Issues: Breach of fiduciary duties as trustee of a family trust; Claim that the defendant-Trustee violated his fiduciary duty under the Trust in not selling its primary asset (a condo) promptly; In re Bennett Estate; In re Reisman Estate; MCL 700.1302(b); MCL 700.1302(b)(v); MCL 700.7801; MCL 700.7811(2); MCL 700.7802(1); In re Harold S. Ansell Family Trust; Royal Prop. Group, LLC v. Prime Ins. Syndicate, Inc.; Denial of compensation for administration of the trust; MCL 700.7901(1) & (2)(h); Attorney fees
Court: Michigan Court of Appeals (Unpublished)
Case Name: Covington v. Knoblock
e-Journal Number: 57675
Judge(s): Per Curiam – Beckering, Hoekstra, and Gleicher
The probate court did not clearly err in finding that the defendant-Trustee breached his fiduciary duties. It also did not err in denying him compensation for his performance as trustee, and in refusing to allow him to be reimbursed for the attorney fees that he incurred in defending this action. The case arose from defendant's administration of a family trust. On appeal, he argued that the probate court erred in finding that he violated his fiduciary duty under the Trust in not selling its primary asset, a condominium, promptly. "Under MCL 700.1302(b), a probate court has 'exclusive legal and equitable jurisdiction' over proceedings concerning the administration and distribution of trust assets and 'the declaration of rights that involve a trust, trustee, or trust beneficiary[.]' This jurisdiction includes the determination of questions arising in the administration of a trust, including the construction of a trust." In this case, the probate court "acted within its jurisdiction and, based upon the facts set forth at trial, neither erred in its interpretation of the Trust, nor clearly erred in determining that defendant breached his fiduciary duties." In the second amendment to the Trust, Article 11, § 1 provided that "'[a]fter the death of the survivor' of the original trustors, 'our Trustee shall sell the real property [meaning the condominium] then owned by us and used as our principal residence.'" The Trust further provided that "the trustee is then to divide all Trust property, which would include the proceeds from the sale of the condominium, equally between plaintiff and defendant. Pursuant to the plain language of the Trust, defendant did not have the authority to transfer the condominium to himself for no consideration, nor did he have the authority to lease the condominium." Article 11, § 1 required him to sell the condominium. "The terms of the Trust clearly directed that the condominium was to be sold after the survivor trustor's death, not whenever the trustee decided to sell it." Also, MCL 700.7801 "imposes upon a trustee the duty to 'administer the trust in good faith, expeditiously, in accordance with its terms and purposes, for the benefit of the trust beneficiaries . . . .'" Thus, "defendant breached his duty to comply with the terms of the Trust when he failed to sell the condominium in the manner set forth in Article 11." Affirmed.
© 2014 State Bar of Michigan