Under Michigan law, a trustee has a duty to periodically prepare and serve a trust accounting. The trust document itself governs who is entitled to receive the trust accounting, and if the trust document is silent, then the Michigan Trust Code governs. But what happens after the person who is entitled to receive the trust accounting dies? Are the decedent’s heirs entitled to enforce the decedent’s right to receive the accounting?
That question arose in In re Estate of William N. Trombly, Docket No 350432, 2020 WL 7754183 (Mich Ct App Dec 29 2020) (unpublished). There, William and Carole were married with two children, Gary and Jacqueline. Under Carole’s trust, after both William and Carole were deceased, she gifted a family farm to Jacqueline, and a Florida condo unit and $100,000 to Gary. In May 2015, Carole died, survived by William and their children. At Carole’s death, Jacqueline became the trustee of Carole’s trust, and under the terms of the trust, Jacqueline was required to serve an annual accounting upon the “current trust beneficiaries.” After Carole’s death, William was the current trust beneficiary of Carole’s trust, for the rest of his life. In December 2017, William died.
After William’s death, Gary petitioned the Macomb County Probate Court to order Jacqueline as trustee of Carole’s trust to provide an accounting to Gary for the time period from Carole’s death to William’s death. Jacqueline opposed that petition on the ground that only William was entitled to receive an accounting during that time period. The Probate Court agreed with Jacqueline and declined to give Gary an accounting for Carole’s trust for the time period before William’s death. Gary did not appeal that ruling.
Subsequently, Jacqueline opened a probate estate for William and was appointed as personal representative. In the context of William’s probate estate, Gary again petitioned the Probate Court to order Jacqueline to provide Gary an accounting for Carole’s trust for the time period before William’s death. Gary argued that William’s right to receive an accounting had passed to Gary, as William’s heir, and that Gary could demand an accounting in order to confirm that William had received it.
The Probate Court ruled that William’s right to receive an accounting did not survive William’s death, and that even if it had, only the personal representative of William’s estate had the authority to demand an accounting from the trustee of Carole’s Trust. The Probate Court further sanctioned Gary for a frivolous filing, and Gary appealed that ruling to the Court of Appeals.
The Court of Appeals declined to decide whether William’s right to an accounting had survived his death. Instead, the Court of Appeals ruled that, if William’s right to an accounting survived his death, only the personal representative of William’s estate had standing to enforce such right. In other words, Gary could not enforce William’s right, because the personal representative of William’s estate owned any such claim. The Court of Appeals suggested that Gary might have had a stronger claim if the appeal had been filed in the proceeding for Carole’s Trust, where Gary was a trust beneficiary. And the Court of Appeals affirmed the sanctions ruling against Gary.
What is to be learned from this case? First, entitlement to a trust accounting is a bright-line test, governed by either the trust document or the Michigan Trust Code. Second, the Probate Court has the discretion to order that other persons receive a trust accounting, in addition to those entitled to the same; the Court may or may not make such an order, depending on the circumstances of the case. Third, if a claim belongs to an estate or a trust, then typically only the fiduciary administering such an estate or trust has the legal authority to enforce such claim. Fourth, a person’s ability to get relief from the Probate Court depends on making the request in the context of the proper file; the Court may have multiple different files open for the same family, with each file pertaining to a particular estate, trust or other matter.
If you need assistance with a probate court matter, please contact Warner attorneys David Skidmore (dskidmore@wnj.com) or Laura Morris (lmorris@wnj.com).
