Expanded Parcel Division Rights Under Amended Michigan Land Division Act

3 20 Advisory Landdivisionact 1200x628

Varnum Viewpoints

The amended Land Division Act (LDA), effective in phases beginning March 24, 2026, significantly expands land division rights across Michigan that are exempt from platting requirements and features the following key changes:

  • Expanded Division Caps: Once fully effective on March 24, 2027, the first 10 acres of a parent parcel may be divided to yield up to 10 resulting parcels, an increase from the prior limit of four, with additional parcels permitted for larger tracts.
  • Municipal Override Authority: Beginning March 24, 2026, municipalities may adopt ordinances permitting more divisions than the amended LDA allows, paving the way for exempt division rights under the LDA to operate as a floor vs. a ceiling.
  • Re-division Restrictions: New child parcels created under the amended LDA, including those created pursuant to a municipal override ordinance authorized by the revised statute, face substantially the same limitations on future divisions under the amended LDA as exist under the existing law, including the 10-year waiting period for the child to ripen into a parent parcel and limits on successive divisions, which can affect long-term development strategies.

Overview of Michigan’s Amended Land Division Act

The first phase of the amendment takes effect March 24, 2026, under 2025 Public Act 58, which revises Section 108 of the LDA (MCL 560.108). This is the first revision to the LDA framework in nearly three decades and aims to increase the supply of buildable lots across the state. For landowners, developers, and municipalities, the amendment creates new opportunities but also introduces new complexities that warrant careful planning.

Expanded Division Rights for Parent Parcels

Under prior law, the first 10 acres, or fraction thereof, of a parent parcel or parent tract may be divided into no more than four resulting parcels. This limitation has historically constrained small and mid-scale residential developments, particularly in infill areas where traditional plats and alternate subdivision processes may not be economically feasible.

Under the amended statute, once fully implemented, the first 10 acres may be divided into 10 parcels. Additional divisions are permitted based on acreage thresholds:

  • One additional parcel for each whole 10 acres beyond the first 10 acres, up to a maximum of 11 additional parcels.
  • For parcels exceeding 120 acres, one additional parcel for each whole 40 acres beyond that threshold.

These expanded division rights may significantly affect land valuation, development feasibility, and strategic planning timelines.

It should be noted, however, that the expanded division rights do not trump other local zoning and parcel requirements, such as minimum lot size, minimum frontage, width-to-depth ratio requirements, and the like, so there will still be instances in which local zoning may limit the increased divisions otherwise permitted under the amended LDA.

New Municipal Authority to Exceed Statutory Caps

Beginning March 24, 2026, municipalities and counties with approval authority under the LDA may adopt ordinances permitting the land to be divided into more parcels than the amended LDA allows. The amended law does not impose a specific numerical cap under such local ordinances; consequently, local ordinances may adopt exempt division standards that both exceed the floor created by the LDA and vary between different zoning districts or based on other criteria espoused by the localities.

This change is especially significant because historically, the LDA functioned as a ceiling on parcel divisions exempt from platting requirements. Under the amended framework, however, it effectively establishes a floor that municipalities may exceed at their discretion, and serves to facilitate, rather than hinder, smaller-scale developments.

In addition, while the same limitations apply to the amended LDA for successive divisions of child parcels created from the initial division of a parent, namely, a 10-year waiting period and additional numerical caps on future divisions, municipalities can enact local ordinances that also trump those requirements. As a result, municipalities are afforded greater control and flexibility to supersede the amended LDA restrictions affecting both initial division and re-division. Determining whether and how to exercise that discretion will require careful development planning and consideration by municipalities. Likewise, interpreting new local ordinances that vary from the amended LDA requirements, and understanding how the two laws jointly affect a given parcel of land, will require careful analysis and planning by landowners and developers.

Transitional Period Through March 2027

The amended statute includes a one-year transition period. From March 24, 2026, through March 24, 2027:

  • Municipal override authority is available
  • Existing statutory division caps remain in effect

Beginning March 24, 2027, the expanded statutory caps take full effect statewide.

This phased rollout provides municipalities time to evaluate infrastructure, zoning, and alignment with master plans before adopting override ordinances. Communities that act early may be better positioned to guide development outcomes that are consistent with long-term land-use goals. 

