Court Opinion

ID: 4256561
Source: CourtListenerOpinion
Date Created: 2018-03-21 09:12:20.557866+00
Date Added: 2024-06-11T14:45:27.005300
License: Public Domain

STATE OF MICHIGAN

                            COURT OF APPEALS

In re PEARL FRANZEL IRREVOCABLE TRUST

MELISSA TIMMERMAN, Trustee of PEARL                                 UNPUBLISHED
FRANZEL IRREVOCABLE TRUST,                                          March 20, 2018

               Appellee,

v                                                                   No. 335447
                                                                    Sanilac Probate Court
RUSSELL FRANZEL,                                                    LC No. 16-032103-TV

               Appellant.

Before: MURRAY, P.J., and CAVANAGH and FORT HOOD, JJ.

PER CURIAM.

       Following a bench trial, the probate court entered an order denying appellant Russell
Franzel’s request for reimbursement of trust funds distributed to Roger Franzel and for removal
of appellee Melissa Timmerman as trustee. Appellant appeals as of right and we affirm.

        This case arises from the beneficiaries and the trustee agreeing to amend the distribution
of the trust after the settlor’s death; the facts are mostly undisputed. In August 2007, Pearl
Franzel established “The Pearl Franzel Trust” (the Trust). Pearl served as the initial trustee and
Timmerman, Pearl’s granddaughter, was named the successor trustee. The beneficiaries of the
Trust were Pearl’s six children (appellant, Roger Franzel, Ronald Franzel, Mary Lou Peruski,
Susan Woodward, and Kay Peruski), and two grandchildren of a deceased child (Brian Franzel
and Christine Franzel). Upon Pearl’s death, Roger was to receive a piece of real property, while
the other children and the grandchildren were to receive a proportional share of the Trust residue.
It appears that the Trust’s primary asset was an 80-acre farm.

        Pearl passed away in January 2015. After her funeral, Timmerman was approached by
the man who was leasing the farm. He offered to buy the farm for $600,000. Timmerman
convened a meeting to discuss the offer and all of the beneficiaries were present, except one who
participated by telephone. It was agreed that the offer would be accepted. However, at this
meeting Woodward proposed that Roger be included in the distribution of the Trust’s residue.
She explained at the trial that “[a]fter my mom had set up the trust, several years later, she
realized that things—that the land [presumably the 80-acre farm] was more valuable. And she

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had asked me to make sure that Roger got the same share as everybody else, except for
[appellant].”1 In other words, it appears that when the Trust was created, Pearl deemed the piece
of property that Roger was to receive as being roughly equal in value to the other sibling’s shares
of the Trust residue. But as the farm’s property value increased, Roger’s share of the Trust
became inferior. Two of the beneficiaries, as well as Timmerman, testified that all the
beneficiaries agreed to Woodward’s proposal. Appellant maintained that he did not consent to
the change. However, in February 2015, he undisputedly signed an agreement to that effect, as
did Timmerman and the other beneficiaries.

       In January 2016, Timmerman made the final distributions under the Trust. But, unlike
the other beneficiaries, disbursements to appellant were discretionary. Under the terms of the
Trust, Timmerman was to retain appellant’s share and make payments to him that she, “in her
sole and absolute discretion determines to be necessary for his health, welfare, and well being
keeping in mind any other source of income he might have.” At trial, Timmerman testified that
she was providing appellant $700 a month.

        In April 2016, appellant filed a petition seeking supervision of the Trust, removal of
Timmerman as trustee, and an accounting of the Trust, as well as other relief. Appellant made
numerous allegations of improprieties against Timmerman, including that she violated the terms
of the Trust by amending the distribution of the Trust. By the time of the September 2016 trial,
that was the primary issue before the probate court. Appellant also maintained that Timmerman
had to seek court approval of any modification to the Trust under MCL 700.7411(1)(a) and that
even if she had, the amendment to the Trust would not have been approved because it was
inconsistent with the material purpose of the Trust. Appellant requested that Timmerman be
removed as trustee and surcharged the amount of money “wrongfully” disbursed to Roger. At
the trial, however, appellant clarified that he was seeking reimbursement from Roger and “not
asking to surcharge [Timmerman].” Timmerman’s primary argument was that appellant’s claim
was barred by the doctrine of equitable estoppel.

