Court Opinion

ID: 9353932
Source: CourtListenerOpinion
Date Created: 2023-01-13 05:10:10.918603+00
Date Added: 2024-06-11T17:10:20.220623
License: Public Domain

If this opinion indicates that it is “FOR PUBLICATION,” it is subject to
                 revision until final publication in the Michigan Appeals Reports.

                            STATE OF MICHIGAN

                            COURT OF APPEALS

In re CLAEYS REVOCABLE LIVING TRUST.

LORAINE CLAEYS,                                                      UNPUBLISHED
                                                                     January 12, 2023
               Appellant,

V                                                                    No. 360054
                                                                     St. Clair Probate Court
THOMAS CLAEYS, Trustee of the CLAEYS                                 LC No. 18-000604-TV
REVOCABLE LIVING TRUST,

               Appellee.

In re ESTATE OF BERNARD CLAEYS.

THOMAS CLAEYS,

               Appellee,
V                                                                    No. 360068
                                                                     St. Clair Probate Court
LORAINE CLAEYS,                                                      LC No. 16-000211-DE

               Appellant.

Before: JANSEN, P.J., and SERVITTO and GADOLA, JJ.

PER CURIAM.

       In these consolidated cases, Loraine Claeys appeals as of right an order of the probate court
approving the sale of certain real estate held in the Claeys Revocable Living Trust (the Trust), of
which she, along with appellee Thomas Claeys, were the beneficiaries. We affirm.

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                                             I. FACTS

        In October 2006, Bernard Claeys executed a will and, along with his wife, Terese Claeys,
a revocable trust. The will placed all of his real property in the Trust, and directed that all of his
real and personal property be distributed according to the terms of the Trust. The Trust provided
for a few specific bequests of personal property, with the rest of the trust assets to be divided in
equal shares between the two beneficiaries—Thomas and Loraine Claeys. The Trust granted its
trustee broad authority to sell and distribute trust assets, which included thirteen parcels of real
estate. None of these parcels was included among the specific bequests. Four of those were
adjacent parcels fronting Lake St. Clair, including one containing the home where Bernard and
Terese resided, 9769 Dixie Highway, and its neighboring parcel, 9765 Dixie Highway.

        Terese predeceased Bernard, who then died in February 2016. The parties were designated
co-personal representatives and co-trustees, respectively, for Bernard’s estate and the Trust. They
began administering the Trust, but from the start could not agree on how to manage the trust assets.
In November 2018, appellant filed a petition to remove appellee as co-trustee and co-personal
representative. After a January 2019 hearing, the probate court removed appellant from those
positions, leaving Thomas Claeys as the sole trustee and personal representative.

        In April 2019, appellant filed a petition requesting the four lots as an in kind distribution
worth $527,000, which included 9765 and 9769 Dixie Highway, which she valued at $297,000. A
hearing followed, at which appellee argued that a higher price could be obtained for the four lots
if they were sold on the open market. The parties then agreed to list the four lots for $775,000. A
stipulated order was entered stating that the four lots would continue to be listed, and that future
sales of the Trust’s real estate would require court approval before closing. In August 2019,
appellant filed a second petition for distribution in kind of the four Dixie Highway lots, this time
for $548,000, of which 9765 and 9769 Dixie Highway constituted $318,000. A hearing followed,
at which appellee reiterated that the property was worth more than appellant’s offer. Appellee had
dropped the listing price for the four lots to $750,000, but offered them to appellant as an in-kind
distribution worth $600,000. Appellant did not accept this offer, and the four lots remained on the
market.

        In August 2021, appellee petitioned the probate court for approval to sell 9765 and 9769
Dixie Highway, having found a buyer offering $420,000. Appellee’s real estate broker testified
that this price was above the median sales price for other properties on the lake, many of which
were in better condition than 9765 and 9769 Dixie Highway. Appellant filed an objection,
requesting that 9769 Dixie Highway instead be distributed to her in kind. A hearing followed, in
which appellee stated that he was selling the two parcels together in order to obtain a higher price.
Appellant countered that she wanted both lots as an in kind distribution valued at $420,000. The
probate court approved the sale to appellee’s buyer, noting the extended time and difficulties that

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had been involved in administering the Trust.1 Appellant filed a motion for reconsideration, which
the probate court denied, and this appeal followed.

