BRMM attorney Andrew Mayoras recently won a probate litigation case concerning interpretation of the provisions of a trust agreement. The action arose following the death of the person who created the trust (decedent), when the surviving spouse (widow) and the decedent’s sister disagreed on the interpretation of provisions of the trust relating to removal and selection of trustees.
Dispute Over Interpretation of Trust Provisions
During his lifetime, the decedent established a trust with substantial assets. A disagreement arose between the widow and the sister concerning interpretation of specific provisions in the trust agreement relating to voting for removing and appointing of trustees, which read:
- “The then beneficiaries of this trust, acting by majority vote if there is more than one vote cast, each such beneficiary being entitled to one vote, such vote to be cast by written ballot signed by such beneficiary ….” (Italics added.)
- The selection and appointment of each successor trustee shall be made by the then beneficiary or beneficiaries of this trust, acting by majority vote if there be more than one, each such beneficiary being entitled to one vote ….”(Italics added.)
The widow believed that she was the only “then beneficiary” under the trust provisions. The sister disagreed, believing that she was also a “then beneficiary,” and therefore entitled to participate in removal and selection of the trustee.
The widow filed a petition in probate court to resolve the dispute. The probate court determined that “then beneficiary” meant “the then person receiving money.” Therefore, the only person entitled to vote on removal and selection of trustees under the circumstances was the decedent’s surviving spouse. The decedent’s sister appealed to the Michigan Court of Appeals.
Michigan Court of Appeals Decision
On review, the Court of Appeals upheld the probate court’s determination. The court rejected the sister’s assertion that the phrase “then beneficiary” should have a meaning similar to “trust beneficiary” or “qualified trust beneficiary” and therefore include her.
In reaching its decision, the Court of Appeals applied established judicial principles in interpreting the trust provisions. The court reasoned as follows:
- The court’s responsibility was to ascertain the intent of the person who created the trust and carry it out.
- Even though the parties disagreed as to the meaning of the term “then beneficiaries,” that fact did not make the trust provision ambiguous.
- The trust instrument should be construed to give every word meaning if possible.
- The meaning of the term “then beneficiaries” could be determined by reference to the trust document itself.
- Because the document used the term “then beneficiaries,” the term was intended to distinguish between two classes of beneficiaries: those who are ”then beneficiaries” and those who are not.
- If the term “then beneficiaries” was the same as “all beneficiaries,” as the sister argued, using the term “then” would be meaningless, because there would never be a time after the death of the creator of the trust that all beneficiaries were not “then beneficiaries.”
- In the common meaning, the word “then” creates a distinction based on time.
- At any given time after the trust was created, some beneficiaries were entitled to receive distributions, and some were not—because their entitlement was based on a future event.
- On that basis, the term “then beneficiaries” referred to the beneficiaries who entitled to receive distributions “at that time.”
- Because the sister was not entitled to receive distributions at the time of the petition, she was not a “then beneficiary” under the trust and was not eligible to vote for removal and selection of trustees.
This conclusion by the Court of Appeals upheld the probate court ruling, deciding the matter in favor of BRMM’s client.
Probate Litigation at BRMM: Our Reputation for Excellence
Attorney Andrew Mayoras concentrates his practice in probate litigation and mediation, primarily involving trust and estate disputes. At BRMM, we are proud of our reputation for excellence in probate litigation. Our experience and extensive knowledge of probate, trusts, estates, and elder law provide a solid foundation for our aggressive and compassionate representation of clients in litigation arising in these areas of the law.
If you have a matter involving a trust or estate that you would like to discuss with one of our experienced probate litigation attorneys, we are here to help. Located in Troy, Michigan, we serve clients throughout the Tri County and Detroit area, as well as in other parts of Michigan. We also represent clients from other states who have an interest in a Michigan estate or trust. Call us at 248.641.7070 or complete our online form to set up your free, confidential consultation.