Court Opinion

ID: 8487021
Source: CourtListenerOpinion
Date Created: 2022-11-18 05:06:13.185487+00
Date Added: 2024-06-11T16:49:57.468732
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 HENRY HAWKINS MEMORIAL FAMILY
EDUCATIONAL TRUST.

SIERRA JEFFERSON and AMINAH JOHNSON-                                  UNPUBLISHED
JEFFERSON,                                                            November 17, 2022

               Appellants,

v                                                                     No. 359029
                                                                      Washtenaw Probate Court
CHANA HAWKINS and KAROLYN SCOTT,                                      LC No. 21-000643-TT
Trustees of the HENRY HAWKINS MEMORIAL
FAMILY EDUCATIONAL TRUST,

               Appellees.

Before: HOOD, P.J., and JANSEN and K. F. KELLY, JJ.

PER CURIAM.

        Appellants, Sierra Jefferson and Aminah Johnson-Jefferson, appeal by right the trial court’s
order of instructions terminating the Henry Hawkins Memorial Family Educational Trust and
denying appellants’ request for accounting. Because we conclude that the trial court erred when
it determined that appellants were not entitled to an accounting, we reverse the portion of the order
denying that request and remand with instructions to the trial court to enter an order directing the
trustees to provide an accounting that complies with the requirements of MCL 700.7814(3).

                       I. BASIC FACTS AND PROCEDURAL HISTORY

         On February 2, 1995, Henry Hawkins executed a will in which he established the Henry
Hawkins Memorial Family Educational Trust Fund (the “Trust”). The Trust was funded with
$100,000 from Hawkins’s estate and was for the use and benefit of lineal descendants of three of
his family members. The money from the Trust was to be used “for the purpose of giving financial
assistance to qualified lineal descendants who wish to obtain a post-high school education, either
at a trade or technic[a]l school, a two year college, a four year college or university, or a graduate

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or professional school.” The Trust afforded the trustees with broad discretion to administer the
funds, including to whom the funds would be awarded, how much, and when.

        Hawkins died sometime in 2001, and by its own terms, the Trust was to terminate 20 years
after his death. Accordingly, on June 9, 2021, appellees Chana Hawkins and Karolyn Scott, two
of the Trust’s three trustees, petitioned the trial court for instructions relative to termination of the
Trust and distribution of its residue. Although appellants, who were applicants for financial
assistance during the life of the Trust,1 did not object to the termination of the Trust, they petitioned
the court for a full accounting of the Trust’s funds, claiming such accounting was never received
during the life of the Trust. Concluding appellants were “qualified trust applicants” but not
“qualified trust beneficiaries,” the trial court denied the request. This appeal followed.

                                   II. STANDARDS OF REVIEW

        This Court reviews de novo the trial court’s interpretation of a trust. In re Theodora
Nickels Herbert Trust, 303 Mich App 456, 458; 844 NW2d 163 (2013). The Court also reviews
de novo issues of statutory interpretation. In re Estate of Koch, 322 Mich App 383, 392; 912
NW2d 205 (2017). A trial court’s findings of fact are reviewed for clear error. In re Filibeck
Estate, 305 Mich App 550, 553; 853 NW2d 448 (2014). “Clear error occurs when this Court is
left with the definite and firm conviction that a mistake has been made.” Skaates v Kayser, 333
Mich App 61, 81-82; 959 NW2d 33 (2020) (quotation marks and citation omitted).

                                          III. DISCUSSION

        The Court’s goal when interpreting a statute is to give effect to the intent of the Legislature.
In re Estate of Koch, 322 Mich App at 392. “If the statutory language is unambiguous, this Court
must enforce the statute as written.” Id. at 393. “The provisions in EPIC must be liberally
construed and applied to promote its underlying purposes and policies, including to discover and
make effective a decedent’s intent in distribution of the decedent’s property[.]” In re Estate of
Horton, 325 Mich App 325, 330; 925 NW2d 207 (2018) (quotation marks and citations omitted).

        Under MCL 700.7814(1), a trustee is required to “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 the request is “unreasonable under the circumstances, a
trustee shall promptly respond to a trust beneficiary’s request for information related to the
administration of the trust.” Id. In addition, the statute requires that:

                 A trustee shall send to the distributees or permissible distributees of trust
         income or principal, and to other qualified or nonqualified trust beneficiaries who
         request it, at least annually and at the termination of the trust, a report of the trust
         property, liabilities, receipts, and disbursements, including the source and amount
         of the trustee’s compensation, a listing of the trust property and, if feasible, their
         respective market values, and, if applicable, any disclosure required under section
         7802(5). In the trustee’s discretion, the trustee may provide the report to any trust

1
    In addition to being an applicant, Sierra Jefferson was awarded funds from the Trust in 2018.

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       beneficiary. Upon a vacancy in a trusteeship, unless a cotrustee remains in office,
       a report shall be sent to the qualified trust beneficiaries by the former trustee. A
       personal representative, conservator, or guardian may send the qualified trust
       beneficiaries a report on behalf of a deceased or incapacitated trustee. [MCL
       700.7814(3).]

        Thus, under MCL 700.7814, there are four classes of persons that are entitled to some form
of accounting: distributees, permissible distributees, qualified trust beneficiaries, and nonqualified
trust beneficiaries. Distributees and permissible distributees are to receive the information “at least
annually and at the termination of the trust,” while qualified and nonqualified beneficiaries are to
receive it only if they request it.