Illustrative Division Potential by Parcel Size

Parent Parcel Size Max Parcels Pre-Amendment Max Parcels Post-Amendment (Effective March 24, 2027) Max Parcels Under Local Ordinance (Effective March 24, 2026)
10 acres 4 10 Per local ordinance (no statutory cap)
20 acres 5 base + up to 2 bonus = 7 11 base + up to 2 bonus = 13 Per local ordinance (no statutory cap)
40 acres 7 base + up to 2 bonus = 9 13 base + up to 2 bonus = 15 Per local ordinance (no statutory cap)
80 acres 11 base + up to 2 bonus = 13 17 base + up to 2 bonus = 19 Per local ordinance (no statutory cap)

Practical Considerations for Key Stakeholders

For Landowners and Developers

  • Review land holdings to identify parcels that may support additional divisions.
  • Evaluate timing strategies, including whether to proceed under current caps, wait for expanded caps in 2027, or pursue development under a municipal override ordinance.
  • Assess re-division limitations before relying on a local ordinance to maximize parcel counts.

For Municipalities

  • Evaluate whether to adopt override ordinances before March 2027 to proactively shape development patterns.
  • Consider infrastructure capacity, zoning implications, and consistency with master plans.

For Lenders and Real Estate Brokers

  • Update due diligence processes to account for expanded division potential.
  • Monitor local ordinance adoption, as override authority may significantly affect land valuations and development feasibility.

Varnum’s real estate attorneys regularly advise landowners, developers, municipalities, lenders, and brokers on land-use, zoning, and land-division strategies throughout Michigan.

If you have questions about how the amended Land Division Act may affect your land holdings, development plans, or municipal policies, contact a member of Varnum’s Real Estate Practice Team.

Michigan Family Cemeteries: Preserving Your Land and Legacy

3 16 Advisory Legalreqsforfamcemeteriesmi 1200x628

For Michigan landowners seeking to combine their family legacy with the perpetual care of their land, private family cemeteries offer a unique and meaningful option. Establishing a family cemetery can reflect deeply held values, fulfill end-of-life planning goals, and ensure long-term stewardship of a portion of your property.

Why Consider a Family Cemetery?

Creating a family cemetery links generational belonging with meaningful care of the land, and can have emotional, communal, and spiritual significance. Establishing a family cemetery can reflect your values, fulfill end-of-life planning goals, and ensure perpetual stewardship of your property.

Land Requirements Under Michigan Law

Michigan law allows family burial grounds under certain conditions. According to MCL § 128.111, a family cemetery may be established on privately owned land if:

  • The land is outside of city or village limits.
  • The cemetery is one acre or less in size.
  • The tract is used exclusively for burying family members.

Legal Considerations for Michigan Cemeteries

Varnum attorneys help landowners navigate the legal and regulatory requirements of creating a private cemetery, including:

Michigan Cemetery Law

  • File the necessary documents with your township, county health department, and register of deeds.
  • Once approved and recorded, the cemetery parcel is exempt from real property taxes.

Zoning

  • Most Michigan municipalities regulate land use, including private cemeteries.
  • Rural properties may allow family cemeteries “by right,” while others require a special land-use permit or variance.

Recordkeeping

  • A licensed funeral director must certify the death certificate and supervise internment.
  • Maintain accurate records of deeds, covenants, and easements to ensure perpetual care and ease of transfer.

Health and Safety Compliance

  • County health departments may impose rules on burial depth, soil conditions, and proximity to water.
  • Michigan law requires burials to be at least 3½ feet below the natural surface.
  • Township ordinances may regulate grave markers, caskets, and other requirements.

Planning for Perpetuity

Michigan presumes burial sites are permanent. Disinterment or relocation typically requires court approval, written family consent, and authorization from the health department. Advance planning ensures your family cemetery remains undisturbed and properly maintained. Options include:

Formal Registration

  • Apply for eligibility with local authorities.
  • Record a deed with the county register of deeds to create a permanent designation.
  • The deed may include covenants and exempt the land from property taxes.
  • Plan for long-term care, including funding a maintenance trust if necessary.

Conservation Easement

  • Work with a land trust or municipality to place a permanent conservation easement on the parcel.
  • Benefits include:
    • Third-party stewardship for ongoing care.
    • Permanent restriction of land use to a burial ground.
    • Possible federal income and estate tax advantages:
      • Charitable deduction for the easement’s value.
      • Reduced estate tax valuation of the conserved land.
      • Additional exclusion of up to 40 percent of the land’s value (conditions apply).

