Generally, the creation of a Trust allows property to avoid probate and to quickly and efficiently pass to the beneficiaries you name, without the time and expense of the probate court’s involvement. In Michigan, when the person who executed a revocable living Trust (called the “Settlor”) dies, there is generally no need to register the Trust with the probate court. This is one of the primary reasons that people execute Trusts–to avoid probate.
Despite the settlor’s best intention to stay out of court, there are times that the court’s involvement is necessary to resolve disputes that become Trust litigation. The probate court is the appropriate forum when disputes arise. MCL 700.1302 and MCL 700.7203, provides that the Michigan probate court has exclusive jurisdiction of proceedings initiated by persons concerning the validity and affairs of all Trusts. These statutes provide the legal basis for filing a Trust litigation proceeding in the probate court.
Some scenarios in which there may be a need to commence a Trust litigation file to supervise its administration or to compel the Trustee to do something are:
- The Trust was executed while the person was under undue influence, mental incapacity, duress, fraud, or some other defect
- The trustee is not giving the Trust beneficiary(s) adequate information
- The Trustee is not administering the Trust properly
- There is a dispute about how to divide or distribute the Trust assets
- Assets were improperly titled at the time of death (joint ownership, pay on death beneficiaries, or not titled in the Trust)
- Allegations of fraud or self-dealing against the Trustee
Probably the most common situation that commences Trust litigation is the Trustee’s failure to keep the beneficiaries informed of what is going on in the Trust administration. Some Trustees believe that they have a right to keep the Trust affairs private rather than appreciating their fiduciary duty to the beneficiaries. MCL 700.7814 mandates that:
“A trustee shall keep the qualified trust beneficiaries reasonably informed about the administration of the trust and of the material facts necessary for them to protect their interests. Unless unreasonable under the circumstances, a trustee shall promptly respond to a trust beneficiary’s request for information related to the administration of the trust.”
Another common situation involves a person objecting to the Trust based on allegations that the Trust was executed while the person was under undue influence or mental incapacity. Trust litigation based on allegations of undue influence, mental incapacity, or some other defect is often time consuming, and highly emotional.
When disputes arise, The Probate Pro’s team of experienced litigation attorneys will represent trustees, personal representatives and beneficiaries in probate and trust litigation. If you are faced with litigation involving a Trust, whether as a Trust beneficiary, trustee of the Trust, or as a creditor, The Probate Pro can aggressively represent your interest.