Trust

 

Filing Procedures -

Trust - Petition to Establish

Michigan law prohibits court employees from providing legal advice and completing forms, petitions, or documents. MCL 700.1211


When would a petition for a trust be filed?

There are several circumstances under which a petition to establish a trust would be filed. The most common are:

I. A party may petition the Court for permission to establish a trust under certain circumstances. These include: A conservator wishes to establish a trust for a protected individual or a developmentally disabled individual (due to an out-of-court settlement, to preserve eligibility for Medicaid or other government benefits, etc.).

If a Judge approves the creation of a trust and supervision is ordered in an existing Conservatorship case or Developmental Disability case, a separate trust file must be created by filing a Petition for Supervision of Trust and to Qualify Trustee, which will include the trust document.

II. No conservatorship exists, but an individual wishes to establish a trust - typically for a minor – due to an out-of-court settlement, to preserve eligibility for Medicaid or other government benefits, etc.

If a Judge grants the Protective Order, a separate trust file must be created by filing a Petition for Supervision of Trust and to Qualify Trustee which will include the trust document.

III. A Circuit Court settlement provides for the establishment of a trust for a minor or legally incapacitated individual. No conservatorship is established. Per court rule, the trust must be approved by the Probate Court.

IV. Typically, there is no preexisting active trust file when a petition of this type is filed. A party may petition the Probate Court for supervision of a trust, for the court to order specific action, or to obtain the court’s approval for a particular action, for example:

• Supervision requested because trust beneficiary believes trustee is not acting correctly.
• Request for termination of trust, removal of trustee, release of trust document, distribution of money, to compel an accounting, objection to attorney and/or trustee fees, etc.
• Trustee seeks formal approval of exercise of power under trust (i.e., make distribution, tax election, change of investments, etc.).
• Trustee (or other interested person) seeks approval to alter, reform, or terminate trust

Petition to Establish Trust for Protected Individual or Individual with a Developmental Disability

This process is used if a conservatorship or developmental disability case exists for the person.

1. Form Used: No SCAO form; attorney drafted. Typically titled “Petition for Authority to Establish Trust.”

2. Filed as part of a conservatorship (CY or CA) or developmental disability (DD) case, as applicable.

3. If petition is granted, the Trustee must open a new TV case by filing the following documents:

• Petition to Qualify Trustee (if no supervision). No SCAO form; attorney drafted.
• Petition for Supervision of Trust and to Qualify Trustee (if ordered supervised). No SCAO form; attorney drafted and a copy of the Trust.
• Acceptance of Appointment (AOA). Note: Under EPIC, Letters of Authority are not issued to Trustees of any Trusts, inter vivos or otherwise.
• A copy of the order from the petition to establish trust.

4. If no assets will remain in the Conservatorship, the Conservator must file a Final Account. A receipt for the funds transferred to the Trust will be required from the Trustee to close the Conservatorship.

Petition for Protective Order to establish Trust

This process is used if no conservatorship or developmental disability case exists. In these situations, a protective order must be filed to obtain authorization to establish the trust.

1. Form Used: PC 639, Petition for Appointment of Conservator and/or Protective Order; attorney drafted form can also be accepted, either filed with the PC 639 or on its own.

2. It is filed as PO (Protective Order) case type.

3. If the petition is granted, the Trustee must open a new TV case by filing the following documents:

• Petition to Qualify Trustee (if no supervision). No SCAO form; attorney drafted.
• Petition for Supervision of Trust and to Qualify Trustee (if ordered supervised). No SCAO form; attorney drafted and a copy of the Trust.
• Acceptance of Appointment (AOA). Note: Under EPIC, Letters of Authority are not issued to Trustees of any Trusts, inter vivos or otherwise.
• A copy of the order from the petition to establish trust.

Petition for Approval of Trust (Circuit Court Settlement)

What is it? MCR 2.420 is a court rule that contains the procedures for settlements for minors and legally incapacitated individuals. It states:

(5) If a settlement or judgment provides for the creation of a trust for the minor or legally incapacitated individual, the circuit court shall determine the amount to be paid to the trust, but the trust shall not be funded without prior approval of the trust by the probate court pursuant to notice to all interested persons and a hearing.

Note: No conservatorship is established in these situations.

1. Form Used: No form; attorney drafted. May be called “Petition for Approval of Trust – Circuit Court Settlement.” and a copy of the Trust

2. It is filed as a Trust Inter Vivos (TV) case type.

3. A hearing is required.

4. If the petition is granted, and supervision is not ordered, the case is closed.

5. If the petition is granted, and supervision is ordered:

• If bond required as part of the order, it must be filed with the Court.
Note: A bond is not required unless ordered by the Judge. Approval of the trust will be delayed until any required bond is submitted and approved by the Court.
• The Trustee is to file an inventory and annual accounts.

Trust - Petition For Supervision/Litigation

1. Form Used: No set form; attorney drafted. Title would typically reflect relief
requested: i.e., Petition for Removal of Trustee, Petition to Terminate Trust,
Petition to Reform Trust, Petition to Compel Accounting, etc. and a copy of the
Trust, if applicable.

2. Case Type: TV if an inter vivos (i.e., revocable living) trust; TT if a testamentary
trust (i.e., trust under will).

• If granted, and supervision is not ordered, the case will be closed.

Examples of cases to be closed after hearing:
- Trust terminated
- Trust amended/altered
- Exercise of trust power granted/denied (i.e., make distribution, tax election,
change of investments, etc.)

- Trustee resigns and replaced by successor trustee

• If granted, and supervision is ordered, the case will remain open.

Examples of supervision of trust cases to be kept open after hearing:
- Trustee directed to provide account(s) to beneficiaries.
- Trustee removed and directed to file final account(s).
- Successor trustee appointed and directed to provide accounts.

• If continuing administration is ordered, the trustee is to file inventory and annual accounts. Under EPIC, Letters of Authority are not issued to Trustees of any Trusts, inter vivos or otherwise.


Rev 05/2022