Beneficiaries and Trustees: What You Need to Know about Mediating a Contested Trust in Michigan

When a trust becomes contested – which can be tied to multiple factors including how it was written, its meaning, or the trustee’s handling of the process – there are ways to move forward under Michigan law.

Probate court can be avoided through mediation, which helps to put the emotions of family members aside and work towards an outcome that helps everyone. Mediation is practical, affordable, and much less stressful for everyone.

How Does Michigan Define a Trust as “Contested”?

Most people don’t truly know how a trust can be contested. There are multiple ways for this to occur. First, a family member may infer the grantor of the trust wasn’t mentally capable when the document was created, or they were under the influence of another person.

Other times it’s as simple as the language in the trust, it could be vague and ambiguous enough that the trustees cannot come to a consensus as to who is to receive certain items. It may also happen because one trustee raises concerns about self-dealing or that the trust hasn’t listed all of the assets correctly. Finally, it could be interpreted that all of the decisions being made are for personal gains, instead of being based on the document.

Disagreement can also stem from:

• Timing of the distribution
• Asset valuations
• Co-trustee conflicts

When this occurs, families may believe that the only answer is probate court, which can be a costly and time-consuming experience. Mediation eliminates this path and replaces it with a structured, controlled space. Everyone can have their say – and everyone can fully listen and understand. The outcome is a solution that pleases everyone. That’s the core of mediation.

Trust Mediation Defined and How it Functions in Michigan

To put it simply, mediation is a confidential process that’s entered into voluntarily by all of those involved. The mediator is wholly neutral, he or she holds no opinion. Their function is to gather everyone in the room and find a resolution they have all agree upon. There is no verdict rendered by the mediator. Instead, the final outcome is defined by those people in dispute.

The mediators themselves are usually comprised of retired judges, estate and trust attorneys, or certified professionals. Put simply: people you can trust. Under probate matters in Michigan, probate judges must strictly adhere to MCR 2.411. This allows the judge to refer contested cases to mediation.

The Mediation Process – It’s Not as Complicated as You Think

• Each side makes an opening statement.
• The mediator meets with each party separately and in private, so each person has the opportunity to truly share what they care about.
• If an agreement is reached, it’s written down, signed and becomes binding.
• If an agreement is not reached all information is kept confidential.
• No one has to give up their right to then go to court.

Mediaton vs. Litigation – What’s the Difference?

Even though money might seem like the focal point of this subject, the differences between mediation and litigation concerning a contested trust are worth reviewing. You’ll notice that with mediation, the advantages are significant.

Trust litigation isn’t cheap, in fact it can run into the range of tens of thousands of dollars. This money is drawn directly from the trust assets that all of the beneficiaries are contesting. The longer the case continues, the less that remains in the trust. Mediation costs a fraction of these costs.

Time is money, and that’s exactly what can be wasted when a case goes to the Michigan probate court. The outcome might take one to three years to finally come, while mediation can be wrapped up in a few weeks.

No one wants their business aired in public, and that’s what can happen in probate court because those records are open to the public. Mediation shields family members from the eyes of the public, a key factor when the subject is finances and family dynamics.

Even strong family bonds can be broken under stressful conditions and when finances and property enter the mix, the damage might not be undone. Litigation introduces an atmosphere of aggression and resentment, while an early approach to mediation relieves the stress and creates a more friendly and non-confrontational setting.

The key to a successful mediation is coming early to the process instead of waiting for discovery and deposition. When all of the parties involved go to mediation, problems can be worked out while avoiding the costs of going to court.

Despite all of these conditions, there are times when the only road to take is litigation. Fraud, elder financial abuse or a dishonest trustee are reasons for litigation. Other factors such as court orders removing a trustee or when a minor or incapacitated beneficiary needs judicial protection, may require a judge to render a final ruling.

Facing Trust Mediation in Michigan? Be Prepared!

When it concerns mediation, organization is the key to success. When you are organized, the process will be smoother, and the outcome can be rewarding and satisfying. Your mediator should have a deep understanding, and experience, regarding this subject matter. It’s not a good idea to go with a general civil mediator. Trust the professionals.

You’ll want to have all of the key documents at hand, this includes:

• The trust instrument – the core legal document that defines the trust
• Amendments to the trust
• Trustee accountings
• Asset inventories
• Any relevant correspondence

Discuss your legal position before the session with an attorney. He or she will review your legal position and provide informed feedback – and provide you with a mostly accurate answer to what can occur.

You also need to have set goals for what you want to result from the proceedings. Options include a distribution of the trust; changing the trustee; a complete accounting; and additional clarity of the language in the trust.

What Does a Trust Attorney do in Mediation?

Think of your trust attorney as an experienced mechanic – he or she will diagnosis your issue and then present a clear and detailed plan of how to best navigate it. The trust must be carefully analyzed and explained to you. Strong points and vulnerable points will be presented to you, with an explanation of what a resolution will look like.

Throughout the session your trust attorney will protect your rights. This includes catching terms that might create problems down the road, and you’ll be shielded from terms that could ultimately keep you from agreeing to something that could hurt your outcome.

Once a decision has been agreed upon, drafting and reviewing the agreement – and attending to any court filings – are handled by the professional.

Don’t risk what is coming to you. A professional Michigan trust attorney knows the rules and regulations, and will advocate for you and your best interests.