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November 25, 2019

Does a Trustee Have the Power to Enforce the Settlor’s Charitable Gift?

Warner Norcross + Judd attorneys Laura Morris and Connor Dugan have obtained an important ruling from the Michigan Court of Appeals, which confirms the power of a trustee to enforce a settlor’s charitable gift. Le Gassick v University of Michigan Regents, Docket No 344971, 2019 Mich App LEXIS 7245 (Nov 19 2019).
 
The Trustee alleged the following facts in his Complaint. Professor James Bellamy was a recognized expert in classical Arabic literature and a full professor at the University of Michigan (the “University”). He believed that a world-class university should have a full professor in his particular field of Arabic studies, and he wanted to ensure that the University would continue his work after his death. Therefore, Professor Bellamy and the University entered into a Gift Agreement, providing that Professor Bellamy’s gift would be used to fund a medieval classical Arabic literature professorship. Professor Belamy amended his Trust to provide for a multi-million-dollar gift to the University after his death, pursuant to the Gift Agreement.
 
After Professor Bellamy died, his friend and colleague Trevor Le Gassick served as Trustee of his Trust and Personal Representative of his Estate (the “Trustee”). The Trustee distributed $2.5 million to the University to fund the professorship, with an additional $1 million to provide graduate student support for the professorship. However, the University failed to hire any expert in medieval classical Arabic literature. Instead, the University appointed an associate professor, with a different field of expertise, to the Bellamy professorship.
 
The Trustee brought suit in the Washtenaw County Probate Court to enforce the terms of both the Gift Agreement and the Trust, and to compel the University to hire an expert in medieval classical Arabic literature for the Bellamy professorship. The University moved to dismiss the petition on the grounds that the Trustee “lacked standing” to enforce the Gift Agreement and the Trust. The Probate Court granted the motion and dismissed the Trustee’s petition, and the Trustee appealed.
 
In a published decision, the Michigan Court of Appeals reversed the Probate Court’s ruling, holding that the Trustee did possess standing to petition the Probate Court to compel the University to honor both the Gift Agreement and the Trust. The Michigan Trust Code was intended to provide certainty that trust terms will be carried out; under the Trust Code, the Trustee had the power to both enforce charitable pledges and to prosecute a claim on behalf of the Trust; and the Trustee had a special interest in performance of the charitable gift that entitled him to seek its enforcement. According to the Court of Appeals: “[A] settlor would have little incentive to create and distribute a charitable trust with specific instructions where no enforcement mechanism was available to protect the settlor’s intent.” The case now returns to the Probate Court for further proceedings.
 
This important decision provides assurance to a charitable grantor that his or her successors will be able to seek enforcement of the grantor’s charitable gift after his or her death. If you need assistance with a probate court matter, please contact Warner attorneys David Skidmore (dskidmore@wnj.com) or Laura Morris (lmorris@wnj.com).

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