The following opinion is presented on-line for informational use only and does not replace the official version. (Mich Dept of Attorney General Web Site - www.ag.state.mi.us) STATE OF MICHIGAN FRANK J. KELLEY, ATTORNEY GENERAL Opinion No. 5190 May 17, 1977 PROFESSIONAL SERVICE CORPORATIONS: Placing shares in a revocable living trust. TRUSTS AND TRUSTEES: Placing shares of a professional service corporation in a revocable living trust. A professional who owns shares of stock in a professional service corporation may transfer his shares to himself as trustee of a revocable living trust of which he is the sole beneficiary and is not subject to loss of licensure by so doing. Robert H. Chase, DDS President Board of Dentistry 1116 South Washington Avenue Lansing, Michigan 48926 You have asked my opinion on the following question: 'May a dentist who owns shares of stock in a professional dental corporation transfer his shares to a revocable living trust of which he is the sole trustee and the sole beneficiary during his lifetime, without being subject to the loss of his license to practice dentistry?' The situation you have described involves a trust with beneficiaries with a future interest in the trust that becomes irrevocable at the time of the grantor's death. Further, a successor trustee is designated to administer the trust at the grantor's death or disability. I have been advised that the purpose of this trust arrangement is to avoid probate. Section 10 of the Professional Service Corporation Act, 1962 PA 192, Sec. 10; MCLA 450.230 MSA 12.315(10), provides in part: 'No shares of a corporation organized under this act shall be sold or transferred except to an individual who is eligible to be a shareholder of such corporation or to the personal representative or estate of a deceased or legally incompetent shareholder. The personal representative or estate of such shareholder may continue to own such shares for a reasonable period but shall not be authorized to participate in any decisions concerning the rendering of professional service. . . .' (Emphasis added) Section 2(b) of the Act defines the term 'professional corporation' to mean a corporation which has as its shareholders '. . . only individuals who themselves are duly licensed or otherwise legally authorized within this state to render the same professional service as the corporation, or the personal representatives or estates of such individuals as provided in section 10.' It will be noted that the statute limits the period during which the personal representative or estate of a deceased or legally incompetent shareholder may continue to own shares. The fact situation at hand, however, does not involve the personal representative of a deceased or legally incompetent shareholder; it involves a trustee who is eligible to be a shareholder in the dental corporation and who is also the sole beneficiary of the trust during his lifetime. I see no threat to the public interest by permitting a licensed dentist who is a shareholder of a professional service corporation from transferring his shares to himself as trustee for the benefit of himself. The purpose of requiring shareholders of a professional service corporation to be members of the profession is to assure the public that the shareholders who participate in decisions concerning the rendering of professional service is a licensed member of that profession. That purpose is satisfied by this arrangement. It is therefore my opinion that a professional who owns shares of stock in a professional service corporation may transfer his shares to himself as trustee of a revocable living trust of which he is the sole beneficiary and is not subject to loss of licensure by so doing. Frank J. Kelley Attorney General