Dispute over the reformation of a trust; Limited powers of appointment (LPAs); MCL 556.112(c); Exercising LPAs in favor of IRC § 501(c)(3) religious, scientific, charitable, or education organizations; Laches; Prejudice; Yankee Springs Twp v Fox

The court held that the probate court erred by granting summary disposition for respondent-trustee/attorney on the basis of laches. Petitioners sought reformation of their mother’s trust after being informed by respondent that they had been disinherited when their father, before his death, exercised his LPAs to appoint all the money over which he had such power to interested party St. Joseph Mercy Oakland. They alleged that their mother never intended respondent to draft the trust in a way that would provide their father with the ability to disinherit them, and unsuccessfully asked the probate court to determine that the LPA was “the product of a mistake of fact and/or law” and to reform it. On appeal, the court agreed with them that the probate court erred by granting summary disposition for respondent based on laches because questions of fact remained as to “whether petitioners unreasonably and inexcusably delayed” their petition for reformation and whether granting it would result in prejudice to their father and overthrow his estate plan. “[R]easonable minds could disagree regarding whether petitioners were dilatory by failing to scrutinize the [trust] and to discover the alleged drafting error.” In addition, “reasonable minds might differ regarding whether [their father’s] restatement of his living trust triggered a due-diligence requirement to examine the” trust. Further, the “alleged deterioration of their relationship with [their father] might be grounds for concern about their status in his will and trust, but in light of” a trust flowchart provided by respondent, as well as his assurances that their mother “had taken care of them in her trust,” and their father’s earlier “conforming exercise of the LPAs,” one might reasonably conclude that petitioners’ relationship with their father “did not trigger a due-diligence requirement to examine the actual terms of the” trust. The evidence upon which the probate court relied to grant respondent summary disposition based on laches created genuine issues of material fact as to “whether and when due diligence required petitioners to examine the [trust] for themselves and what they knew about the scope of the LPAs.” Likewise, the record was “insufficient to conclude that a change in circumstances caused by petitioners’ alleged delay would make it inequitable to reform the” trust. Reversed and remanded.