Learn More About Family Cemeteries in Michigan

Family cemeteries offer landowners a way to connect their property’s legacy with their family’s legacy. Varnum’s Estate Planning and Real Estate Practice attorneys guide clients through eligibility, land use planning, tax considerations, and strategies for perpetual care.

2025 summer associate Anthony Mayotte contributed to this advisory. Tony is currently a law student at the University of Michigan Law School.

DOJ Issues New Corporate Enforcement and Voluntary Self-Disclosure Policy 

3 11 Advisory Dojnewcorpenforcement 1200x628

On Tuesday, March 10, 2026, the Department of Justice (DOJ) issued a first-of-its-kind Corporate Enforcement and Voluntary Self-Disclosure Policy (CEP), a department-wide framework governing how the DOJ evaluates and resolves corporate misconduct. The policy applies to all corporate criminal matters except certain antitrust violations. The CEP incentivizes voluntary self-disclosure, full cooperation, and timely remediation by offering outcomes ranging from a full declination of prosecution to substantial reductions in fines.  

DOJ Corporate Enforcement Policy Framework 

The CEP establishes a three-tier structure for resolving corporate misconduct. 

Part I: Declination of Prosecution 

The DOJ will decline prosecution when a company voluntarily self-discloses, fully cooperates, and timely remediates, provided no aggravating circumstances are present. Examples of aggravating circumstances include particularly egregious misconduct or corporate recidivism within five years. Even when prosecution is declined, companies must still pay disgorgement, forfeiture, and restitution where appropriate.  

Part II: Non-Prosecution Agreement with Significant Fine Reduction 

Part II applies to companies that cooperate and remediate but narrowly miss the voluntary self-disclosure requirements or face aggravating factors. In those cases, the DOJ may offer a Non-Prosecution Agreement with a term of less than three years, no independent compliance monitor, and a fine reduction of 50% to 75% off the low end of the U.S. Sentencing Guidelines range.  

Part III: Reduced Penalty with Prosecutorial Discretion 

Under Part III, companies that do not qualify for the first two tiers may still receive a reduction in penalties, though the DOJ caps the reduction at 50% of the applicable fine. Prosecutors retain full discretion over the ultimate resolution and enforcement terms.  

Self-Disclosure, Cooperation, and Remediation 

To qualify as voluntary self-disclosure under the CEP, a company must make a good-faith disclosure to the appropriate DOJ component before the misconduct is known to the Department or before an imminent threat of disclosure exists. The disclosure must also occur when the company has no preexisting obligation to report and must be made within a reasonably prompt time after becoming aware of the misconduct.  

Disclosures made only to regulatory or civil enforcement agencies generally do not qualify, though they may receive limited credit. Notably, the policy allows companies to remain eligible for a declination even if a whistleblower submits to the DOJ first. To qualify, the company must self-report within 120 days of receiving the whistleblower’s internal report.  

Under the CEP, full cooperation requires proactive, rolling disclosure of facts and evidence, rather than simple responses to document requests. Companies are expected to attribute facts to specific sources, make personnel available for interviews, and avoid interfering with investigative steps. Cooperation credit is earned incrementally and is not presumed.   

Timely remediation requires root-cause analysis, an effective compliance program, disciplining responsible employees, and implementing controls governing personal and ephemeral messaging platforms used for business communications. 

Practical Takeaways 

  • Strengthen compliance programs. Companies should ensure their programs reflect DOJ criteria, including adequate resourcing, compliance-function independence, risk-based tailoring, and regular testing.  
  • Build internal reporting and escalation protocols. The 120-day whistleblower window requires companies to promptly triage, investigate, and escalate internal reports of criminality and misconduct to senior leadership and outside counsel.  
  • Develop a self-disclosure playbook. Companies should establish a framework for evaluating whether and when to self-disclose, addressing the CEP’s criteria and weighing risks and benefits at each stage of an internal investigation.  
  • Review document retention and communications policies. The DOJ has flagged ephemeral messaging as a remediation concern; companies should ensure adequate guidance and controls are in place to properly preserve documents and communications.  
  • Prepare for proactive cooperation. Full cooperation under the CEP requires proactive engagement, not passive responsiveness, in any interaction with the DOJ.  

For more information regarding the new CEP or guidance on compliance-related issues, please contact any member of Varnum’s White Collar Defense and Government Investigations Practice Team.    

