Michigan Court of Appeals Clarifies Probate Court’s Discretion When Awarding Attorney Fees From Trusts

In re Robert W. Ashcraft Trust

• Opinion Published March 10, 2026 (Feeney, P.J., and Garrett and Bazzi, JJ.)

• COA Docket No. 372846

• Wayne County Probate Court

Holding: The Court of Appeals affirmed the probate court’s denial of the appellant’s request for attorney fees to be paid from the Ashcraft Trust under MCL 700.7904(1). The Court of Appeals concluded that the probate court acted within its discretion when it determined that the appellant’s litigation did not enhance, preserve, or protect trust property, provisions that MCL 700.7904(1) requires before awarding fees from the trust.

Facts: The dispute arose from the administration and final distribution of the Robert W. Ashcraft Revocable Living Trust. The appellant, Susan Nazem, was a co-trustee and managed the last physical asset of the trust, which was a cottage in Port Hope, Michigan.

In November 2021, the Ashcraft brothers, Robert B. and William B. Ashcraft, discovered that Nazem had not paid the property taxes on the cottage. Following an investigation, the Ashcraft brothers invoked a provision within the trust that permitted the removal of a trustee by majority vote of the beneficiaries and removed Nazem as a co-trustee. After Nazem sought judicial review of her removal, the probate court found that the trust language authorized the decision and upheld the removal. In May 2022, the cottage was sold and the proceeds paid into the trust.

The Ashcraft brothers proposed a final distribution schedule, seeking to reduce Nazem’s share of the proceeds from the cottage.  The brother’s proposition was to reduce Nazem’s share by $35,137.50, which charged her $3,937.50 for the cost of defending against her first petition, and $31,200 in rent for the 39 months of her or her daughter’s use of the cottage. Nazem challenged the proposed distribution and filed another petition with the probate court.

The probate court ruled that Nazem breached her fiduciary duty as a co-trustee by using the cottage and allowing her daughter to use the cottage without payment of rent to the trust for a period of 55 days. The probate court surcharged Nazem for two months of rent ($1,600), in addition to $812.50 in dispossession fees, and $3,937.50 for the Ashcraft brothers’ attorney fees incurred while defending against her original petition concerning the breach of fiduciary duty claim. Rather than the $35,137.50 reduction initially sought by the Ashcraft brothers, the court imposed a surcharge of $6,350.

In May 2024, Nazem petitioned the court to have the trust pay her attorney’s fees under MCL 700.7904(1). She argued the trust should pay her fees because she shielded it from the Ashcraft brothers’ “unclean hands.” Furthermore, she contended that equity required the trust to pay her attorney fees if it also paid the brothers’ fees. The probate court denied Nazem’s petition for attorney fees and advised that the Trust would pay the Ashcraft brothers’ attorney fees as they pertained to the petition.

Key Appellate Ruling:

The Court of Appeals affirmed the probate court recognizing that MCL 700.7904(1) does not require an award of attorney fees and expenses from trust property whenever a party enhances, preserves, or protects trust property. Instead, the statute simply authorizes a probate court to exercise its discretion when doing so may be appropriate, as justice and equity require. Therefore, a probate court has broad discretion to determine if it warrants such an award.

Michigan adheres to the “American Rule,” which provides that a party may not recover attorney fees as an element of costs or damages unless a statute, court rule, or common law exception allows such a recovery. Nemeth v Abonmarche Dev Inc, 457 Mich 16, 37-38; 576 NW2d 641 (1998). One such exception is MCL 700.7904(1), which states: “[i]n a proceeding involving the administration of a trust, the court, as justice and equity require, may award costs and expenses, including reasonable attorney fees, to any party who enhances, preserves, or protects trust property, to be paid from the trust that is the subject of the proceeding.” However, MCL 700.7904(1) does not require an award of attorney fees and expenses from trust property whenever a party enhances, preserves, or protects trust property. Instead, the statute simply authorizes a probate court to exercise its discretion when doing so may be appropriate, as justice and equity require. Therefore, a probate court has broad discretion to determine if it warrants such an award.

Nazem argued that the trial court abused its discretion when it denied her petition, that she is entitled to have her attorney fees paid from the Trust under MCL 700.7904(1), and that equity and justice require the award of attorney fees. Applying MCL 700.7904(1), Nazem contended that she (1) preserved trust property from undue depletion, thus benefiting the Trust and (2) enforced the settlor’s original intent of equal distribution, and therefore enhanced, preserved, or protected trust property.

The Court of Appeals disagreed, reasoning that Nazem did not “enhance, preserve, or protect trust property” within the meaning of the statute by “illuminating improper conduct from the brothers.” Rather, she was primarily concerned with the amount of her own distribution from the trust and did not produce a tangible benefit to the trust as the statute intends. The Court of Appeals affirmed the probate court’s order denying Nazem’s petition for attorney fees because she failed to establish a violation of the statute, or any other error or abuse of discretion. Because of this, the probate court properly exercised its discretion in denying her request for attorney fees under MCL 700.7904(1).