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Failure To Fulfill Trust Requirements As Grounds For Trust Termination

November 11, 2015

Authors

Luke Lantta

Failure To Fulfill Trust Requirements As Grounds For Trust Termination

November 11, 2015

by: Luke Lantta

Trust instruments occasionally permit the trustees – sometimes with or without the beneficiaries’ consent – to terminate the trust early under certain circumstances.  Why continue a trust or be forced to go into court when, for example, its purpose has been fulfilled?  The Elaine Radlick-Trupp Revocable Trust gave the trustees broad authority to terminate the trust.  The trustees could discontinue the trust when they determined discontinuance to be justified, when it was not economically sound to continue, or when they determined that termination was in the best interests of the beneficiaries because of unforeseen circumstances.  In the Michigan case of Trupp v. Naughton (unpublished), several of the co-trustees of the trust may have inadvertently triggered the termination provision through their actions.

The trust contained two real properties and we will focus on

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When Trying To Invalidate A Trust, You Can’t Have Your Cake And Eat It Too

October 15, 2014

Authors

Luke Lantta

When Trying To Invalidate A Trust, You Can’t Have Your Cake And Eat It Too

October 15, 2014

by: Luke Lantta

If you want to challenge a trust’s validity, you can’t also accept a distribution from that trust.  You have to choose.  This is known as the doctrine of election.  In fact, as the Michigan Court of Appeals recently determined in In re William W. Weigle Revocable Trust (unpublished), in Michigan, once you’ve filed suit, you can’t then try to give it back.

In this case, William W. Weigle executed a trust amendment in 2007 under which the petitioners – who were Weigle’s neighbors – were to receive a one-half interest in Weigle’s house and 72% of the balance of the trust assets while respondent – who was also Weigle’s neighbor – was to receive the remaining 19% of the trust’s assets.  Weigle later amended his trust to grant petitioners all interest in the house

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Federal Appellate Court Affirms Dismissal Of Widow’s Action For Damages Against Trustees For Filing Fraudulent Information Return

October 10, 2013

Authors

Tiffany McKenzie

Federal Appellate Court Affirms Dismissal Of Widow’s Action For Damages Against Trustees For Filing Fraudulent Information Return

October 10, 2013

by: Tiffany McKenzie

Update: On October 1, 2013, in Vandenheede v. Vecchio, the U.S. Court of Appeals for the Sixth Circuit affirmed the U.S. District Court for the Eastern District of Michigan’s judgment for the Defendants Vecchio and Borschke.   Plaintiff Mary C. Vandenheede sued Defendants alleging tax fraud under 26 U.S.C. § 7434.   The district court granted Defendants’ motion for summary judgment based on the fact that violations of 26 U.S.C. § 7434(a) fall on the “filer,” and not on every person involved in preparing the return.  The Court upheld the district court’s judgment because the Plaintiff failed to provide particularized facts from which one could infer that the Defendants knowingly issued false returns to the IRS.  Also, the Court stated that the Plaintiff failed to suggest a different or preferable way in which the Defendants should have categorized payments to her on the tax returns.

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Equity Will Not Interfere With Plain Language Of Trust Instrument And Trust Settlement Agreement

August 6, 2013

Authors

Luke Lantta

Equity Will Not Interfere With Plain Language Of Trust Instrument And Trust Settlement Agreement

August 6, 2013

by: Luke Lantta

Just how controlling is a trust instrument?  Even though a court may have the equitable power to modify a trust instrument or trust settlement agreement, the Court of Appeals of Michigan‘s opinion in In re George W. Scheer Inter-Vivos Trust reminds us of just how reluctant a court may be to allow equity to interfere with the plain language of a trust.

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Michigan Allows Guardians And Conservators To File Divorce Complaints On Behalf Of Their Wards

May 7, 2013

Authors

Luke Lantta

Michigan Allows Guardians And Conservators To File Divorce Complaints On Behalf Of Their Wards

May 7, 2013

by: Luke Lantta

Not surprisingly, in Estate of Burnett, the Michigan Court of Appeals reaffirmed that a guardian or conservator can file a complaint for divorce on behalf of the incapacitated spouse over whom the guardianship or conservatorship is placed.

For the family law readers out there, the other interesting question answered by the appellate court was that the trial court had jurisdiction to enter a judgment of divorce between married persons of the same sex even though Michigan’s state constitution prohibits recognition of a marriage entered into by two individuals of the same sex.  Click on the link above for more details.

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Court Dismisses Widow’s Action For Damages Against Trustees For Allegedly Fraudulent Information Return

April 5, 2013

Authors

Tiffany McKenzie and Steve Dawson

Court Dismisses Widow’s Action For Damages Against Trustees For Allegedly Fraudulent Information Return

April 5, 2013

by: Tiffany McKenzie and Steve Dawson

Right now we are all in the peak of tax return filing season.  As part of the tax return process, many tax practitioners file information returns for the entities they represent. Any person, including a corporation, partnership, individual, estate, and trust, who makes a payment (such for as rent, wages, salaries, and annuities) must file an information return with the IRS to report the payment.  But what happens if a false information return is filed with the IRS?

In 1996, Congress enacted 26 U.S.C. § 7434(a), which gives victims of fraudulent filing activities a damage remedy against the perpetrators.  The provision applies whenever “any person willfully files a fraudulent information return with respect to payments purported to be made to any other person.”  It allows the subject of the false information return to recover from the person filing the return the greater of $5,000 or actual

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Cover Page Of Trust Instrument Contradicted Text Of Trust Instrument

October 5, 2012

Authors

Luke Lantta

Cover Page Of Trust Instrument Contradicted Text Of Trust Instrument

October 5, 2012

by: Luke Lantta

When updating a particular estate planning document, it’s a good idea to double check that all estate planning documents reflect the testator or grantor’s desired changes.  So, for example, if you update a will, then it’s good practice to double check that you update any corresponding or affected language in a related trust document.  And, if you’re in the habit of using cover pages for trust documents, it’s best to make sure that the cover page actually reflects the text of the trust instrument.

In In re Eleanor V. Mirek Trust (unpublished), Joanne Kloss contended that Eleanor V. Mirek intended that she be the successor trustee of Mirek’s revocable trust upon Mirek’s death.  The Michigan probate court that heard the case, however, found that Mirek intended for her nephew, Warren Kriskywicz, to serve as the successor trustee.

To reach this decision, the probate court had to

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