BRMM Wins Landmark Trust Case In Michigan Court Of Appeals

BRMM attorneys Andy Mayoras and Ron Barron achieved a critical victory in the Michigan Court of Appeals that will likely have long-standing implications in trust and probate law in the State of Michigan.  On January 29, 2015, the Michigan Court of Appeals released a published opinion that clarified several different aspects of Michigan’s comprehensive Trust Code, which is a relatively new law, passed in 2010.  The opinion involved longstanding and very contentious probate court litigation, in which Ron Barron served as a co-trustee of a substantial trust, and Andy Mayoras served as the litigation and appellate counsel.

The Case, In re Gerald L. Pollack Trust, ___ Mich App ___, ___ NW2d ___ (2015), involved a heated dispute started in Oakland County Probate Court.  It was brought by two sons of the decedent, successful business owner Gerald Pollack, who died in 2009.  The sons felt that his final estate plan did not leave enough to them, instead favoring the decedent’s wife.  The final trust protected the wife’s interests throughout her life, and passed on the business interests for the benefit of the sons after her life.  The sons felt entitled to inherit control and ownership of the business immediately, not after the wife passed away.

In bringing this heated probate court battle, numerous legal issues of first impression were raised, which have now been answered (in many cases for the first time in the State of Michigan) by this Court of Appeals opinion.  These include:

  1. When the trustee of a trust follows the proper procedure outlined in the Michigan Trust Code, as was done in this case, beneficiaries wishing to challenge a trust document must do so within six months of receiving notice.  This new law applies even where the decedent died before the new law was passed, as long as the notice was sent afterwards and provided the full six-month time period set forth in the Trust Code.
  2. Applying the new law in this fashion did not violate the sons’ due process rights, or any “accrued rights” that arose prior to the date the new law became effective.   The right to bring a trust challenge is not accrued or “vested” until the claim is actually filed.
  3. The new six-month period provided the sons a reasonable time to bring their trust challenge, and they failed to do so.  As such, any rights they had as trust beneficiaries prior to the new law being passed were not impaired or extinguished by the new law.
  4. The fact that Mr. Barron served as a co-trustee of the Trust, along with a corporate trustee, did not give rise to a finding that he received a benefit from the Trust, which would potentially trigger a presumption of undue influence.  If the presumption had applied, it would have permitted the sons to present their claims at trial.  Instead, the Oakland County Probate Judge dismissed the undue influence claims through summary disposition.  The decision was upheld by the Court of Appeals.
  5. When examining the potential benefit received by a person under the presumption of undue influence test, the benefits received under the challenged document should be compared to the benefits received under the prior document, which was not contested in the probate court in this case (even though it was contested in the Court of Appeals).
  6. A contestant of a will or trust who alleges mistake has the burden of establishing that a mistake occurred, and this includes the obligation to come forward with evidence of mistake at the summary disposition stage, even if the summary disposition motion does not specifically seek dismissal of the mistake claim (at least where the formal admission of the will was sought).
  7. A trustee has standing – meaning the legal right – to defend against not only a direct trust challenge, but also a petition seeking to reform or modify the trust, where the terms which the petitioners sought to reform or modify are tantamount to a challenge to the validity of the trust, such as the terms of distribution and who served as trustee.
  8. Further, a trustee has not only the right, but the legal obligation to defend against a challenge to the validity of the Trust.
  9. The grounds for seeking removal of a trustee are expressly set forth in the Michigan Trust Code, and prior common law grounds no longer apply.  This is consistent with the Michigan Trust Code’s purposes and policies, of making more comprehensive laws governing trusts to foster certainty and to promote confidence in those who create a trust that their instructions will be followed.
  10. Allegations of hostility or bias, as well as the existence of other litigation between the trustee and a beneficiary, are not enough to warrant removal of the trustee, where (as found here), there is no evidence that the Trust itself or its property was harmed, or that the parties seeking removal were affected as beneficiaries.

 

Because the Michigan Trust Code has only been in effect for less than five years, these new rulings will define and govern the applicability of these important provisions of the statutes for what is likely to be decades to come.  The attorneys of Barron, Rosenberg, Mayoras & Mayoras are proud to have helped bring about such important legal rulings, which will help clarify trust and probate law for not only those involved in similar disputes, but also those who wish to create trusts as well.

Barron, Rosenberg, Mayoras & Mayoras, P.C., is located in Oakland County, Michigan, and concentrates the majority of its practice on estate planning, including preparing wills and trusts, trust and estate related litigation, as well as elder law, special needs planning, and related probate and other litigation.  You can contact them for a free consultation at 248-641-7070, or through the firm’s website, www.brmmlaw.com.