                                            II. ANALYSIS

       Appellant argues that the probate court erred by approving the sale of 9765 and 9769 Dixie
Highway instead of ordering them distributed to her in kind. “We review the probate court’s
findings of fact for clear error.” In re Redd Guardianship, 321 Mich App 398, 403; 909 NW2d
289 (2017). “We review the probate court’s dispositional rulings for an abuse of discretion,” which
occurs when its decision falls outside the range of reasonable and principled outcomes. Id.

       In In re Allen Estate, 150 Mich App 413, 416; 388 NW2d 705 (1986), this Court stated as
follows:
                A fundamental precept which governs the judicial review of wills is that the
        intent of the testator is to be carried out as nearly as possible. Where there is no
        ambiguity, that intention is to be gleaned from the four corners of the instrument.
        If a will evinces either a patent or a latent ambiguity, a court may establish intent
        by considering two outside sources: (1) surrounding circumstances, and (2) rules of
        construction. [Citations omitted.]

“The rules of construction applicable to wills also apply to the interpretation of trust documents.”
In re Reisman Estate, 266 Mich App 522, 527; 702 NW2d 658 (2005).

        The trust property at issue was part of the estate’s residue. The only direction for this
residue was that it be distributed “in equal shares” between appellant and appellee. The Trust
further authorized the trustee to effect distributions in kind or in cash “as it thinks fit,” and to sell
any real property “on such terms and for such consideration as it thinks fit.” Nowhere is any piece
of real property singled out. Appellant argues that a strong statutory preference for distributions
in kind should be respected in this case, citing MCL 700.3906(1). We find this argument
unpersuasive. MCL 700.3906(1) states, “Unless the will indicates a contrary intention, the
distributable property of a decedent’s estate shall be distributed in kind to the extent possible . . . .”
That statutory preference for distribution in kind is thus qualified by the words “to the extent
possible,” as well as deference to a will that has indicated “a contrary intention.” Accordingly, no
authority compelled the probate court to respect a preference for distributions in kind.

        The record also does not support the breach of fiduciary duty of which appellant accuses
appellee. “A trustee shall administer the trust solely in the interests of the trust beneficiaries.”
MCL 700.7802(1). Further, “the courts have imposed on the fiduciary duties of honesty, loyalty,
restraint from self-interest and good faith.” In re Green Charitable Trust, 172 Mich App 298, 313;
431 NW2d 492 (1988). Appellant argues that appellee has been blocking her from obtaining the
subject property for years out of spite. But our review of the record reveals a trustee attempting to

1
  The struggle over the four Dixie Highway lots was one of many disagreements over the
management of various trust assets about which the probate court had held hearings for over five
years.

                                                   -3-
get the highest possible price for valuable trust assets. The two offers appellant put forward for
9765 and 9769 Dixie Highway in 2019 were for lower amounts than the $420,000 offer appellee
eventually received. Also in 2019, appellant stipulated to an order to continue to attempt to sell
the property, indicating that in-kind distribution was not a necessity for her. Further, she declined
an offer from appellee to receive the four lots in kind for $150,000 less than the listing price. These
considerations suggest that appellee has acted honestly and in good faith.

        Appellant argues, for the first time on appeal, that an in kind distribution would be
preferable because of tens of thousands of dollars of savings in real estate commissions, closing
costs, transfer taxes, and title insurance. However, issue-preservation requirements “impose a
general prohibition against raising an issue for the first time on appeal.” Glasker-Davis v
Auvenshine, 333 Mich App 222, 227; 964 NW2d 809 (2020). In any event, appellant does not
offer evidentiary support concerning potential cost savings. Moreover, any cost savings would
have to be weighed against the additional administrative burdens in time and resources of trying
to balance a distribution in kind between two seemingly hostile parties, instead of simply selling
the subject property and dividing the proceeds.

        Appellant’s offer to match the $420,000 offer came after a buyer had finally been obtained,
after years of unsuccessfully listing the property for sale and ongoing contention between the
parties. We agree with appellee that, after years of questions about how much the Trust’s various
parcels of real property were actually worth, and disputes over how much each beneficiary had
withdrawn from trust proceeds, an injection of cash was preferable to frustrating the cash purchaser
and starting a new struggle over how to balance a distribution in kind. The trustee presented the
probate court with an offer to finally sell the property for an attractive price so that the even
distribution contemplated by the Trust could actually be realized. For these reasons, we conclude
that the probate court’s decision to approve this sale was within the realm of reasonable outcomes,
and was not an abuse of discretion.

       Affirmed.

                                                               /s/ Kathleen Jansen
                                                               /s/ Deborah A. Servitto
                                                               /s/ Michael F. Gadola

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