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PROBATE 54: The probate court removed the current bank as trustee because the Trust could not afford the fees.

The Special Needs Trust was established for the benefit of LBG. The Trust was funded with the proceeds of a settlement obtained for LBG’s benefit as a result of injuries he sustained at the hospital in the days after his birth. The sole purpose of the Trust is to provide for LBG’s lifelong care. The bank was selected by LBG’s family to serve as the trustee.

Annual Accounting of Trust

The probate court approved the 6th through 10th annual accounts without issue. However, at the hearing on the petition to approve the 11th annual account, the probate court raised questions concerning the attorney fees and fiduciary fees that the bank charged to the Trust. The accounting indicated that the trust had gained $29,892.78 in income, had incurred $41,313.19 in expenses, and had a remaining balance of $810,995.85. The court was concerned that the attorney fees of $1,117 and the fiduciary fees of $15,511.53 seemed high in relation to the size of the Trust.

The court stated that it would approve the accounting but cautioned that it would be keeping a close eye on the matter. The court added that it had experience with cases where large institutions abused trust funds.

On April 13, 2020, the bank filed its 12th annual petition to allow accounts. The accounting indicated that the Trust had gained $55,507.94, had incurred $97,933.80 in expenses, and had a remaining balance of $768,569.99. This time the attorney fees and costs were $6,3554.63 and the fiduciary fees and expenses were $14,955.50. At the hearing on the petition, the court asked what the bank did for Fifteen Thousand Dollars. The bank’s lawyer stated that the bank provided a myriad of services.

Guardian Ad Litem (GAL)

The court suggested that Bank was using the Trust’s money to invest in its own products. The court appointed a guardian ad litem (GAL) to offer an opinion on the reasonableness of the fees charged by the banks, by the lawyers, and the distribution of money. On October 19, 2020, the GAL submitted a report to the court. The court questioned whether the fees, which were standard for the bank, were reasonable for the Trust. The Court reiterated its concern that this particular Trust cannot afford the bank as a trustee.

Removal of Trustee

On March 19, 2021, the court entered an order allowing the 12th annual account, removing the bank from its role as trustee, and appointing a new fiduciary to serve as successor trustee.

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REAL ESTATE 89: RM had not included any language in the deed providing that the property was a joint tenancy with full rights of survivorship, the property instead became a tenancy in common.

RM drafted the deed without seeking counsel and mistakenly believed that, if either she or FK died, the property would fully pass to the surviving tenant. FK’s will provided that if his wife predeceased him—which she did—the personal representative of his estate should sell any residual property that he owned and divide the cash proceeds equally among his surviving children.

FAMILY LAW 83: A trial court can terminate a parent’s rights and permit a stepparent to adopt a child.

A trial court has discretion to terminate a parent’s rights and permit a stepparent to adopt a child when the conditions of MCL 710.51(6) are met. MCL 710.51(6)(b) requires the petitioner to establish that the other parent had the ability to visit, contact, or communicate with the children, and substantially failed or neglected to do so for a period of two years.

PROBATE 53: The trust agreement included an Incontestability Provision.

A settlor’s intent is to be carried out as nearly as possible. Generally, in terrorem clauses are valid and enforceable. However, a provision in a trust that purports to penalize an interested person for contesting the trust or instituting another proceeding relating to the trust shall not be given effect if probable cause exists for instituting a proceeding contesting the trust or another proceeding relating to the trust.

FAMILY LAW 82: Court stated it would terminate the personal protection order (PPO) after the parties present documentation of the initiation of the divorce proceedings.

However, the trial court concluded that these matters should, in fact, be in the province and the jurisdiction of the Family Division and in that respect, having issued a personal protection order, the Court stated it would terminate the personal protection order after the parties present documentation of the initiation of the divorce proceedings.

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PROBATE 51: Trust filed a petition to determine title to credit union account.

The probate court explained that the owners of the account are S and J. When S passes, J becomes the owner of the account. J is the one who had the authority to make the designation. Nowhere in any documents is there a designation by J that SJ be the owner -- or the beneficiary of the account. The designation made by his father was no longer binding because he was no longer the owner at the time J passed away.

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