in Re Pearl Franzel Irrevocable Trust

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MELISSA TIMMERMAN, Trustee of PEARL UNPUBLISHED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

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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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