Trusts Blog
Battle Creek Estate Planning - Trust Law Blog

Closing a Trust:

Posted December 1, 2018

A trust terminates without court intervention, as provided in the trust instrument, when no purpose of the trust remains to be achieved or the purposes of the trust have become impossible to achieve or are found by a court to be unlawful or contrary to public policy. A trustee or beneficiary may commence a proceeding to confirm the termination of the trust. A trust may be terminated by the court on a petition for termination by the trustee or another interested person for various reasons, including the following:

  • Owing to circumstances not anticipated by the settlor, termination of the trust will further the settlor’s stated purpose or
  • if there is no stated purpose, the settlor’s probable intention.

All of the qualified trust beneficiaries and the trustee consent, and termination is consistent with the material purposes of the trust or continuance of the trust is not necessary to achieve any material purpose of the trust. However, if a trustee fails and refuses to consent or fewer than all the qualified trust beneficiaries consent, the court may terminate the trust if the following apply:

(i) if the trustee and all of the qualified trust beneficiaries had consented, the trust could have been modified under MCL 700.7411(5), and

(ii) the interests of a qualified trust beneficiary who does not consent will be adequately protected.

MCL 700.7411(1)(a).

 

Trusts :

Posted November 20, 2018

A court may construe the terms of a trust instrument to carry out the, decedent original Trustee or "settlor", intent. However, an appropriately executed trust instrument is to be given effect according to its terms, and, in determining the settlor’s intent, the court must first look to the expression of intent in the trust instrument and construe the instrument so that each word has meaning, to the extent possible. (extrinsic evidence may be introduced to determine intent only when the estate-planning documents are internally inconsistent). The intent of the settlor as gathered from the entire trust instrument controls an apparently inconsistent term when the inconsistency cannot be reconciled. Generally, the rules of construction that apply to deeds, contracts, and other written instruments apply to trusts. EPIC also contains specific rules of construction that are applicable to trusts, including the following:

  • An individual who does not survive an event by 120 hours is considered to have predeceased the event.
  • The donor’s intent in requiring that a power of appointment be exercised by specific reference is presumed to be to prevent an inadvertent exercise of the power..
  • Adopted and illegitimate individuals and their descendants are included in class gifts in accordance with the rules for intestate succession.
  • Terms of relationship that do not differentiate between blood relationships and affinity relationships (e.g., nieces and nephews) are construed to exclude affinity relationships.
  • Terms of relationship that do not differentiate between relationships by the half blood and by the whole blood (e.g., brothers and sisters) are construed to include both types of relationships.
  • Antilapse provisions may apply to preserve the interest of a deceased beneficiary for his or her surviving descendants.
  • Multigenerational class gifts that do not specify the manner in which the property is to be distributed among class members are to be distributed according to the laws of intestate succession.
  • Property that is to be distributed by representation is to be distributed on a per capita at each generation basis.
  • Age of majority means the legal age of majority in effect when the trust instrument was executed. MCL 700.2721.

 

Charitable Trusts

Posted October 14, 2018

A charitable trust may be created for the relief of poverty, the advancement of education or religion, the promotion of health, scientific, literary, benevolent, governmental, or municipal purposes, any purpose described in section 501(c)(3) of the internal revenue code, 26 USC 501, or other purposes the achievement of which is beneficial to the community.

If the terms of a charitable trust do not identify a particular charitable purpose or beneficiary, the court may select 1 or more charitable purposes or beneficiaries. The selection shall be consistent with the settlor's intention to the extent it can be ascertained. The settlor, a named beneficiary, or the attorney general of this state, among others, may maintain a proceeding to enforce a charitable trust. The right of the settlor of a charitable trust to enforce the trust is personal to the settlor and may not be exercised by any of the following:

  • The settlor's heirs, assigns, or beneficiaries.
  • The settlor's fiduciary, other than the trustee of the charitable trust the enforcement of which is being sought.
  • An agent of the settlor acting pursuant to a durable power of attorney, unless the right to enforce the trust is expressly conferred on the agent by the power of attorney.

MCL 700.7405

 

 

 

 

Disclaimer