        After the trial, the probate court issued an oral opinion denying appellant’s requested
relief. The court recognized that it was not being asked to construe or reform the terms of the
Trust, but it could not ignore that the “overriding public policy is to give the intent of the drafter
of the document what she wants.” With that in mind, the court found that “based on the
testimony,” “it was [Pearl’s] intent to reform this trust. That she wanted the children to receive
the same approximate amount, with [appellant] to receive approximately double, the
grandchildren to each receive by representation one-half of their deceased parent’s share.” The
court then determined that “the agreement was entered into by all the individuals voluntarily”
and “knowingly” and that “the modification or agreement that was entered was consistent with
the material purposes of the trust and that by making those findings, I am conforming to the
terms of what [Pearl’s] expressed intent was.” Thus, the court denied appellant’s request for

1
  Under the terms of the Trust, appellant was to receive twice as much as his other siblings. That
ratio was not changed by the subsequent amendment.

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reimbursement. The court also denied the request to remove Timmerman as trustee, as “it does
not appear to me that [she] has done anything wrong.”

        “[A]ppeals from a probate court decision are on the record, not de novo.” In re Temple
Marital Trust, 278 Mich. App. 122, 128; 748 NW2d 265 (2008). After a bench trial, a probate
court’s factual findings are reviewed for clear error. In re Bennett Estate, 255 Mich. App. 545,
549; 662 NW2d 772 (2003). “A finding is clearly erroneous when a reviewing court is left with
a definite and firm conviction that a mistake has been made, even if there is evidence to support
the finding.” Id. A probate court’s dispositional rulings are reviewed for an abuse of discretion.
In re Lundy Estate, 291 Mich. App. 347, 352; 804 NW2d 773 (2011). “A probate court’s decision
whether to surcharge a personal representative or a trustee is also reviewed for an abuse of
discretion.” In re Duane v Baldwin Trust, 274 Mich. App. 387, 397; 733 NW2d 419, aff’d 480
Mich. 915 (2007). An abuse of discretion occurs when the court “chooses an outcome outside the
range of reasonable and principled outcomes.” Temple Marital Trust, 278 Mich. App. at 128. We
review de novo the interpretation of a trust. In re Theodora Nickels Herbert Trust, 303 Mich
App 456, 458; 844 NW2d 163 (2013). Questions of statutory construction are also reviewed de
novo. Temple Marital Trust, 278 Mich. App. at 128.

       “[T]he Estates and Protected Individuals Code (EPIC), MCL 700.1101 et seq., governs
the application of a trust in Michigan.” In re Stillwell Trust, 299 Mich. App. 289, 294; 829 NW2d
353 (2012). Under EPIC, a probate court has exclusive jurisdiction over proceedings that
concern “the administration, distribution, modification, reformation, or termination of a trust[.]”
MCL 700.1302(b). A probate court also has concurrent jurisdiction to “[h]ear and decide a claim
by or against a fiduciary or trustee for the return of property.” MCL 700.1303(h).

       Appellant first claims that the probate court abused its discretion in denying him
reimbursement of his share of Trust that was distributed to Roger under the beneficiaries’
agreement. We note that, on appeal, appellant seeks reimbursement from Timmerman. But
appellant has effectively abandoned this request by maintaining at trial that he was seeking
reimbursement from Roger, not Timmerman. In any event, appellant fails to establish that the
probate court abused its discretion in denying his requested relief.

