in Re Poston Estate
331772
Mich. Ct. App.Jul 25, 2017Background
- Thelma L. Poston created a revocable trust in 1994; her son Kevin (respondent) became successor trustee in 2011; Thelma died in 2014.
- Kevin moved trust funds from accounts in his parents’ names into joint accounts he shared with his wife Kathy; both he and Kathy made withdrawals/loans and repaid portions.
- Craig (petitioner) and other siblings received distributions/advances reflected in Trust amendments and in separate signed “advance” statements; the Trust amendments stated loans would accrue no interest, while the advance statements imposed 4% interest and were not signed by Thelma.
- Craig petitioned to compel relief alleging breaches: failure to account, self‑dealing/possible conversion, undisclosed trustee compensation (1% fee), and undue influence; he sought removal of Kevin as trustee and other remedies.
- Probate court found breaches (failure to account, self‑dealing), denied removal but denied trustee compensation, awarded attorney fees to both sides as trust administrative expenses, rejected conversion and undue‑influence claims, and treated distributions as loans (but imposed a 4% interest rate).
- On appeal the Court of Appeals affirmed most rulings, reversed the imposition of 4% interest, affirmed attorney‑fee awards and denial of case‑evaluation sanctions, and remanded for proceedings consistent with the opinion.
Issues
| Issue | Craig (petitioner) argument | Kevin (respondent) argument | Held |
|---|---|---|---|
| Whether trustee should be removed for breach of trust | Kevin committed serious breaches (no accounting, self‑dealing, possible conversion) warranting removal | Court may choose remedies short of removal; actions had parental consent and advice of financial advisor | No removal; denial of trustee fee is an appropriate remedial sanction (affirmed) |
| Whether transfers constituted conversion of trust assets | Moving funds to Kevin/Kathy accounts and withdrawals were wrongful conversion | Transfers were made with parents’ consent and on adviser’s suggestion; funds largely intact/loans repaid | No conversion established; probate court’s factual finding upheld (affirmed) |
| Whether loans/distributions to beneficiaries accrue 4% interest | Craig relied on signed advance statements imposing 4% | Kevin relied on Trust amendments stating loans accrue no interest; advance statements not signed by settlor | Court reversed imposition of 4% interest; Trust amendments (signed by settlor) control (reversed in part) |
| Whether attorney fees and case‑evaluation sanctions proper | Craig sought fees as administrative expense; Kevin sought case‑evaluation sanctions | Kevin argued case evaluation favored him and sanctions apply; Kevin argued fees to Craig should be reduced for unsuccessful claims | Fees to both parties as trust administrative expenses affirmed; denial of case‑evaluation sanctions affirmed because no final "verdict" was entered at that time; award to Craig not reduced on appeal (affirmed) |
Key Cases Cited
- In re Bennett Estate, 255 Mich. App. 545 (standard for clear‑error review)
- Maldonado v. Ford Motor Co., 476 Mich. 372 (abuse‑of‑discretion standard)
- In re Duane Baldwin Trust, 274 Mich. App. 387 (removal of trustee standard)
- In re Green Charitable Trust, 172 Mich. App. 298 (trustee duties and interpretation)
- Ducharme v. Ducharme, 305 Mich. App. 1 (breach of trust definition)
- In re Temple Marital Trust, 278 Mich. App. 122 (attorney‑fee awards and review standards)
- In re Stillwell Trust, 299 Mich. App. 289 (trust construction: settlor intent controls)
- In re Kostin Estate, 278 Mich. App. 47 (settlor intent canon)
- In re Woodworth Trust, 196 Mich. App. 326 (latent ambiguity principles)
- Farm Bureau Mut. Ins. Co. of Mich. v. Nikkel, 460 Mich. 558 (contract‑signing/reading principle)
- Sterling Heights v. Chrysler Group, LLC, 309 Mich. App. 676 (written order controls over oral pronouncement)
- Jerico Const., Inc. v. Quadrants, Inc., 257 Mich. App. 22 (definition of "verdict" for case evaluation rule)
- Allard v. State Farm Ins. Co., 271 Mich. App. 394 (exceptions to mandatory case‑evaluation sanctions)
- In re Hammond Estate, 215 Mich. App. 379 (executor/trustee fees when no wrongdoing proven)
- Mouzon v. Achievable Visions, 308 Mich. App. 415 (preservation of issues for appeal)
- Rivette v. Rose‑Molina, 278 Mich. App. 327 (plain‑error review)
- Nat’l Waterworks, Inc. v. Int’l Fidelity & Surety, Ltd., 275 Mich. App. 256 (appellate briefing obligations)