Under the Michigan Trust Code, a trustee owes each beneficiary duties of loyalty, impartiality, prudent investment, and honest reporting, and beneficiaries have the right to information, formal accountings, and court intervention when those duties are ignored. Those trustee duties and beneficiary rights sit in Article VII of the Estates and Protected Individuals Code (MCL 700.7101 and following), and they are backed by real remedies: surcharge, fee reduction, and removal.
What a Michigan Trustee Legally Owes You
The duties overlap, but each one does distinct work. A trustee who complies with four of them and ignores the fifth is still exposed.
Loyalty
A trustee has to manage the trust solely in the beneficiaries’ interests. Michigan law presumes that any transaction between the trustee and the trust is tainted by a conflict of interest. That presumption extends to deals with the trustee’s spouse, children, siblings, parents, attorney, or any business entity in which the trustee holds a significant stake.1Michigan Legislature. MCL – Section 700.7802 The trustee can try to justify a self-dealing transaction, but the burden is on them. The clean move is to avoid it.
Impartiality
Most trusts have more than one beneficiary, and their interests often pull in different directions. An income beneficiary wants yield now. A remainder beneficiary wants the principal to grow. The trustee has to balance those competing needs fairly rather than favoring whichever beneficiary is louder or closer.2Michigan Legislature. MCL – Section 700.7803
Prudent Investment
Michigan’s prudent investor rule requires the trustee to invest and manage trust assets with reasonable care, skill, and caution in light of the trust’s purposes and distribution requirements.3Michigan Legislature. MCL – Section 700.7809 The portfolio is evaluated as a whole, not one holding at a time. The trustee should weigh the beneficiaries’ circumstances, risk and return objectives, inflation, tax consequences, and liquidity needs. Diversification is expected unless the trust document or specific circumstances justify a concentrated position. A trustee who parks the entire trust in one stock because it has always done well is inviting a breach claim if that stock collapses.
Duty to Inform and Report
Trustees must keep beneficiaries reasonably informed about administration and the facts they need to protect their interests. Requests for information should get a prompt response unless it would be unreasonable under the circumstances. Beyond responding, the trustee must send at least annual reports to income and principal distributees. Those reports show the trust’s property, liabilities, receipts, disbursements, the trustee’s compensation, and the current market value of trust assets where feasible.4Michigan Legislature. MCL – Section 700.7814 A final report is due when the trust terminates.
Delegation Done Right
A trustee is not required to do everything personally. Michigan permits delegation of investment and management functions to agents, so long as the trustee uses reasonable care in selecting the agent, defining the scope of the work, and periodically reviewing performance.5Michigan Legislature. MCL – Section 700.1510 – Delegation of Investment and Management Functions A trustee who follows those steps is not personally liable for the agent’s decisions. The trustee can also hire attorneys, accountants, appraisers, and brokers, and may rely on their recommendations without running an independent investigation.6Michigan Legislature. Michigan Compiled Laws 700.7817 – Specific Powers of Trustee
What Beneficiaries Can Demand
Beneficiaries are not passive. The Trust Code gives them concrete tools.
The right to information is foundational. Annual reports are automatic; other information should be provided on reasonable request. On top of that, a beneficiary can demand a formal accounting: a detailed picture of every receipt, disbursement, and asset held. The accounting is the mechanism most beneficiaries use to catch a problem. If the numbers do not add up, that is the opening to push further.
When informal complaints go nowhere, a court can:
- Interpret ambiguous trust provisions.
- Order the trustee to correct a breach.
- Reduce or deny the trustee’s compensation.
- Surcharge the trustee for losses caused by mismanagement.
- Remove the trustee.
Courts have wide discretion on remedies. The goal is to protect beneficiaries’ interests and honor the settlor’s intent.
Removing a Trustee
The settlor, a co-trustee, or any qualified trust beneficiary can petition to remove a trustee. The court can also act on its own initiative. Grounds include:
- A serious breach of trust, such as misappropriating assets, failing to account, or repeatedly ignoring the trust terms.
- Cotrustee conflict that impairs administration.
- Unfitness or persistent failure to manage the trust effectively.
- A substantial change of circumstances, where removal serves the beneficiaries, matches the trust’s purposes, and a suitable replacement is available.
Courts do not remove trustees lightly. Once a pattern of mismanagement or self-dealing is on the record, though, removal becomes the expected outcome.7Michigan Legislature. MCL – Section 700.7706
What About the Trustee’s Fee?
If the trust document sets the fee, that controls, but a court can adjust it when the trustee’s actual duties differ substantially from what was anticipated or when the specified fee is unreasonably high or low.8Michigan Legislature. MCL – Section 700.7708 Where the document is silent, the trustee is entitled to what is reasonable under the circumstances. Professional corporate trustees typically charge 1% to 2% of trust assets annually, with smaller trusts often facing higher percentage-based fees or minimum dollar charges. Individual trustees can take reasonable compensation too, though family trustees often waive it.
Deadlines for Challenging the Trust Itself
If you believe a revocable trust is invalid because the settlor lacked capacity, was subject to undue influence, or the document was improperly executed, Michigan enforces firm deadlines after the settlor’s death. You must file within the earlier of:
- Two years after the settlor’s death, or
- Six months after the trustee sends you a notice that includes the trust’s existence, the settlor’s name, the trust’s date, the trustee’s name and address, the portions of the trust affecting your interest, and the time allowed to contest.
The six-month clock only starts if the notice contains all required information. When the trustee skips or botches the notice, the two-year outer deadline still runs.9Michigan Legislature. MCL – Section 700.7604 Missing either deadline almost certainly bars the claim. If you receive a trustee notice, treat the date on it as the start of a countdown.
On the separate question of whether the trust can be attacked as invalid at all: the challenger typically carries the burden of proving the settlor lacked capacity or was pressured into signing.
Spendthrift Protection for Beneficiaries
A spendthrift clause blocks a beneficiary’s creditors from reaching trust assets before those assets are actually distributed. Michigan expressly validates these provisions. Language stating that the trust is held subject to a “spendthrift trust” restricts both the beneficiary’s voluntary transfers and creditors’ involuntary collection efforts.10Michigan Legislature. MCL – Section 700.7502 Until a distribution actually reaches the beneficiary’s hands, creditors generally cannot attach it.
The shield is not absolute. Michigan carves out exceptions under Sections 7504, 7506, and 7507 that allow certain creditors, such as child support claimants and the government for specific obligations, to reach trust assets even where a spendthrift clause exists.
Resolving a Dispute Without Litigation
Not every trust conflict has to go to court. Michigan law expressly gives trustees the power to resolve disputes through mediation, arbitration, or other alternative dispute resolution procedures.6Michigan Legislature. Michigan Compiled Laws 700.7817 – Specific Powers of Trustee Mediation fits family trust conflicts especially well: relationships matter, and litigation costs can outrun the amount actually in dispute. Some trust documents require mediation or arbitration as a first step; even without such a clause, the parties can agree to ADR at any point.
If you are a beneficiary who suspects something is off, start with the accounting. Most legitimate concerns show up in the numbers. If the informal route fails, talk to an attorney well before the two-year or six-month contest deadlines expire. Waiting too long is the most common and most avoidable mistake in Michigan trust litigation.