       We agree with appellant that the amendment violated the terms of the Trust. The Trust
allowed Pearl to amend the terms during her lifetime but, under the circumstances, her statement
to Woodward regarding Roger’s distribution was ineffective to accomplish an amendment. See
MCL 700.7602(3). The Trust also prohibited Timmerman from amending the terms. Although
Timmerman may not have initiated the amendment, it is undisputed that her assent to the
agreement was necessary. Indeed, the agreement begins by noting that “[t]his Agreement is
made by and among MELISSA TIMMERMAN, Successor Trustee of the PEARL FRANZEL
TRUST (Trustee), and the following persons who are heirs of Pearl Franzel and the beneficiaries
of the Pearl Franzel Trust[.]” Thus, Timmerman was a party to the agreement that effectively
amended the Trust. Therefore, she violated the terms prohibiting her from amending the Trust.

        However, as we read the court’s opinion, the court effectively approved the modification
of the Trust under MCL 700.7411(1)(a), which provides as follows:
       (1) Subject to subsection (2), a noncharitable irrevocable trust may be modified or
       terminated in any of the following ways:

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                (a) By the court upon the consent of the trustee and the qualified trust
       beneficiaries, if the court concludes that the modification or termination of the
       trust is consistent with the material purposes of the trust or that continuance of the
       trust is not necessary to achieve any material purpose of the trust.

We note that the probate court did not expressly reference MCL 700.7411(1)(a) in its ruling, but
appellant raised the statute’s relevance before the court and the court’s ruling tracks the statute’s
language: “Now I do find that the modification or agreement that was entered into was consistent
with material purposes of the trust and that by making those findings, I am conforming to the
terms of what her expressed intent was.” Therefore, we conclude that the probate court’s ruling
should be viewed as approving the modification of the Trust under MCL 700.7411(1)(a).

        Appellant takes issue with the probate court considering Woodward’s testimony in
determining Pearl’s intent regarding the amendment. When discerning the meaning of a trust, a
court must give effect to the settlor’s intent. Herbert Trust, 303 Mich. App. at 458. A court may
only look outside the document to determine the settlor’s intent if the terms of the trust are
ambiguous. Bill & Dena Brown Trust v Garcia, 312 Mich. App. 684, 693; 880 NW2d 269
(2015). In this case, however, the probate court expressly acknowledged that it was not being
asked to construe the meaning of the Trust. Rather, it appears that the probate court determined
Pearl’s intent for the purpose of deciding whether the modification complied with MCL
700.7411(1)(a). Appellant does not provide any authority suggesting that the probate court erred
by considering extrinsic evidence in determining the material purposes of the Trust. “On appeal,
in order for the appellant to receive relief, it has the burden to demonstrate that the lower court
erred as governed by the relevant standard of review.” Menard, Inc v City of Escanaba, 315
Mich. App. 512, 521 n 3; 891 NW2d 1 (2016). Therefore, we decline to reverse the probate court
on this ground.

        Indeed, appellant does not acknowledge that the probate court made the required finding
under MCL 700.7411(1)(a), arguing that a court would have likely denied a petition under that
statute “because the purported amendments violate the material purpose of the trust because the
amendments distribute monies to Roger Franzel at the cost of the remaining beneficiaries.”
Appellant does not elaborate on that position. But, fairly read, appellant suggests that a purpose
of the Trust was for Timmerman to retain appellant’s funds and make payment to him at her
discretion. The amendment violated that purpose, appellant argues, because he was allowed to
give a portion of his share to Roger. At trial, Timmerman testified that Pearl put the restrictions
on appellant’s share for two reasons: “One, mostly because she didn’t want him to lose his Social
Security benefits, or SSI, or whatever that was. And two to keep him from blowing it all.” Even
assuming that a purpose of the Trust was to prevent appellant’s careless spending, we do not find
that an agreement by all the beneficiaries and the trustee to include one of the sibling’s in the
distribution of the Trust’s residue, at a purported cost of $14,441.22, falls into that category.
Further, there is nothing in the record to suggest that the amendment had any effect on
appellant’s Supplemental Security income benefits. Thus, the probate court did not clearly err in
finding that the modification was consistent with the material purposes of the Trust.