       The term “distributee” is defined by statute:

       “Distributee” means a person that receives a decedent’s property from the
       decedent’s personal representative or trust property from the trustee other than as a
       creditor or purchaser. A trustee of a trust created by will is a distributee only to the
       extent that distributed property or an increment of the distributed property remains
       in the trustee’s hands. A beneficiary of a trust created by will to whom the trustee
       distributes property received from a personal representative is a distributee of the
       personal representative. For the purposes of this subdivision, “trustee of a trust
       created by will” includes a trustee to whom property is transferred by will to the
       extent of the devised property. [MCL 700.1103(o).]

The term “permissible distributee,” however, is not defined by statute. This Court has interpreted
the term to mean “a person who is permitted, not entitled, to receive trust property from the trustee
other than as a creditor or purchaser.” In re Rhea Brody Living Trust (On Remand), 325 Mich App
476, 483; 925 NW2d 921 (2018), vacated in part on other grounds 504 Mich 882 (2019).

       In turn, the term “qualified trust beneficiary” is defined under MCL 700.7103(g) as:

       a trust beneficiary to whom 1 or more of the following apply on the date the trust
       beneficiary’s qualification is determined:

             (i) The trust beneficiary is a distributee or permissible distributee of trust
       income or principal.

               (ii) The trust beneficiary would be a distributee or permissible distributee
       of trust income or principal if the interests of the distributees under the trust
       described in subparagraph (i) terminated on that date without causing the trust to
       terminate.

                (iii) The trust beneficiary would be a distributee or permissible distributee
       of trust income or principal if the trust terminated on that date.

The term “nonqualified trust beneficiary” is not defined by statute and has not been interpreted by
the Court. Presumably, a nonqualified trust beneficiary would be one who is a trust beneficiary
but does not fall within the three categories listed in MCL 700.7103(g).

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         Appellants assert that the trial court erred when it determined that appellants were not
qualified trust beneficiaries and, therefore, not entitled to an accounting of the Trust under MCL
700.7814. In appellants’ view, the trial court misinterpreted the statute when concluding they were
not qualified trust beneficiaries entitled to an accounting. In denying appellants’ request, the court
considered appellants to be “qualified trust applicant[s]” but not “qualified trust beneficiar[ies],”
and made reference to the broad discretion afforded to the trustees, the limitations on the trustees’
civil liability, and the fact that recipients could not object to the award or amount of assistance
provided by the Trust. We agree with appellants that the trial court erred when it concluded they
were not entitled to an accounting.

        Sierra Jefferson asked for and received a $3,000 distribution from the Trust in 2018 for use
in her higher education. She also asked for, and may have received, other distributions from the
Trust in 2019. There is no question that Sierra Jefferson was not entitled to these distributions,
thus making her a permissible distributee under MCL 700.7814(3). And as a permissible
distributee, Sierra Jefferson was supposed to receive annually and at the termination of the Trust
“a report of the trust property, liabilities, receipts, and disbursements, including the source and
amount of the trustee’s compensation, a listing of the trust property and, if feasible, their respective
market values, and, if applicable, any disclosure required under section 7802(5).” MCL
700.7814(3).

        The record regarding Aminah Johnson-Jefferson is less clear. Appellants assert that she
asked for, and was told she would be given, distributions from the Trust. There does not appear
to be record evidence of this, however. Nevertheless, there does not appear to be any dispute from
appellees that she was otherwise eligible to receive Trust distributions should they be awarded.
Thus, like Sierra Jefferson, Aminah Johnson-Jefferson was permitted, but not entitled to,
distributions from the Trust, making her a permissible distributee under MCL 700.7418.

        Both appellants are permissible distributees under the Trust, as well as qualified trust
beneficiaries. First, appellants are “trust beneficiaries” under MCL 700.7103(l)(i) because they
have a contingent present or future beneficial interest in the Trust. See In re Rhea Brody Living
Trust, 325 Mich App at 480 (defining beneficial interest as “[a] right or expectancy in something
(such as a trust or an estate), as opposed to legal title to that thing.”). Appellants’ interest was
contingent, and not vested, because their request for assistance had to be approved by the trustees.
Moreover, as explained above, appellants are permissible distributees under MCL 700.7814(3),
thus making them qualified trust beneficiaries under MCL 700.7103(g)(i).

        As qualified trust beneficiaries and permissible distributees of the Trust, appellants were
entitled to receive “a report of the trust property, liabilities, receipts, and disbursements, including
the source and amount of the trustee’s compensation, a listing of the trust property and, if feasible,
their respective market values . . . .” MCL 700.7814(3). Although appellants received some
documentation of the Trust in the form of bank records, there is no dispute that appellants did not
receive, at minimum, the “disbursements” made by the trustees to other financial-assistance
applicants. Therefore, we reverse the portion of the trial court’s order that denied appellants’
request for an accounting and remand for entry of an order directing the trustees to provide an
accounting that complies with the requirements of MCL 700.7814(3).

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        Reversed and remanded for further proceedings consistent with this opinion. We do not
retain jurisdiction. Appellants, as the prevailing parties, may tax costs. MCR 7.219(A).

                                                         /s/ Noah P. Hood
                                                         /s/ Kathleen Jansen
                                                         /s/ Kirsten Frank Kelly

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