Childress Trust, In re

• Decision Date: 18 May 1992
• Docket Number: Docket No. 122642
• Citation: 486 N.W.2d 141,194 Mich.App. 319
• Parties: In re CHILDRESS TRUST. Denise CHILDRESS, for herself and as personal representative of the Estate of Jimmy Dale Childress, a disappeared person, Petitioner-Appellant, v. Leonard J. ANGEL, Trustee, Respondent-Appellee.
• Court: Court of Appeal of Michigan — District of US

Page 141

486 N.W.2d 141

194 Mich.App. 319

In re CHILDRESS TRUST Denise CHILDRESS, for herself and as personal representative of the Estate of Jimmy Dale Childress, a disappeared person Petitioner-Appellant, v. Leonard J. ANGEL, Trustee, Respondent-Appellee.

Docket No. 122642.

Court of Appeals of Michigan.

Submitted December 10, 1991, at Detroit.

Decided May 18, 1992, at 9:30 a.m.

Released for Publication Aug. 3, 1992.

Moceri, Hoste & Bejin, P.C., by Thomas H. Bejin, Mount Clemens, for petitioner-appellant.

Rupp, Ehrlich, Foley & Serwer, P.C., by Joseph H. Ehrlich, Troy, for Leonard J. Angel.

Before MICHAEL J. KELLY, P.J., and SULLIVAN and CONNOR, JJ.

SULLIVAN, Judge.

Petitioner appeals as of right from a probate court order denying her petition for supervision of a trust. Petitioner claims that the probate court erred in characterizing her interest as contingent, and in denying on that basis her request for information and an accounting. We reverse and remand for further proceedings.

Petitioner's grandfather, Hugh M. Childress, was settlor and trustee of an inter vivos trust created in 1980. In 1988, upon Hugh Childress' death, the trust became irrevocable and respondent became the successor trustee. Respondent has provided this Court with only a redacted copy of the trust instrument. It appears, however, that the trust provides for discretionary payments from principal and income for the support of a lifetime beneficiary and for the remainder to go to petitioner and her father. ¹ The trust instrument provides for alternative distribution of the remainder interests in the event the remaindermen do not survive the life beneficiary.

Petitioner requested a copy of the trust and a list of the assets. When the trustee refused, petitioner filed her petition in probate court. Initially, the trustee refused to disclose the requested information, claiming that the income beneficiary feared petitioner because of her alleged drug use. At the evidentiary hearing that the probate court ordered with regard to this alarming charge, the trustee abandoned that claim. Instead, he argued that he was obligated to disclose only minimal information to petitioner because she was a contingent beneficiary and, under Sec. 814 of the Revised Probate Code, M.C.L. Sec. 700.814; M.S.A. Sec. 27.5814, only "presently vested beneficiaries" are entitled to more extensive disclosures.

After an in camera review of a complete copy of the trust instrument, the probate court issued its opinion and order, finding petitioner's interest to be contingent. The court then ruled that the trustee had given petitioner all the information to which she was entitled under the statute, that is, a copy of the portions of the trust instrument that described her interest. The court required the trustee to post a $100,000 bond and reminded the trustee of his duty to notify petitioner upon the death of the income beneficiary. In this appeal, petitioner argues that she has a vested interest in the remainder of the trust, and that the code entitles her to information about the trust and its administration. We agree with petitioner and reverse the order of the probate court.

A vested interest is one that is capable of becoming possessory immediately upon the expiration of the preceding estate. Stevens Mineral Co. v. Michigan, 164 Mich.App. 692, 696, 418 N.W.2d 130 (1987). Our Supreme Court has labeled an interest such as petitioner's a vested remainder interest subject to defeasance. In re Jamieson Estate, 374 Mich. 231, 236, 132 N.W.2d 1 (1965). The probate court and the trustee have miscast petitioner's interest in the trust as a contingent interest in the remainder. The trustee relies on two "contingencies": (1) that petitioner must survive the primary income beneficiary, and (2) that there must be assets left in the trust after the primary beneficiary's death. These are not conditions that render a remainder interest contingent rather than vested.