        Appellant raises no other challenges to the probate court’s ruling on this matter, and
again, it was his burden to do so. See Menard, Inc, 315 Mich. App. at 521 n 3. We are not ruling
that, as a matter of law, the probate court properly applied MCL 700.7411(1)(a) in this case.
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Rather, appellant simply fails to present a persuasive argument for reversal. Aside from not
identifying error requiring reversal in the probate court’s MCL 700.7411(1)(a) ruling, appellant
does not cite to any statute or caselaw supporting his request for reimbursement from
Timmerman, which is his requested relief. “A party may not merely announce a position and
leave it to this Court to discover and rationalize the basis for the claim.” Nat’l Waterworks, Inc v
Int’l Fidelity & Surety, Ltd, 275 Mich. App. 256, 265; 739 NW2d 121 (2007). To the contrary,
“[t]he consent of a beneficiary to an act or omission of a trustee precludes the beneficiary from
holding the trustee liable for breach of his fiduciary duty of trust.” Preston v Granada Mgt
Corp, 188 Mich. App. 667, 672; 470 NW2d 411 (1991). Ultimately, the probate court denied
appellant’s request for reimbursement. For the reasons discussed, appellant fails to establish that
the probate court abused its discretion in making that determination.

      Appellant also argues that the probate court abused its discretion in declining to remove
Timmerman as trustee. We disagree. We review a probate court’s decision on whether to
remove a trustee for an abuse of discretion. In re Duane, 274 Mich. App. at 396.

        “In MCL 700.7706(2), the Legislature comprehensively codified a detailed list of
grounds containing specific requirements for the removal of a trustee.” In re Gerald L Pollack
Trust, 309 Mich. App. 125, 163; 867 NW2d 884 (2015). MCL 700.7706 provides, in relevant
part:
                (1) The settlor, a cotrustee, or a qualified trust beneficiary may request the
       court to remove a trustee, or a trustee may be removed by the court on its own
       initiative.

               (2) The court may remove a trustee if 1 or more of the following occur:

               (a) The trustee commits a serious breach of trust.

              (b) Lack of cooperation among cotrustees substantially impairs the
       administration of the trust.

               (c) Because of unfitness, unwillingness, or persistent failure of the trustee
       to administer the trust effectively, the court determines that removal of the trustee
       best serves the purposes of the trust.

               (d) There has been a substantial change of circumstances, the court finds
       that removal of the trustee best serves the interests of the trust beneficiaries and is
       not inconsistent with a material purpose of the trust, and a suitable cotrustee or
       successor trustee is available.

Appellant does not address MCL 700.7706 or identify a specific ground for Timmerman’s
removal. Instead, he relies on MCL 700.1308(1)(g), which allows a court to “[r]emove the
fiduciary as provided in this act” when a fiduciary breaches a duty to a beneficiary. But “where
a statute contains a general provision and a specific provision, the specific provision controls.”
Gebhardt v O’Rourke, 444 Mich. 535, 542; 510 NW2d 900 (1994). Regardless, appellant’s
argument is without merit. Appellant maintains that the Trust required Timmerman to keep his
share of the funds separate in a trust created under his name. The pertinent Trust provision

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provides that “[a]ny share of the trust to be conveyed and delivered to [appellant], except for
household furnishings and outdoor equipment, shall be retained in trust by the Successor Trustee
for the benefit of [appellant] on the following terms and conditions[.]” That provision simply
does not require the creation of a separate trust in appellant’s name. Rather, Timmerman must
hold appellant’s share for his benefit.

        Appellant also points to MCL 700.1212, which requires a fiduciary, in part, to segregate
“assets held in the fiduciary capacity.” MCL 700.1212(1). In this case, the probate court found
that Timmerman “has held the funds separately.” Appellant argues that that finding was
erroneous “because through Melissa Timmerman’s own testimony she admits that she is not
holding money in [appellant’s] name.” As discussed, however, the Trust does not require
Timmerman to hold appellant’s share of the Trust in his own name. Thus, appellant fails to
establish that the probate court’s finding on this matter was clearly erroneous or that it abused its
discretion in denying his request for removal.

       Affirmed. Appellee is entitled to tax costs as the prevailing party. MCR 7.219(A).

                                                              /s/ Mark J. Cavanagh
                                                              /s/ Karen M. Fort Hood

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