In re Estate of Stan
301 Mich. App. 435
| Mich. Ct. App. | 2013Background
- Decedent died in 2011, survived by two daughters, Georgiann (petitioner) and Christine (appellee); most assets were outside Michigan; only limited Michigan probate assets existed.
- Decedent’s will (Oct. 19, 2010) nominated Georgiann as sole personal representative and poured residue into a trust; the will contained no in terrorem clause but expressly incorporated the trust.
- The trust (restated Oct. 19, 2010) appointed Georgiann as successor trustee, granted specific cash and real-estate distributions to each daughter, divided remaining property equally, and contained a broad in terrorem clause penalizing unsuccessful challenges to the will or the trust.
- Christine objected in probate to Georgiann’s appointment as sole personal representative, alleging Georgiann had taken and failed to account for assets and withheld information; Georgiann nonetheless was appointed.
- Georgiann filed to enforce the trust’s in terrorem clause to disinherit Christine based on Christine’s unsuccessful objection to Georgiann’s appointment. The probate court denied enforcement; the court of appeals affirmed on different grounds.
Issues
| Issue | Plaintiff's Argument (Stan) | Defendant's Argument (Christine) | Held |
|---|---|---|---|
| Whether Christine’s objection to Georgiann’s appointment as personal representative triggered the trust’s in terrorem clause (i.e., was a challenge to “any provision of the will or trust”)? | Georgiann: Christine’s objection was an unsuccessful challenge to a provision of the will (the nomination) and thus triggers the clause, barring Christine from trust distributions. | Christine: Her objection challenged only the appointment (not the validity or provisions of the trust or dispositive provisions of the will) and was legally permissible. | Court: Christine’s objection did fall within the clause’s literal scope ("any provision" includes executor nomination), but enforcement was barred because Christine had probable cause to object. |
| Whether statutory limits on enforcing in terrorem clauses apply when the clause is in a trust but the will incorporates the trust and the challenge targeted the will’s nomination. | Georgiann: The statutes restricting enforcement (MCL 700.2518 and 700.3905) apply to clauses in wills, not trusts; thus they should not bar enforcement of a clause contained solely in a trust. | Christine: The will incorporated the trust and the trust’s clause explicitly addresses will challenges; therefore the statutes apply and bar enforcement if probable cause existed. | Court: The clauses in the trust were effectively made part of the will because the will incorporated the trust; the statutes limiting enforcement of in terrorem clauses in wills therefore apply. |
| Whether Christine had probable cause to object (which would render the in terrorem clause unenforceable under the statutes). | Georgiann: Christine had no probable cause; her challenge was unsuccessful and thus should be penalized under the clause. | Christine: She reasonably believed Georgiann had mishandled estate property and failed to account, giving her probable cause to object to appointment. | Court: Christine had probable cause based on evidence Georgiann took control of assets before appointment and allegations of mismanagement; clause unenforceable. |
Key Cases Cited
- Schiffer v. Brenton, 247 Mich 512 (recognizing general validity of in terrorem clauses) (Mich. 1929)
- In re Perry Trust, 299 Mich App 525 (in terrorem clauses are valid but strictly construed) (Mich. Ct. App. 2013)
- Dep’t of Agriculture v. Appletree Marketing, LLC, 485 Mich 1 (definition and interpretation of broad words like "any") (Mich. 2010)
- In re Griffin Trust, 281 Mich App 532 (probable cause standard for defeating in terrorem enforcement) (Mich. Ct. App. 2008)
- Vanderlinde v. Bankers Trust Co. of Muskegon, 270 Mich 599 (trust provisions incorporated into wills can be treated as part of the will) (Mich. 1935)