When a Trust is established, a Trustee will be named in order to administer the Trust upon the death of the Settlor. The duties of the Trustee include gathering and preserving the Trust assets, giving legal notice to potential creditors, providing the beneficiaries with an inventory and annual accounting, and distributing the Trust assets according to the terms of the Trust. However, when issues arise between the Trustee and the Trust’s beneficiaries, Michigan law allows the beneficiaries to file a petition in Probate Court to have remove a Trustee.
While the right to remove a Trustee has always existed in Michigan, it was codified by the Michigan Legislature when it passed MCL 555.26. This statute provides that the court may remove a trustee “who shall have violated or threatened to violate his trust, or who shall be insolvent, or whose insolvency shall be apprehended, or who, for any other cause, shall be deemed an unsuitable person to execute the trust.” The Michigan Supreme Court in Reed v. Newberry interpreted this statute to require the person seeking removal to show some evidence of incompetence, neglect of duty, violation of trust, or some other good cause.
The Gerber Case
While there are often conflicts between a Trustee and the Trust’s beneficiaries, the Michigan Supreme Court in In re Gerber’s Trust ruled that mere hostility between a Trustee and beneficiary is not grounds to remove a Trustee where the trust agreement does not require the trustee and beneficiary to interact personally. The Supreme Court has also ruled that as long as a Trustee has acted reasonably, he or she may not be removed just because a beneficiary is dissatisfied with the Trustee’s decision making. Other courts have even held that a legal controversy between the Trustee and a beneficiary is insufficient grounds for removal. While it is natural for there to be tension between a Trustee and the Trust’s beneficiaries after the death of a loved one, Michigan law requires a showing of more than just mere disagreement before a court will remove a Trustee.
Remove a Trustee?
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