DOL Proposes New Rule on Independent Contractor Classification

3 9 Advisory Dojnewrulecontractors 1200x628

The U.S. Department of Labor (DOL) has proposed a new rule for determining employee or independent contractor status under the Fair Labor Standards Act (FLSA). The proposed rule seeks to rescind the 2024 independent contractor rule issued during the Biden administration.

The public comment period closes on April 28, 2026, at 11:59 p.m. Independent contractor classification rules have shifted in recent years. For more background on the rescission of the 2024 rule, see “Independent Contractor Rules in Flux: What Employers Need to Know.”

Economic Reality Test Remains the Framework

The proposed rule applies the “economic reality” test, the standard framework for assessing independent contract status. The two primary factors in evaluation are:

  • Control: The nature and degree of the principal’s control over the work performed.
  • Opportunity for Profit or Loss: The worker’s ability to earn a profit or risk a loss based on their own initiative.

Additional Factors Considered

Other factors the DOL may evaluate include:

  • The extent to which the work is part of an integrated unit of production.
  • The permanency of the relationship.
  • The level of skill required for the work.
  • The worker’s investment in facilities and equipment.

The rule emphasizes the actual practice of the relationship over the contract and provides fact-specific examples to guide classification decisions.

Federal vs. State Independent Contractor Tests

Employers should note that federal and state standards may differ.

For example, Michigan and other states use separate tests to determine independent contractor status for unemployment insurance tax purposes. A worker may qualify as an independent contractor under the federal FLSA standard but be classified differently under state unemployment insurance laws.

As a result, employers must evaluate classification under both federal and applicable state standards when classifying employees.

Why Proper Worker Classification Matters

Employee versus independent contractor classification affects more than wage payment. It also impacts:

  • Wage and hour compliance.
  • Payroll and tax withholding obligations.
  • Eligibility for health insurance and retirement benefits.
  • Employer unemployment insurance contributions.

Misclassification can trigger liability across multiple legal and regulatory areas, including wage claims, tax penalties, and benefits disputes.

Employers seeking guidance on the proposed rule or the classification of workers should contact a Varnum Labor and Employment or Employee Benefits attorney.

Estate Planning for Blended Families in 2026

Estate planning can be complex for any family, but blended families face unique challenges that are often overlooked. Remarriage, stepchildren, and competing priorities can make standard estate planning approaches insufficient.

Whether you are reviewing your own plan or advising clients, proactively addressing these issues is essential for protecting assets and family harmony.

Choosing the Right Trustee or Fiduciary for Blended Families

Selecting a trustee or fiduciary is particularly important in blended families. Family members may face competing loyalties or emotional pressure after a death.

A neutral third-party or professional fiduciary can help ensure the estate plan is administered consistently and according to its terms, reducing the risk of conflicts among a surviving spouse and children from prior relationships.

Planning for the First Death in a Blended Family

Many estate plans for married couples rely on a trust becoming irrevocable at the first spouse’s death. For blended families, this is an especially important consideration.

Irrevocable trusts can protect children’s inheritances from previous relationships while still providing for the surviving spouse, balancing fairness with control over long-term distribution.

Coordinating Estate Plans with Prenuptial or Postnuptial Agreements

Prenuptial and postnuptial agreements play a critical role in blended family planning. They clarify expectations and can override default state inheritance laws.

Estate plans should be reviewed alongside these agreements to ensure that trusts, wills, and beneficiary designations align and work together effectively.

Avoiding Unintended Disinheritance

Without careful planning, assets can unintentionally pass entirely to a surviving spouse, leaving children from a previous marriage unprotected.

Review trust structures, beneficiary designations, and ownership arrangements to confirm they reflect the intended balance among all family members.

Powers of Attorney and Decision-Making Authority

In blended families, decisions during incapacity can be as sensitive as distributions after death. Naming agents with clear authority and whose appointment is unlikely to be contentious can reduce family conflicts during already stressful times.

The Importance of Communication

Misunderstandings are often the root of estate disputes. Clear communication about goals, priorities, and expectations can prevent surprises, even without disclosing every detail.

Why Blended Families Need Proactive Estate Planning

Blended families are increasingly common, but estate plans frequently fail to address their needs. A thoughtful review of your estate plan focusing on the following can protect both relationships and assets:

  • Trustee and fiduciary selection
  • Trust structure and timing
  • Beneficiary coordination
  • Powers of attorney and decision-making authority

For families and advisors alike, addressing these issues proactively can make a meaningful difference in long-term outcomes.

