In Michigan, the statutory provisions of the Michigan Trust Code (MTC) govern removal of a trustee. Michigan court decisions establish that those provisions establish the only basis for removing a trustee in the state, unless the document creating the trust contains other provisions that specifically relate to removal of the trustee.
The MTC provisions empower a court to remove a trustee if certain conditions are met. Petitioning the probate court for removal under those provisions is the only process available to an individual who is dissatisfied with a trustee’s performance, absent provisions in the trust document itself relating to trustee removal.
The statutory provisions relating to trustee removal are found in MCL 700.7706. The section states that the settlor (the person creating the trust, also called the grantor), a co-trustee, or beneficiary may ask the court to remove a trustee. A court also may remove a trustee on its own initiative.
The law authorizes a court to remove a trustee if one (or more) of the following conditions occurs:
- A breach of trust (violation of duty) by the trustee
- Substantial impairment of trust administration due to lack of cooperation among co-trustees
- A court determination that removal best serves the purposes of the trust, due to trustee’s unfitness, unwillingness, or persistent failure to administer the trust effectively
- A court determination that removal best serves the interests of the beneficiaries due to a substantial change of circumstances, if removal is not inconsistent with a material purpose of the trust and a suitable co-trustee or successor trustee is available
In addition to or instead of removing the trustee, the law states that the court may order any appropriate relief under MCL 700.7901 “necessary to protect the trust property or the interests of the trust beneficiaries.” That section addresses the authority of a court to remedy a breach of trust by the trustee (which occurs when a trustee violates any duty) through any appropriate relief, including:
- Ordering the trustee to perform their duties
- Enjoining the trustee from committing a breach of trust
- Ordering an accounting by the trustee
- Appointing a special fiduciary to take the trust property and administer the trust
- Suspending the trustee
- Reducing or denying compensation of the trustee
- Subject to certain conditions, voiding an act of the trustee, imposing a lien or constructive trust on property, or tracing property wrongfully disposed of and recovering the property or proceeds
Under all of these provisions, Michigan courts have broad authority to remedy issues relating to the trustee’s conduct when a petitioner requests removal. However, the court must find the existence of one of the necessary conditions set forth in the statute before making a final determination about the appropriate remedy.
A little over five years ago, BRMM attorneys won a landmark case in the Michigan Court of Appeals. The case, In re Gerald L. Pollack Trust, 309 Mich. App. 125, 867 N.W.2d 884 (2015), clarified several important aspects of state trust law provisions enacted in 2010, including the trustee removal provisions.
In the Pollack case, the Court held that under Michigan law, the grounds for requesting removal of a trustee are exclusively those set forth in the statutes, and that common law grounds previously articulated in Michigan court decisions no longer apply to a request for trustee removal. The holding of the Court has frequently been cited by judges and lawyers since the Pollack decision was issued.
The Court of Appeals also stated that claims of hostility or bias, and the occurrence of other litigation between the beneficiary and trustee, were insufficient to justify removal of the trustee, when there was no evidence of harm to the trust or trust property or impact on the parties requesting removal as beneficiaries. The Court’s decision in this regard clarified those provisions of trust and probate law for future court actions, as well as for attorneys who work with trusts in their practices.
If you are a grantor, co-trustee, or beneficiary experiencing problems with a trustee, those issues can be difficult to navigate and resolve. Allowing the problems to fester and potentially get worse is not a good approach. Instead, you should discuss your situation with an attorney knowledgeable about trusts and trust litigation.
Your attorney can advise you on what options are available to address the issues. Depending on the circumstances, your attorney may be able to assist in resolving the problems without resorting to litigation.
Our probate and estate planning practice at BRMM includes the full range of probate litigation, including matters relating to trusts and trustee conduct. From our office in Troy, we serve clients in southeastern Michigan and throughout the state. We also work with out-of-state residents with an interest in a Michigan estate or trust. Call us at (248) 494-4577 or complete our online form to set up your free initial consultation.