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Trustee’s negligence does not change the necessary nature of legal assistance in estate administration

Posted on Monday, May 14, 2018

In an unpublished decision of the Michigan Court of Appeals, In re Mina L. Olson Trust (Docket No. 307835), the Court of Appeals upheld a probate court’s order that approved as reasonable and necessary legal fees billed by a law firm that had been retained by a former trustee, even though the fees were partly due to the trustee's negligence. Respondents -- the current co-trustees -- argued that preparing tax returns, asset inventories, and annual reports for the estate were not necessary legal services. However, the Court of Appeals held that though such work was not legal services, MCL 700.7817(w) specifically empowers a trustee to employee an attorney “to advise or assist the trustee in the performance of the trustee’s administrative duties” and the contested work fell into this category. The Respondents argued that the services were not necessary because they were a result of the trusteee’s “individual mismanagement of trust responsibilities” and further that the probate court failed to analyze where she performed her trust responsibilities reasonably and competently. However, the Court of Appeals held that though the trustee’s negligence contributed to the amount of work necessary, it did not change “the nature of the necessary work.” Therefore, negligence on the part of the trustee does not make the resulting attorney’s work unnecessary. The attorney’s work was still necessary in administering the trust. Further, the Court of Appeals noted that the probate court did reduce the legal fees owed from the estate due to the trustee’s negligence. The Supreme Court of Michigan has denied review of this case.

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