Before making changes to property ownership or relying on outdated documents, consult with Varnum estate planning attorneys to ensure your plan protects your assets, supports your family, and aligns with your long-term goals.

Varnum in the Community: Sarah Wixson, Katie Szymanski, and Cole Anderson

Varnum in the Community

Grand Rapids, MI, Feb. 20, 2026 – Varnum partner Sarah Wixson has joined the board of Friends of the Children Detroit, attorney Katie Szymanski has been named Board Vice President for the Western Michigan Estate Planning Council, and attorney Cole Anderson has been elected to the board and partnership committee of Beyond26.

Sarah Wixson Joins Friends of the Children Detroit Board

Friends of the Children Detroit supports youth facing significant obstacles through long-term, professional mentoring relationships. The organization connects children with paid, full-time mentors who support them from early childhood through high school graduation. As a board member, Wixson will support the organization’s mission of empowering youth through sustained mentoring and advocacy.

Wixson is a litigation partner and leader of Varnum’s Health Care Practice Team. She advises physicians, hospitals, and health care entities on litigation, compliance, regulatory, and licensing matters. Her practice also includes business and real estate disputes, including shareholder, contract, and commercial litigation.

Katie Szymanski Named Vice President of Western Michigan Estate Planning Council Board

The Western Michigan Estate Planning Council is a professional organization affiliated with the National Association of Estate Planners & Councils that promotes collaboration among estate planning professionals in West Michigan. As Vice President of the Board of Directors, Szymanski will support the council’s education, professional development, and member engagement efforts.

Szymanski is a member of Varnum’s Estate Planning Practice Team. Her practice includes estate settlement, trust administration, tax, and wealth transfer planning for individuals and families. She also advises clients on tax compliance and planning for real estate and closely held business interests. Szymanski is a Certified Trust and Fiduciary Advisor (CTFA®).

Cole Anderson Elected to Beyond26 Board of Directors

Beyond26 supports adults with disabilities in finding employment through individualized advocacy and networking. The organization works with businesses and community partners to identify employment and volunteer opportunities. As a member of the Partnership Committee, Anderson will support fundraising and partnership development efforts to help expand Beyond26’s reach and impact.

Anderson is an associate in Varnum’s Labor and Employment Practice Team. He supports clients through legal research, drafting, and preparation of filings and agreements related to workplace matters. Prior to joining Varnum, Anderson served as a corporate counsel extern and interned with the Macomb County Prosecutor’s Office.

EPA Repeals Greenhouse Gas Endangerment Finding

2 26 Advisory Eparepealsgreenhousegasendangerment 1200x628

On February 12, 2026, the United States Environmental Protection Agency (EPA) finalized a deregulatory rule rescinding the 2009 greenhouse gas (GHG) Endangerment Finding. The Endangerment Finding served as the legal and scientific basis for federal regulation of GHG emissions under Section 202(a) of the Clean Air Act.

The 2009 determination concluded that greenhouse gases “endanger public health and welfare,” triggering EPA’s obligation to regulate GHG emissions from motor vehicles. With the repeal, EPA simultaneously eliminates federal GHG emission standards for light-, medium-, and heavy-duty vehicles and engines, along with associated compliance mechanisms, including credit trading, fleet averaging, and reporting requirements.

Legal Significance of the Repeal

The recission marks a substantial reinterpretation of EPA’s authority under the Clean Air Act and narrows the agency’s view of how the statute applies to globally dispersed greenhouse gases.

Although the immediate regulatory rollback applies to mobile sources, eliminating the Endangerment Finding removes the foundational determination that has historically supported federal GHG regulation across multiple sectors. As a practical matter, this action may limit EPA’s ability to impose future GHG performance standards unless Congress provides new congressional authorization or a subsequent agency reversal.

Importantly, non-GHG Clean Air Act programs remain in effect. Regulated entities must continue to comply with National Ambient Air Quality requirements, hazardous air pollutant standards, permitting obligations, and other applicable federal and state environmental regulations.

Litigation and Regulatory Uncertainty

The rule is expected to face immediate legal challenges in the U.S Court of Appeals for the District of Columbia Circuit. Litigation could create uncertainty regarding the rule’s durability and implementation timeline.

Depending on judicial outcomes, the court could:

  • Issue a stay of the rule;
  • Remand the rule to EPA for further explanation; or
  • Vacate the repeal and reinstate the prior Endangerment Finding.

