By Ben Solis
Gongwer News Service
The Wayne County Probate Court committed no error when it granted summary disposition to the estate of a deceased man whose trust proceeds were in dispute between his adult children and their aunt, a unanimous Michigan Court of Appeals panel ruled Monday.
In a published opinion issued Tuesday written by Judge Kristina Robinson Garrett, joined by Judge Anica Letica and Judge Kathleen Feeney, the panel in Martinez v. Findling (COA Docket No. 366172) affirmed the probate court's decision, an order to alter the trust and to redirect proceeds to the man's estate.
The case required the court to interpret the relationship between notice provisions in the Estates and Protected Individuals Code and state court rules governing settlement, probate and trust proceedings.
The man died in 2021 and left nearly $2 million in settlement funds from a medical malpractice lawsuit in a trust, the court's record shows. The trust was created to supplement his governmental assistance benefits, but the parties disputed who was entitled to the remaining proceeds: the sister of the man, who was his legal guardian, or his three adult children.
The aunt hired an attorney to assist with the trust's formation, and eventually became a trustee. The attorney later filed a petition to fund and supervise the trust, and the probate court authorized distribution of the funds.
The man's children were never notified of the proceedings and the remaining balance was distributed to the aunt. The children moved for a rehearing. Meanwhile, the aunt challenged the attorney's failure to distribute the funds to her as required by the previous order.
Moving for summary disposition, the adult children argued there was no material issue of fact that the aunt and the probate court unlawfully created a residuary clause, and that the trust was not properly formed because the children were entitled to notice of all proceedings. The trust also could not be considered a legal will.
The probate court ultimately granted the adult children's motion and ruled that the court improperly authorized the trust because neither the attorney nor the aunt gave notice, and the residuary clause could not be deemed a legal will because the trust lacked his signature. The aunt also failed to provide clear and convincing evidence of the deceased's intent to leave her the remaining balance.
As a remedy, the probate court altered the trust's residuary clause and replaced the aunt with the man's estate as the beneficiary. All remaining assets were also directed to the personal representative of the man's estate.
On appeal, Garrett wrote that it was undisputed that that the decedent before his death was legally incapacitated, and claims settled on behalf of people who are legally
incapacitated are governed by EPIC and applicable court rules.
EPIC defines a protected individual as either a minor or a person for whom a conservator has been appointed or by some other protective order. Part of the provision authorizes a probate court to make a protective order if the individual cannot manage their own property due to disability and money is needed for support.
Garrett wrote the issue at hand was whether EPIC or the applicable court rules required notice to the decedent's adult children when the aunt's attorney petitioned to fund the special needs trust and before probate court authorization.
"Neither party contests the probate court's conclusion that Findling's petition for authorization and approval of the trust was a protected proceeding or that the probate court's authorization of the trust was a protective order under EPIC," Garrett wrote. "When MCL 700.5405 and MCL 700.5311(1)(a) are read together, it is plain that notice of a proceeding for a protective order must be given to the incapacitated individual's 'spouse, parents, and adult children.' We agree that the probate court's authorization of the trust was a protective order under EPIC. … Therefore, the probate court did not err by concluding that the proceeding to authorize the trust was improper."
Garrett also said the effect of the residuary clause went beyond the circuit court's direction, as did the aunt's authority as a guardian given the limited intent of the trust, so the provision naming her as such was void and unenforceable.
"We agree with the probate court that Luisa failed to show by clear and convincing evidence that Hector intended the residuary clause to allocate his property upon his death," Garrett wrote. "First, the trust was not executed as a valid will. It is undisputed that Hector did not sign the trust, and the trust only contained the signatures of Luisa, as grantor, and Findling, as trustee. Therefore, the trust itself supports the conclusion that Hector did not review or approve of the residuary clause."
On the overall modification of the trust and the redirection of funds, Garrett said it was apparent to the aunt that the deceased had children, even as she argued they had no right to notice because they were not his lawful heirs.
"Although the children were born during the marriage, Luisa contended that Hector did not consent to his wife's use of assisted reproduction while they were married. The probate court flatly rejected this argument," Garrett wrote. "Implicit in this contention, though, is the fact that Luisa knew about the children, but did not believe they had any interest in their father's estate. Because Luisa knew about Hector's children, their existence was not an unanticipated circumstance as the probate court held. Regardless, for the reasons addressed, the probate court properly changed the residuary clause to allocate Hector's remaining assets to his estate, which is the correct outcome because the residuary clause was void and the trust terminated upon Hector's death."
