Separate administration of an estate & a trust; General power of appointment to distribute trust assets; Whether a will was executed with all the formalities of a deed as required under the trust; Applicability of MCL 700.2503; Public policy; Distinguishing In re Cudnik v William Beaumont Hosp

The court held that the “trial court did not err by ordering that the Estate and the Trust be administered separately because the Will failed to conform with the formalities of a deed as required under Section 3.2 of the Trust.” Thus, the Estate was not entitled to half of the Trust’s assets. Appellant incorrectly argued that the decedent (Ladney) “had a general power of appointment not subject to the conditional language in Section 3.2 because Sections 3.2 and 3.3 of the Trust are not inconsistent. The Trust’s unambiguous language in Section 3.2 granted Ladney a power of appointment to distribute half of the Trust’s assets upon death if he executed an instrument with all the formalities of a deed. The ordinary meaning of settlor’s reference to ‘all the formalities of a deed’ required Ladney to distribute the Trust’s assets in an instrument that met the requirements for a valid deed.” The court noted that “in order for the Will to be executed with all the formalities of a deed it” had to be notarized. But appellant conceded that it was not. “Therefore, the Will failed to satisfy Section 3.2 of the Trust, which was a specific condition set forth by settlor limiting how Ladney’s power of appointment could be carried out. Because we must give meaning to the settlor’s clear directives, the Estate is not entitled to half of the Trust’s assets because the Will was not executed with all the formalities of a deed, as required by Section 3.2 of the Trust.” Appellant seemed “to rely on language in Section 3.3 to argue that the conditional language in Section 3.2 should not be given effect.” The court disagreed. “The phrase ‘any power of appointment’ in Section 3.3 merely references the power of appointment granted to Ladney in Section 3.2.” It did not, as appellant argued, “negate the conditional language in Section 3.2, which required Ladney to carry out said power in an instrument with all the formalities of a deed. Appellant’s interpretation of Section 3.3 would negate the conditional language in Section 3.2, which the settlor specifically set forth. Appellant’s argument also fails to read the Trust as a whole, which” the court was required to do when interpreting it. Thus, “the trial court correctly found that the Will failed to comply with Section 3.2 of the Trust because it was not executed with all the formalities of a deed.” Appellant also incorrectly argued “that any technical defects in the Will should be overlooked under MCL 700.2503. But, as the trial court stated, this case does not involve a challenge to the validity of the Will.” Thus, MCL 700.2503 did not apply. Finally, the court saw “no similarity between the issue in Cudnik and the present case, and appellant offers no explanation as to why that case or any other authority should convince [it] to hold that the Trust is unenforceable as against public policy.” Affirmed.