Companies should evaluate near-term compliance cost reductions against longer-term regulatory risk, including the potential for reversal under a future administration.

State-Level Greenhouse Gas Regulation and Enforcement Risk

Even if the federal Endangerment Finding remains rescinded, states may seek to address perceived regulatory gaps through:

  • State greenhouse gas emission standards;
  • Revised permitting requirements;
  • Climate-related statutory claims; and
  • Common-law climate litigation.

As a result, compliance obligations may shift rather than disappear. Multi-jurisdictional regulatory exposure remains a key consideration for manufacturers, energy companies, and transportation-related entities.

Organizations should take a proactive, risk-based approach to environmental compliance and climate governance to ensure preparedness across multiple regulatory scenarios.

For questions regarding the Endangerment Finding repeal or environmental compliance strategy, please contact Varnum’s Environmental and Natural Resources Practice Team.

Using Trusts to Improve Tax Outcomes, Control, and Certainty in Divorce Settlements

2 23 Advisory Trustsfordivorcesettlements 1200x628

Parties in a divorce often want to reach a settlement quickly. In the rush to resolve disputes, however, spouses may agree to divide assets or enter long-term payment obligations without fully considering tax basis, capital gains, estate inclusion, or future enforcement of those agreements. Incorporating estate planning strategies into divorce negotiations can help align cash flow, control, and tax outcomes while reducing post-divorce conflict.  

A trust is a legal arrangement in which a third-party trustee holds and manages property for the benefit of another person. Trusts allow parties to separate control of assets from beneficial enjoyment and embed clear, enforceable terms that might otherwise require ongoing court oversight. When structuring a property settlement, a trust can replace a fragile “pay-or-pursue” arrangement with predictable administration by an independent fiduciary.

A trust may be used to:

  • Provide a reliable income to a former spouse without relying on the payor’s ongoing cooperation
  • Direct remaining assets to children or other beneficiaries
  • Manage capital gains and estate tax exposure
  • Address future contingencies such as remarriage, inheritances, or changes in earnings

The optimal structure depends on each party’s priorities, including income certainty, flexibility to terminate benefits, estate tax efficiency, and control over ultimate beneficiaries.

Trust Structures That May Support Divorce Settlements

Lifetime QTIP Trust

When the primary goal is to provide a guaranteed income to a former spouse, a qualified terminable interest property (QTIP) trust can require all trust income to be paid to the former spouse as beneficiary. A neutral trustee administers the trust while the settlor, or payor, retains control over who receives the remaining assets after the beneficiary’s death.

Since the trust assets are included in the income beneficiary’s estate at death, they typically receive a date of death basis adjustment, which may benefit the remainder beneficiaries. This approach favors predictability and security over flexibility and must be implemented before the divorce is finalized, while the marital deduction remains available.

Bypass or Credit Shelter Trust

If the parties want support or other payments to end upon specific future events, a bypass trust can condition or terminate income or access based on triggers such as remarriage, income thresholds, receipt of inheritances, or the passage of time. Tradeoffs may include using a lifetime gift and estate tax exemption and losing a basis adjustment at the beneficiary’s death. Certain reversionary features can restore control to the payor but may increase estate inclusion risk.

Charitable Remainder Trust

If the divorce involves the sale of an asset that has significantly appreciated, such as stock, a charitable remainder trust may offer tax advantages. The trust can sell low-basis assets without immediate capital gains tax. It then pays income to the former spouse for a defined term and distributes the remainder to a charitable organization. The contributing party may receive a charitable deduction at the time of funding. This structure can combine tax efficiency with enforceable behavioral terms.

Irrevocable Life Insurance Trust

When support obligations are secured with life insurance, an irrevocable life insurance trust (ILIT) can keep death benefits outside the insured’s taxable estate while incorporating conditions tied to remarriage and other events. An ILIT often avoids complications associated with direct policy ownership and can provide liquidity for estate planning if needed.

Alimony Trust

When a divorce involves a business that is difficult to value or divide, an alimony trust can hold the business interest, distribute its income subject to negotiated conditions, and name children as remainder beneficiaries. This structure can reduce valuation disputes, improve governance, and create greater certainty around tax and cash flow outcomes.

The Bottom Line

Thoughtful collaboration between divorce counsel and estate planners can transform fragile settlement promises into enforceable, tax-aware structures that reduce risk for both parties. For assistance, contact a member of Varnum’s family law or estate planning practice teams.