A remainder interest vests upon the death of the grantor, not upon the death of the life tenant. In re Hurd's Estate, 303 Mich. 504, 509, 6 N.W.2d 758 (1942); In re Patterson's Estate, 227 Mich. 486, 489-491, 198 N.W. 958 (1924). The possibility of the death of the remainderman before the life tenant does not prevent taking a vested remainder. Hurd's Estate, supra; Holmes v. Holmes, 215 Mich. 112, 117, 183 N.W. 784 (1921).

A remainder interest that becomes possessory upon the death of the lifetime beneficiary is vested even if the holder of the life interest may invade the principal and has discretion to exhaust the corpus. Broas v. Broas, 153 Mich. 310, 311-312, 116 N.W. 1077 (1908). Where the trust provides that the trustee may invade the entire corpus of the estate if necessary to support and provide medical care for the income beneficiary, the persons named as being entitled to the corpus upon the death of the income beneficiary have a vested remainder interest in the corpus of the trust subject to defeasance if the entire corpus is used as described. Glaser's Elevator & Lumber Co. v. Lee Homes, Inc., 65 Mich.App. 328, 331, 237 N.W.2d 312 (1975).

Thus, petitioner has a vested interest in the remainder subject to defeasance in the event she dies before the income beneficiary or before the trust corpus is depleted. ² The next question is whether a person with a vested future interest is entitled to information regarding the trust administration under the Revised Probate Code. We hold that she is.

The statute includes holders of both vested and contingent remainder interests in its definition of "beneficiary." M.C.L. Sec. 700.3(2); M.S.A. Sec. 27.5003(2). There is no statutory distinction among classes of beneficiaries except in Sec. 814, regarding the trustee's duty to keep beneficiaries informed. M.C.L. Sec. 700.814; M.S.A. Sec. 27.5814. The relevant portions of this section state:

(1) The trustee shall keep the presently vested beneficiaries of the trust reasonably informed of the trust and its administration.

(2) Within 30 days after his acceptance of the trust, the trustee shall inform in writing the presently vested beneficiaries and if possible, 1 or more persons who may represent beneficiaries with future interests, of his name and address and of the court in which the trust is registered or probated, and, further, advise the beneficiary that he has the right to request and receive a copy of the terms of the trust which describe or affect his interest and relevant information about the assets and administration of the trust.

(3) Upon reasonable request, the trustee shall provide the beneficiary with a copy of the terms of the trust which describe or affect his interest and with relevant information about the assets of the trust and the particulars relating to the administration.

(4) The trustee shall provide to each presently vested beneficiary a statement of the accounts of the trust annually and on termination of the trust or change of the trustee.

The trustee contends that petitioner is a beneficiary, but not a "presently vested beneficiary." Consequently, according to the trustee, she is entitled, under subsections 2 and 3, to a copy of the terms of the trust that describe or affect her interest, and the trustee has given that to her. He ignores the provisions requiring that the trustee also give each beneficiary "relevant information about the assets and administration of the trust." Petitioner is entitled to that information and more.

The term "presently vested beneficiaries" as used in subsections 1, 2, and 4 has not been construed in a reported decision. In subsection 2, the term is used to describe the rights of that class of beneficiaries, seemingly in contrast to the rights of "beneficiaries with future interests." Further confusion arises from the last phrase of this subsection that uses the bare term "beneficiary" to state that the trustee must inform beneficiaries of their rights to receive a copy of relevant parts of the trust document and information about trust assets and administration. Given that petitioner is a "presently vested beneficiary" with a "future interest" in the trust, it is not clear whether the Legislature intended that she be entitled to full disclosure. Because of this ambiguity, judicial construction of the statute is appropriate. Dep't of Social Services v. Brewer, 180 Mich.App. 82, 84, 446 N.W.2d 593 (1989).

In enacting the trust provisions of the Revised Probate Code, the Legislature adopted much of the Uniform Probate Code (UPC). See House Legislative Analysis, HB 4475, January 30, 1979, p. 10. There are, however, significant differences between the uniform act and the pertinent provisions of Michigan's statute. In construing an amendment of a statute, we presume that a change in phrasing implies an intent to change the meaning as well. Greek v. Bassett, 112 Mich.App. 556, 562, 316 N.W.2d 489 (1982). The presumption does not apply in this case because we are concerned with the adoption of a statute from a model act, not an amendment of an existing statute. The principle, however, is useful. The Legislature began with the model act; we may reasonably assume that deviations from the language of that act...