Gongwer News Service
The Wayne County Probate Court committed no error when it granted summary disposition to the estate of a deceased man whose trust proceeds were in dispute between his adult children and their aunt, a unanimous Michigan Court of Appeals panel ruled Monday.
In a published opinion issued Tuesday written by Judge Kristina Robinson Garrett, joined by Judge Anica Letica and Judge Kathleen Feeney, the panel in Martinez v. Findling (COA Docket No. 366172) affirmed the probate court's decision, an order to alter the trust and to redirect proceeds to the man's estate.
The case required the court to interpret the relationship between notice provisions in the Estates and Protected Individuals Code and state court rules governing settlement, probate and trust proceedings.
The man died in 2021 and left nearly $2 million in settlement funds from a medical malpractice lawsuit in a trust, the court's record shows. The trust was created to supplement his governmental assistance benefits, but the parties disputed who was entitled to the remaining proceeds: the sister of the man, who was his legal guardian, or his three adult children.
The aunt hired an attorney to assist with the trust's formation, and eventually became a trustee. The attorney later filed a petition to fund and supervise the trust, and the probate court authorized distribution of the funds.
The man's children were never notified of the proceedings and the remaining balance was distributed to the aunt. The children moved for a rehearing. Meanwhile, the aunt challenged the attorney's failure to distribute the funds to her as required by the previous order.
Moving for summary disposition, the adult children argued there was no material issue of fact that the aunt and the probate court unlawfully created a residuary clause, and that the trust was not properly formed because the children were entitled to notice of all proceedings. The trust also could not be considered a legal will.
The probate court ultimately granted the adult children's motion and ruled that the court improperly authorized the trust because neither the attorney nor the aunt gave notice, and the residuary clause could not be deemed a legal will because the trust lacked his signature. The aunt also failed to provide clear and convincing evidence of the deceased's intent to leave her the remaining balance.
As a remedy, the probate court altered the trust's residuary clause and replaced the aunt with the man's estate as the beneficiary. All remaining assets were also directed to the personal representative of the man's estate.
On appeal, Garrett wrote that it was undisputed that that the decedent before his death was legally incapacitated, and claims settled on behalf of people who are legally
incapacitated are governed by EPIC and applicable court rules.
EPIC defines a protected individual as either a minor or a person for whom a conservator has been appointed or by some other protective order. Part of the provision authorizes a probate court to make a protective order if the individual cannot manage their own property due to disability and money is needed for support.
Garrett wrote the issue at hand was whether EPIC or the applicable court rules required notice to the decedent's adult children when the aunt's attorney petitioned to fund the special needs trust and before probate court authorization.
"Neither party contests the probate court's conclusion that Findling's petition for authorization and approval of the trust was a protected proceeding or that the probate court's authorization of the trust was a protective order under EPIC," Garrett wrote. "When MCL 700.5405 and MCL 700.5311(1)(a) are read together, it is plain that notice of a proceeding for a protective order must be given to the incapacitated individual's 'spouse, parents, and adult children.' We agree that the probate court's authorization of the trust was a protective order under EPIC. … Therefore, the probate court did not err by concluding that the proceeding to authorize the trust was improper."
Garrett also said the effect of the residuary clause went beyond the circuit court's direction, as did the aunt's authority as a guardian given the limited intent of the trust, so the provision naming her as such was void and unenforceable.
"We agree with the probate court that Luisa failed to show by clear and convincing evidence that Hector intended the residuary clause to allocate his property upon his death," Garrett wrote. "First, the trust was not executed as a valid will. It is undisputed that Hector did not sign the trust, and the trust only contained the signatures of Luisa, as grantor, and Findling, as trustee. Therefore, the trust itself supports the conclusion that Hector did not review or approve of the residuary clause."
On the overall modification of the trust and the redirection of funds, Garrett said it was apparent to the aunt that the deceased had children, even as she argued they had no right to notice because they were not his lawful heirs.
"Although the children were born during the marriage, Luisa contended that Hector did not consent to his wife's use of assisted reproduction while they were married. The probate court flatly rejected this argument," Garrett wrote. "Implicit in this contention, though, is the fact that Luisa knew about the children, but did not believe they had any interest in their father's estate. Because Luisa knew about Hector's children, their existence was not an unanticipated circumstance as the probate court held. Regardless, for the reasons addressed, the probate court properly changed the residuary clause to allocate Hector's remaining assets to his estate, which is the correct outcome because the residuary clause was void and the trust terminated upon Hector's death."
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