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WILLS/TRUSTS 13: Reimbursement to trustees for fees incurred in defending the petition.

In 1990, Respondent M and her now-deceased husband created the Trust. After the husband’s death in 1995, the Trust became an irrevocable. In 2016, respondents signed a document purporting to remove petitioner as a co-trustee of the Trust pursuant to the trust language, and to appoint another child as a co-trustee.

In 2017, petitioner filed a petition with the probate court seeking removal of all trustees from the trust and the appointment of an independent trustee to administer the trust.

In August of 2017, Respondent M filed a motion for summary disposition, arguing that the petition had failed to allege that she was incompetent or otherwise incapacitated, or to otherwise allege any basis for her removal as trustee or for the removal of the other trustees in contravention of her wishes as settlor of the trust, current co-trustee, and current sole beneficiary. Respondents also filed a joint motion for summary disposition.

After a hearing, the probate court granted both motions, holding that the petition had failed to state a claim on which relief could be granted and that there was no genuine issue of material fact, such that respondents were entitled to summary disposition. The probate court noted that it lacked the power to remove Respondent M and appoint an independent trustee if she was alive, competent, and had not resigned as trustee, and that nothing in the petition challenged Respondent M’s competency.

Respondents subsequently moved the trial court to impose sanctions on petitioner for a frivolous filing and to award respondent’s attorney fees and costs, for having to defend the petition.

An action is frivolous if the party had no reasonable basis to believe that the facts underlying the party’s legal position were in fact true or the party’s legal position was devoid of arguable legal merit. Nothing in the initial petition alleged that Respondent M had died, resigned, or was incapacitated.

After a hearing on respondents’ motion for reimbursement of attorney fees and sanctions, the probate court issued a written opinion and order finding petitioner’s initial petition frivolous. The probate court awarded respondents $37,000 in attorney fees and costs, of which $10,000 was to be paid by petitioner individually, while the remaining $27,000 was to be paid from the trust.

The $27,000 ordered to be paid to respondents from the trusts was not a sanction, but instead was reimbursement to the trustees for expenses incurred in defending the petition. The Trust contains language providing for the reimbursement of expenses incurred by trustees in administering the trust.

Aldrich Legal Services is pleased to assist you with your estate planning needs.

We draft and review wills, trusts and other estate planning documents to help our clients with their estate objectives. Located in Plymouth, Michigan, we assist clients throughout southeast Michigan.

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