 5877’s effectiveness is contingent on the passage of HB 5874 and HB 5880 (and these, in turn, are tie-barred to HB 5877). In short, all four bills must be enacted for HB 5874–5877 to take effect.

Affected parties and entities

  • Purchasers and lenders who acquire property distributed in kind (or security interests in such property) from distributees or their transferees.
  • Personal representatives, distributees, and potential beneficiaries in estates where distributions are in kind.
  • Entities recording or relying on recorded instruments related to such distributions, as exemptions may affect prima facie evidence of transfer-for-value.

Related fiscal and policy context (as summarized in the accompanying analysis)

  • HB 5874 would repeal the State Real Estate Transfer Tax Act, shifting revenue considerations to the School Aid Fund (SAF). This repeal would reduce SAF revenues in FY 2027 and FY 2028 (roughly $475 million and $488 million, respectively, based on January 2026 consensus estimates for RET receipts).
  • HB 5880 proposes a services excise tax, with revenue directed to a new property tax savings reimbursement fund, designed to offset SAF losses by distributing funds to the SAF equal to RET receipts for the 2026 tax year (and adjusted for inflation thereafter, up to a 3% cap).
  • The combination of these bills aims to repeal an RET-related revenue source while creating a mechanism to offset SAF revenue losses, with statutory intent but not a guaranteed appropriation.

Procedural/timeline notes

  • Introduced April 22, 2026, and referred to the Committee on Government Operations.
  • Effective date is 90 days after enactment, conditional upon enactment of HB 5874 and HB 5880 (tie-bar).
  • The analysis and fiscal notes indicate anticipated substantial shifts in SAF revenues and potential offset strategies, but final fiscal impact depends on enacted companion bills and future appropriations.

Bottom line

HB 5877 tightens and clarifies the treatment of transfers received in kind from a personal representative or distributee in estate distributions, clarifying when title is transferred free of estate interests and how prima facie evidence of transfer-for-value is treated. It is part of a broader package reforming the state real estate transfer tax regime (repeal and offset measures), with significant fiscal implications for the School Aid Fund and related revenue streams.

Compiled from official sources — confirm details with the bill’s official record.

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