Will Your Family’s Trust Pay the Legal Bill?

Many clients considering litigation are under the impression they’ll be able to recover their attorney fees if they “win.” It is often a surprise to learn from their attorney that under the American Rule, you generally cannot recover attorney fees unless a specific statute, court rule, or common law exception allows for it. One such area where this is possible, the subject of a recent appellate opinion titled In re Robert W. Ashcraft Trust, elaborates on the Michigan Trust Code’s allowance of attorney fees.

Specifically, MCL 700.7904(1) discusses when a non-trustee may be able to recover attorney fees from a trust. The statute states:

In 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.

The Court of Appeals in Ashcraft clarified that the word “may” and phrase “as justice and equity require” makes such an award entirely permissive and discretionary. Further, the Court of Appeals made clear that it would interpret this statute in light of previous caselaw like Becht v Miller and In re Temple Marital Trust. Typically, this means awarding attorney fees only where litigation provides a distinct benefit to the entire trust, rather than just some beneficiaries’ shares. In this context, the Court of Appeals upheld the denial of attorney fees because the appellant failed to show her actions benefited the whole estate instead of just her own interests.

The bottom line is that just because you win doesn’t mean the Trust picks up the check. Overall, the published Ashcraft case offers a great discussion of an issue that often comes up for attorneys representing a non-trustee beneficiary of a trust.

Disclaimer

This publication is for general information only. The information contained is not intended as formal legal advice. If you have any questions or need assistance, please contact your attorney at Curtis, Curtis & Brelinski, P.C.

Article by: Ethan J. Loch