One of the most common worries we hear from Michigan homeowners setting up a living trust is: "If my house is owned by my trust, won't I lose my homestead exemption?" The short answer is no, as long as the trust is revocable and you still live there. Michigan Treasury says so directly. This guide explains the rule, the one kind of trust where it's different, and the few forms that keep everything in order.
The Short Answer
- A trust itself is not an "owner" for the Principal Residence Exemption (PRE).
- But the grantor of a revocable trust (you, the person who created it) counts as an owner. If you live in the home, you keep the exemption.
- Irrevocable trusts are different. The grantor generally does not qualify, though a beneficiary who lives there might.
- When you deed your home to your trust, file a Property Transfer Affidavit (Form 2766). If the assessor asks, a Form 2368 signed in your name "as grantor" confirms the exemption.
- When the owner dies, the trustee must file Form 2602 to remove the exemption within 90 days.
What the Exemption Is Worth
According to Michigan Treasury, the PRE "exempts an owner's principal residence from the local school operating millage, up to 18 mills." That's the exemption most people call the "homestead exemption." It's separate from the Homestead Property Tax Credit you claim on your income tax return.
For a home with a taxable value of $100,000, 18 mills is $1,800 a year. Losing it by mistake is expensive, which is why it's worth getting right.
Revocable Trusts: You Keep It
Treasury's ownership requirement guidance is clear. It answers the question "Does a Trust qualify as an owner that is eligible for the principal residence exemption?" with: "No. A Trust is not considered an 'owner' under MCL 211.7dd and does not qualify. However, the grantor or beneficiaries may qualify."
It then explains that "a grantor of a trust is an owner that is eligible for the principal residence exemption if: (1) the grantor of the trust is an individual/person and (2) the trust is either a revocable trust or a qualified personal residence trust."
Treasury's own example: Blue Acre is owned by the Smith Living Trust, a revocable trust. John is the grantor and lives there. Is John eligible? "Yes."
That's the typical Michigan living trust: you create it, you can change or cancel it, and you live in the house. Your exemption stays.
Irrevocable Trusts: Read Carefully
The same Treasury page gives a contrasting example: if the Smith Living Trust is irrevocable, John "is not an eligible owner as the grantor because the trust is irrevocable." Treasury adds that he "may still qualify as a beneficiary."
Irrevocable trusts are mostly used for Medicaid and asset-protection planning, which is beyond a DIY kit. If someone suggests one, make sure the trust terms and the PRE are reviewed together before you move the house. A qualified personal residence trust (QPRT) is a special case that Treasury treats as eligible for the grantor during the term they keep the right to live there.
Step-by-Step When You Deed Your Home to Your Trust
- Record the deed from you to yourself as trustee of your trust at the county Register of Deeds. See how to fund a Michigan living trust.
- File a Property Transfer Affidavit (Form 2766) with your city or township assessor within 45 days. Treasury's PRE guidance repeats this 45-day rule. Form 2766 lists an uncapping exemption for a transfer into a trust where the settlor or settlor's spouse is the sole beneficiary, so check that box.
- Confirm the PRE with the assessor. Some assessors keep the exemption in place automatically when they see a transfer to the owner's own revocable trust; others ask for a new Form 2368. A quick call saves guesswork.
- Watch your next tax bill. If the PRE percentage drops from 100% to 0%, contact the assessor right away.
How to Sign Form 2368 for a Trust-Owned Home
This is where people get tripped up. Treasury's claim requirement guidance says the grantor or beneficiary who lives in the home "should complete and sign the Principal Residence Exemption Affidavit (Form 2368), using their name (e.g., 'Chris Smith, as Grantor of the Chris Smith Revocable Trust')." A trustee may also sign on the grantor's behalf using the grantor's name.
Deadlines: according to the same page, Form 2368 is due "on or before June 1 (for the summer tax levy) or on or before November 1 (for the winter tax levy)."
After the Owner Dies: The 90-Day Rule
When the grantor dies, the exemption doesn't automatically continue. Treasury says the deceased "is no longer eligible because they cannot occupy the property or intend to return," and that "the estate's personal representative or trustee must file a Request to Rescind Principal Residence Exemption (Form 2602) with the Assessor within 90 days of death."
Treasury's guidance states that failing to file a required Form 2602 "results in a $5 daily penalty (up to $200)," and that a denied exemption can lead to back taxes and interest.
If a family member inherits the home and moves in, they file their own Form 2368. The separate question of whether the taxable value uncaps is covered in our guide to inheriting a Michigan home. If you're the trustee, see the successor trustee checklist.
Frequently Asked Questions
Does a Lady Bird deed affect my homestead exemption?
A Lady Bird deed keeps you as the owner with a life estate, and Treasury's eligible-owner list includes "a person holding a life lease in property previously sold or transferred to another." Confirm with your assessor when you record it. See our Lady Bird deed guide.
My spouse and I have a joint revocable trust. Do we both sign?
Treasury's guidance focuses on the grantor who occupies the home. Sign as grantor(s) of the trust using your own names, and ask your assessor if they want both signatures.
Does putting my home in a revocable trust uncap my property taxes?
Generally no, if you and/or your spouse are the sole beneficiaries. Form 2766 lists that transfer as exempt. See Treasury's Transfer of Ownership Guidelines for details.
I moved into assisted living. What happens?
The PRE depends on the home being your principal residence. Michigan has a "conditional rescission" process for some situations, so talk to your assessor before filing anything.
Set Up Your Trust Without Losing Your Exemption
The CreateMIWill Trust Kit ($197) includes an attorney-drafted Michigan revocable living trust with a certificate of trust, plus step-by-step instruction and signing guides that cover deeding your home into the trust. The Complete Bundle ($349) adds a Michigan will, durable power of attorney, and patient advocate designation.
Michigan Trust Kit or Complete Bundle
Attorney-drafted Michigan revocable living trust with certificate of trust, funding instructions, and signing guide. Instant download.
Sources: Michigan Treasury, Principal Residence Exemption; PRE Guidelines: Ownership Requirement; PRE Guidelines: Claim Requirement; Form 2368; Form 2602; Form 2766.