Who is Entitled to Know When a Trust is Being Changed

Who is Entitled to Know When a Trust is Being Changed

A person who creates a trust names the beneficiaries who can receive income and assets paid by the trust, as well as those persons or charities who would be entitled to receive the remaining assets after the death of the lifetime beneficiary.  Under the Mississippi trust law, those current and remainder beneficiaries are generally referred to as “qualified beneficiaries” and are entitled to notices about the assets in the trust and proposed changes to the trust.  A recent Michigan case addressed the efforts of the trustmakers to terminate a trust without giving notice to such a remainderman.

Donald F. Clark created an irrevocable, discretionary trust for the benefit of himself and his wife, Elaine.  At Elaine’s death her son, Donald, would become the sole beneficiary.  The trust named Michael Mooney as the initial trustee and remainderman (person who will receive the remaining trust assets) at the death of Donald.  Mooney was ultimately removed as trustee by the Iosco County Probate Court to avoid a conflict of interest.

Thereafter, Elaine and Donald petitioned the court to terminate the trust without providing notice to Mooney.  Mooney objected to the petition, asserting that he was a “qualified beneficiary” under Michigan law and as an interested party was entitled to notice of the proceeding.  The probate court agreed, concluding that Mooney was an interested person as a remainderman and had the right to object to the termination petition.  Elaine and Donald appealed, arguing that Mooney’s interest was too remote for him to be considered a qualified beneficiary entitled to notice.

In an unpublished opinion, the Michigan Court of Appeals agreed with the trial court.  Although the court declined to find Mooney to be an undefined interested party under the applicable notice statute, it held that the probate court did not err in concluding that he should be provided notice and an opportunity to participate in matters involving the termination of the trust under the catch-all provision of the notice statute, in the interests of justice and consistently with the trustmaker’s intent.

In re Donald F. Clark Trust, 2020 WL 862614 (Michigan App. Feb. 20, 2020) (unpublished)

http://publicdocs.courts.mi.gov/OPINIONS/FINAL/COA/20200220_C346539_50_346539.OPN.PDF

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