Termination of a trust under the Estates & Protected Individuals Code (EPIC); MCL 700.7412; Notice; MCL 700.7411(3); Removal of trustee; MCL 700.7706(1) & (2); Judicial disqualification; MCR 2.003(C)(1); Cain v Department of Corrs

The court held that the probate court erred by dissolving the settlor’s (Elaine) trust because notice was lacking and it failed to further Elaine’s “plainly stated intent.” It also held that the probate court erred by removing the original court-appointed independent trustee (appellant-Gallagher). But it declined to disqualify the probate judge. Two of Elaine’s children engaged in extensive litigation involving the trust and attorney fees related to the management of trust property. After several years, the probate court dissolved the trust, removed Gallagher as trustee, and ordered all trust assets to a conservator/successor trustee for the purpose of winding up the trust, distributing funds as necessary for Elaine’s care, and maintaining the trust assets. The court found that the probate court’s “dissolution” of the trust violated EPIC’s plain language. It “provided no notice to any of the parties identified in MCL 700.7411(3) before terminating Elaine’s trust on its own motion.” In addition, it “failed to comply with MCL 700.7412(2)’s requirement that the trust’s termination ‘will further the settlor’s stated purpose, or if there is no stated purpose, the settlor’s probable intention.’” Elaine was left “intestate. She is not competent to execute a new will and her wishes cannot be effectuated.” The court next found that the probate court did not identify any viable basis for its decision to remove Gallagher as trustee. Instead, it “specifically indicated that it had not found that Gallagher acted improperly. [It] may have believed that Gallagher had been pushed around by the competing parties and that a change would serve Elaine’s best interests. However, [it] made no record finding to that effect.” As such, on remand, if it decides to relieve him “of his post, [it] must refer to MCL 700.7706(2) and support its ruling.” Finally, the court declined to disqualify the trial judge, noting it did not believe his comments “revealed an inability to fairly judge and control the proceedings on remand. With a bit of verbal caution, we are confident that [the judge’s] resolve will fairly and equitably direct this action to completion while protecting Elaine’s interests. Assigning a new judge at this late date would require expending even more attorney fees so that the parties could educate the bench on the lengthy history of this case and the issues remaining. That delay and expense would benefit no one.” Reversed and remanded.