January 18, 1995
A judge may not serve as trustee of an inter vivos trust for an aunt.
References: MCJC 5D; JI-88; MCL 700.801 et seq, MSA 27.5801 et seq, MCL 700.582, MSA 27.5582, MCL, 700.5005(1), MSA 27.5005(1)
A judge inquires whether ethics rules prohibit the judge from serving as a trustee of a living trust created by, and presumably for the benefit of, the judge's aunt.
MCJC 5D states:
"A judge should not serve as an executor, administrator, testamentary trustee, or guardian, except for the estate, testamentary trust, or persons of a member of the judge's immediate family, and then only if such service will not interfere with the proper performance of judicial duties. As a family fiduciary, a judge is subject to the following restrictions:
"(1) A judge should not serve if it is likely that as such fiduciary the judge will be engaged in proceedings that would ordinarily come before the judge or if the estate, trust, or ward becomes involved in adversary proceedings in the court on which the judge serves or one under its appellate jurisdiction.
"(2) While acting as such fiduciary, a judge is subject to the same restrictions on financial activities that apply in the judge's personal capacity." Emphasis added.
The rule prohibits a judge from serving as a testamentary trustee for anyone other than an immediate family member. However, may a judge serve as the trustee of a living, i.e., inter vivos trust?
There appears to be no substantive nor fiduciary difference between the function and duty of a testamentary trustee versus the trustee of an inter vivos trust. For instance, Article 8 of the Revised Probate Code, MCL 700.801 et seq, MSA 27.5801 et seq governs the internal affairs of all trusts whether testamentary or inter vivos. See, MCL 700.805, MSA 27.5805. Both a living and testamentary trustee are charged, in general, with the gathering, holding, managing, and administering of assets for the benefit of the trust beneficiaries. MCL 700.823-829, MSA 27.5823-5829. The evils to be avoided by prohibiting judges from serving as trustees, namely the appearance of additional prestige or advantage, JI-88, Shaman, Lubet, Alfini Judicial Conduct and Ethics, The Michie Company 1992, at p 196, are equally present whether the trust is testamentary or created by inter vivos document.
Therefore, the Committee sees no relevant difference between a trustee's function and duties as trustee of an inter vivos versus testamentary trust, and a judge may not serve as trustee for either trust except for an immediate family member.
The next issue to be addressed is the definition of "immediate family member." Specifically, in the case of the inquiring judge, whether a maternal aunt can be considered an immediate family member.
The term "immediate family member" should be narrowly defined. Michigan, in adopting its Code of Judicial Conduct, has chosen to depart from the American Bar Association Model Code of Judicial Conduct. The ABA Code would allow a judge to serve as trustee for a "member of his family." ABA Model Code of Judicial Conduct (1990) 4E states:
"(1) A judge shall not serve as executor, administrator, or other personal representative, trustee, guardian, attorney in fact or other fiduciary, except for the estate, trust or person of a member of the judge's family, and then only if such service will not interfere with the proper performance of judicial duties.
"(2) A judge shall not serve as a fiduciary if it is likely that the judge as a fiduciary will be engaged in proceedings that would ordinarily come before the judge, or if the estate, trust or ward becomes involved in adversary proceedings in the court on which the judges serves or one under its appellate jurisdiction.
"(3) The same restrictions on financial activities that apply to a judge personally also apply to the judge while acting in a fiduciary capacity."
The ABA definition of "member of the judge's family" is "spouse, child, grandchild, parent, grandparent, or other relative or person with whom the judge maintains a close familial relationship." Michigan has not adopted the language of the ABA Model Code of Judicial Conduct 4E or the ABA definition. Rather, MCJC 5D allows a judge to serve as a trustee only for an immediate family member. The implication to be drawn is that Michigan's class of family members is narrower than that specified in the ABA Model Code. Even the ABA provisions would not allow a judge to serve as fiduciary for an inter vivos trust, nor for a maternal aunt.
Black's Law Dictionary defines the term "immediate" in this context as "next in line or relation; directly connected; not secondary or remote." It would be the position of the Committee that immediate family members would include only parent and child, husband and wife, or brother and sister. Any other relationship would not be directly connected or next in line to the judge but rather would depend on an intervening relative. An aunt, therefore, would not be considered by the Committed to be a member of the judge's "immediate" family.
Even where the family relationship is sufficiently close, there are still restrictions on the circumstances under which a judge may serve as a fiduciary as set forth in MCJC 5D(1) and (2).
The Michigan legislature, in enacting restrictions on the ability of a judge to serve as fiduciary, has also used the term "immediate family." See MCL 700.582, MSA 27.5582 which states:
"(1) A judge of any court, excepting municipal court, shall not be appointed as a fiduciary in an estate except for a member of his or her immediate family."
Thus, it is contrary not only to professional ethics, but contrary to the public policy of the State as expressed by the legislature for a judge to serve as fiduciary except in certain highly limited circumstances. A trustee falls within the statutory definition of fiduciary in some cases. MCL 700.5005 (1), MSA 27.5005(1). Existing policy dictates that the circumstances under which a judge should serve as trustee should be highly limited.
The circumstances in which a judge is permitted to serve as a fiduciary, including testamentary or inter vivos trustee, are extremely limited. A judge is prohibited from serving as a trustee under an inter vivos trust for a maternal aunt.