Health v. Old Kent Bank & Trust Co.
Health v. Old Kent Bank & Trust Co.
Opinion of the Court
The State of Michigan, Department of Mental Health, appeals from an order entered December 29, 1982, dismissing its objection to the
The dispute in this case concerns the corpus and income balance of a trust established by Benjamin T. Sykes, Sr., in his will of January 16, 1967. The will provides in pertinent part:
"(1) My Trustee shall apply such amounts from the income and principal hereof to or for the benefit of my said wife, Della A. Sykes, and my son, Benjamin T. Sykes, Jr., in such proportions and amounts and at such intervals as the Trustee shall deem necessary to provide for their proper care, support and welfare, always considering the means reasonably available to each such beneficiary from all sources; any unused income in any accounting year shall be accumulated and added to the principal hereof; the amounts of and occasions and necessity for and preferential use between beneficiaries of any such income or principal payments shall be wholly within the discretion of my Trustee and its judgment shall be conclusive.”
The parties stipulated to the following facts regarding Benjamin T. Sykes, Jr. Much of his adult life was spent in jails in Michigan and in other states. His father knew of his imprisonments when he executed his will. Sykes, Sr., provided only occasional and relatively small amounts to his son for his support during his lifetime. In March, 1980, the son was involuntarily committed by the probate court for the County of Ionia to the Michigan Institute of Mental Health. He was transferred to Ypsilanti Regional Psychiatric Hospital in June, 1980, where he remained until his death on December 26, 1981. During that time the Michigan Department of Mental Health provided services for him.
Individuals for whom the Department of Mental Health provides care are financially liable for the
On May 6, 1982, the Department of Mental Health made an annualized determination of the financial liability of Benjamin Sykes in the amount of $17,657. In making that determination, the department took into account and counted as an asset the corpus and income balance of the trust. The department calculated the trust balance at $31,709, which figure was the trust balance reported by the trustee in the previous annual accounting. One-half of the original net worth was found to be $15,855. The trustee paid $2,049.60 to the State of Michigan for the cost of care of the son. The state claims that the trust still owes $15,607.40. For that reason, the state objected to the final accounting of the trust and made a claim on the trust for that amount.
The issue before this Court is whether the trustee abused its discretion in refusing to pay the state’s claim against the beneficiary for the value of the services provided the beneficiary in a state mental institution.
The standard of review where a probate court sits without a jury is whether the court’s findings are clearly erroneous. In re Wojan Estate, 126 Mich App 50; 337 NW2d 308 (1983). In construing wills and trusts, the intention of the testator or
The general rule is that the interest of the beneficiary of a spendthrift trust cannot be reached by creditors of the beneficiary. Restatement Trusts, 2d, § 157. One of the exceptions to that general rule concerns claims for necessary services rendered to the beneficiary. Id., § 157(b).
The first matter to be considered is whether the provision of services in a state mental institution can be considered "necessary services” so that the son’s interest in the spendthrift trust could be reached in satisfaction of the claim, if this exception is acknowledged. To date Michigan courts have not recognized the necessary services exception to the general rule that the interest of the beneficiary of a spendthrift trust cannot be reached. The courts of other states, however, have permitted state institutions of which the beneficiary of a spendthrift trust was an inmate to reach that interest. See Estate of Lackmann v Dep’t of Mental Hygiene, 156 Cal App 2d 674; 320 P2d 186 (1958); Dep’t of Mental Health & Developmental Disabilities v First National Bank of Chicago, 104 Ill App 3d 461; 432 NE2d 1086 (1982). The son herein was involuntarily committed to the state institution which implies that a determination was made that it was necessary to provide such care for him. For purposes of this appeal we will assume, arguendo, that the services rendered in this case were "necessary services” within the meaning of § 157(b).
Those cases can be distinguished, however, from the case at bar. In both cases, despite the "complete and absolute” discretion of the trustee, the state was allowed to reach the trust because "such discretion is not an arbitrary one and one which would permit the trustee to provide no support whatever for [the beneficiary] and to throw him on the charity of others or of the state”. Dep’t of Mental Health & Developmental Disabilities, supra, 104 Ill App 3d 465; 432 NE2d 1088. It was determined that the settlor intended to provide the support for the beneficiaries.
In the case at bar, however, the trustee had complete discretion as to whether the son was to receive any payments from the trust. Not only
Affirmed.
Reference
- Full Case Name
- In re SYKES ESTATE DEPARTMENT OF MENTAL HEALTH v. OLD KENT BANK & TRUST COMPANY
- Cited By
- 2 cases
- Status
- Published