Request to surcharge a trustee; MCL 700.7901(2)(c) & (j); MCL 700.7902; Validity of a trust; MCL 700.7402(1); MCL 700.7406; Settlors’ intent; Breach of a trustee’s fiduciary duties; “Good faith” & “bad faith”; Personal representative (PR)

Holding that the probate court did not make a mistake in determining the settlors’ intent or by finding that appellee-trustee (Joyce) did not breach her fiduciary duties, the court affirmed the order denying appellant-PR’s (Conti) request to surcharge her for transfers of the decedent’s assets. The decedent, Raymond, was Joyce’s father. He and his wife, Carol, had five other children, including interested parties-Regina and Kristy, Patrick, and Teresa. Raymond and Carol executed a living trust. They named Joyce the trustee and sole beneficiary. After the Frisbies passed away, Conti was appointed as an independent PR, “ordered to investigate all contested transactions, and he was authorized to claw back the value of the transacted funds for any transactions that were deemed inappropriate.” He filed a petition for surcharge against Joyce, seeking a judgment “of $490,112.96 for allegedly improper disposals of the estate’s assets.” After a two-day evidentiary hearing, the probate court denied the petition. On appeal, Conti challenged “whether the trust was in accord with the settlors’ intent[.]” The probate court determined that the testimony “established ‘Joyce was attempting to follow her parent’s [sic] wishes, which was to make sure that there was enough money to take care of Teresa. They left the trust funds to Joyce with the direction to Joyce that she take care of Teresa.’ The probate court’s factual findings were supported by the testimony.” Conti also argued that Joyce breached her duty of care, and “the express terms of the trust, when she transferred over $300,000 to Patrick during Raymond’s lifetime.” However, the record showed “that the money was not transferred into the trust account, or to Patrick, until after Raymond’s death.” In addition, it was undisputed that “Regina and Kristy consented to the transfer to Patrick. In fact, there was testimony that they demanded it. Joyce believed Patrick would execute their parents’ wishes. She agreed to initiate the transfer to Patrick as a compromise, which is not sufficient to establish bad faith.” The court noted that while she “had misgivings about the transfer and testified it was against her better judgment, it does not establish bad faith. Further, there was no evidence that Joyce acted secretly or with selfish motivations.”