In re Estate of Loretta Pat Kramek, Deceased, _____ Mich App _____, 253895, 11/3/05
Return to Probate Review MenuThis case is very dependent upon the facts as given by the Court of Appeals. Those facts as given are as follows:
Decedent’s will provided:
I direct that all real property that I own at the time of my death, in Otsego County, be placed in trust for the use of my children, DAVID KRAMEK and LORRAINE BROWN and their families and anyone they would wish to enjoy it. At the time of the death of the survivor DAVID KRAMEK AND LORRAINE BROWN, the real property in Otsego County would then go to the surviving child/children of DAVID KRAMEK and LORRAINE BROWN, fifty percent (50%) to go to LORRAINE’ child/children.The residue of the estate was divided equally between Kramek and Brown. The will further provided that, if either Kramek or Brown predeceased decedent, their share would go to his or her children, to be held in trust and distributed to each child, fifty percent at age thirty and fifty percent at age thirty-five. Decedent named Kramek as trustee of this trust. The will also nominated Kramek as personal representative. Decedent bequeathed to Katzen $5.00.
Decedent died on April 7, 2003. On April 14, 2003, Kramek filed an application for informal probate. On April 15, 2003, Kramek, Brown, and Katzen entered into an estate settlement agreement.
On October 2, 2003, Katzen filed a petition for approval and construction of the estate settlement agreement. Katzen also requested that a guardian ad litem (GAL) be appointed to ensure protection of the decedent’s grandchildren.
In response, Kramek asserted that the estate settlement agreement did not include the real estate in Otsego County (Otsego Property). He also requested that the GAL be discharged because the children were represented by another attorney, John Mabley, who also represented Brown.
Brown asserted in response that the agreement “contemplates” that the trust for the Otsego property not be created, but rather, that the property be divided between Katzen, Kramek, and Brown equally. Brown asserted that the agreement, “if given effect by this court, “ would extinguish the rights of decedent’s grandchildren. She asserted that the grandchildren were not represented when the agreement was negotiated and executed. On this basis, Brown requested that the court determine that the provisions of the agreement that affect the Otsego property be held unenforceable. But she requested that the remainder of the agreement be approved.
The trial court permitted the GAL to continue representing decedent’s grandchildren. After a hearing, the trial court entered an order approving the agreement as including the Otsego property and holding that provision enforceable. The trial court also entered an order removing Kramek as personal representative.
The Court of Appeals first determined whether MCL 700.3914 or MCL 700.7207 should be applied to the case. They noted that MCL 700.3914 applies when parties enter into an agreement to change, alter, or amend the terms of a will and MCL 700.7207 applies when parties enter into an agreement to change, alter, or amend the terms of a trust. In this case, a trust was not created before decedent’s death nor before the settlement agreement was entered into. Therefore, the parties did not modify a trust or the distribution of trust assets with their agreement. They did modify the terms of the will. The Court concluded that MCL 700.3914 would apply and MCL 700.7207 would not apply.
In applying MCL 700.3914, the Court of Appeals rejected the argument that a guardian ad litem (GAL) was required to represent decedent’s grandchildren before the parties could execute their agreement. The Court stated that the statute does not require that a representative be appointed before the agreement is executed, but only that a representative be appointed and given notice of the agreement. It is then up to the trial court to determine whether the agreement is “made in good faith and appears just and reasonable.” In this case, a GAL was appointed for the minors for the court hearing. The proceedings were therefore in compliance with MCL 700.3914.
The Court of Appeals also rejected the argument that the trial court should not have reviewed extrinsic evidence. The Court opined that extrinsic evidence may be used where there is a latent ambiguity to indicate the actual intent of the parties. In this case the Court of Appeal held that such a latent ambiguity existed.
The Court of Appeals next addressed the issue of the removal by the trial court of the personal representative, Kramek. Kramek objected to his removal because Katzen was not a “party” and could not request removal and there was no basis for removal. The Court rejected the first objection finding Katzen was an “interested person” because she was a party to the settlement agreement. However, the Court did hold that there was no basis for removal. The trial court had removed Kramek because of what it characterized as a conflict of interest. The trial court had opined that the “bickering” would cost the estate money and the appointment of a disinterested personal representative would expedite administration. The Court of Appeals held that while MCL 700.3611 broadly permits the trial court to remove a personal representative if it is “in the best interest of the estate” just because the personal representative contests some issue involving the estate does not meet that standard. The Court characterized resolving the present dispute as a normal function of the probate court. Therefore, Kramek’s role as personal representative was not tainted by a conflict of interest merely because he disputed the terms of the settlement agreement. The Court also noted that this particular dispute was handled expeditiously by both the parties and the trial court.
In conclusion, the Court of Appeals affirmed the order approving the estate settlement agreement and reversed the order removing Kramek as personal representative.
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