In re MONIER KHALIL LIVING TRUST.
EVELYN KHALIL and MELANIE KHALIL ZAGAR, co-trustees of MONIER KHALIL LIVING TRUST, and MIKHAIL KHALIL, Appellees. THOMAS KHALIL and SANDRA KHALIL BENAVIDES, Appellants,
Probate Court LC No. 2016-823742-TV
Before: Gleicher, P.J., and K. F. Kelly and Letica, JJ.
Court orders that the motion for reconsideration is GRANTED,
and this Court's opinion issued March 12, 2019 is hereby
VACATED. A new opinion is attached to this order.
trust action, two of the trustee's children contended
that a sibling unduly influenced their mother to allot him a
disproportionate share of the trust's assets. The probate
court dismissed the action without a hearing and despite that
none of the parties filed a dispositive motion. The court
inexplicably discounted the evidence presented by petitioners
and failed to create an adequate record for this Court's
review. We vacate the probate court's order summarily
dismissing petitioners' undue influence claim and remand
for further proceedings, which must be conducted on the
case involves a trust created by Monier Khalil in 1992.
Monier died in 1994, leaving behind his wife, Evelyn, and
their four children: Mikhail, Thomas, Sandra, and Melanie.
After his death, Monier's assets (mostly Corktown real
estate) flowed into two sub-trusts: the marital trust and the
residuary trust. Both were intended to provide for Evelyn for
the remainder of her life. Evelyn and Melanie were designated
as co-trustees for the sub-trusts. When Evelyn passes away,
any remaining assets will flow into the children's trust
to be divided equally between Monier's children.
marital and residuary trusts grant Evelyn prodigious power
and authority to use and disburse of trust assets. Evelyn may
request distributions without limitation and for any reason
and may exhaust the trust principals to provide for her
needs. Evelyn may disburse of trust assets during her
lifetime, favoring one child over another in doing so. The
trust also shelters Evelyn from "accountab[ility] or
liab[ility] to" any of her children "for the manner
in which [s]he, in good faith, exercises [her] powers and
discretions; [her] judgment with respect to all matters shall
be binding and conclusive upon all" her children.
Melanie, and Mikhail (respondents) contend that in 2007,
Evelyn distributed certain trust properties to her children.
Melanie, Thomas, and Mikhail received properties in Corktown,
but Evelyn purchased a home for Sandra. Evelyn claims that
the trust continues to make the mortgage, insurance, and tax
payments for the home. Respondents further allege that Thomas
sold his properties to Mikhail, but now regrets his decision.
2016, Sandra and Thomas (petitioners) launched this probate
case by filing a "verified petition for accounting,
surcharge of the trustee; return of property to Hotch Potch;
transferred as a result of undue influence and removal of
trustees." They later filed an amended petition. In
these pleadings, petitioners sought an accounting, claiming
that respondents had denied previous requests for
information. Petitioners asserted that Evelyn and Melanie
breached their duty of loyalty by giving Mikhail an unequal
share of property from the trust and by depleting the trust
for purposes other than Evelyn's care. Petitioners
further contended that Mikhail had unduly influenced Evelyn
into giving him control over the trust, which he used as his
personal piggy bank. They alleged that Mikhail had
"usurped" the role of trustee by listing himself on
the trust's bank accounts. Petitioners presented evidence
that Mikhail managed the daily business of the trust
properties and used trust funds to manage his separately
owned properties. Petitioners raised three counts:
"breach of duty of loyalty by the trustee['s]
depletion of the trust assets", undue influence, and for
an accounting, surcharge, and return of improperly
transferred properties to the trust.
retorted that the language of the trust gave Evelyn great
discretion to disburse property as she saw fit and even to
designate Mikhail as a business representative. Respondents
further contended that the property distributions challenged
by petitioners were made in 2007 with petitioners' full
knowledge and consent.
probate court conducted virtually all of the proceedings that
followed off the record, hampering our review. The
court's notes indicate that at an in-chambers conference,
the court verbally directed the parties to file "briefs
in support" by May 19, 2017. Petitioners' brief
contended that over a 10-year period, the trust transferred
to Mikhail and his companies 11 of the trust properties.
These transfers were a breach of Evelyn's fiduciary duty
and her duty of loyalty to the trust beneficiaries and were
accomplished as a result of Mikhail's undue influence,
petitioners asserted. Petitioners also believed that Mikhail
benefitted from improper cash transfers that were not
accounted for in the public record, and denied that they ever
consented to them. And petitioners contested that the trust
gave Evelyn broad power to make whatever transfers she
wished. Such unfettered authority, petitioners argued, would
defeat the purpose of the trust, i.e., to ensure that Evelyn
was financially provided for.
further asserted that they "ha[d] twice addressed this
Court and pleaded to take the deposition of Evelyn . . . to
show to the Court that she is, in fact, under undue influence
of Mikhail . . . ." Petitioners did not indicate on what
date these pleas were made and the court failed to conduct
any phase of this proceeding in the courtroom or on the
record; everything was discussed in chambers. Petitioners
again asked to depose their mother "to establish whether
such acts are of her own free will or as they appear to be
the unvarnished undue influence of Mikhail." And
petitioners asserted that they established a presumption of
undue influence as Evelyn appeared on case-related matters
only in the company of Mikhail, she shared joint
representation with Mikhail, and Evelyn directed her other
children to talk to Mikhail whenever they asked trust or
filed their brief on May 19, asserting that the transfers
made by Evelyn were authorized by the trust itself and by
applicable law. Although any remainder will flow into the
children's trust, "while Evelyn is living, none of
the children has any right to any distributions of trust
assets or any right to an accounting of such assets."
Evelyn's decisions in this regard were "binding and
conclusive," precluding any liability to her children.
Respondents contended that the petition was "a
half-baked attempt to gain leverage in a sibling
rivalry." Specifically, respondents insisted that
petitioners wanted "to undo certain transfers of
property from their mother's trust that were made ten
years ago, with Petitioners' full consent and knowledge,
and to their benefit, because they believe they can profit
another in-chambers, off-the-record "hearing," the
court ordered respondents to present an accounting within 30
days, including the trust's assets as of January 1, 2007,
all property and cash disbursements made to Evelyn's
children since 2007, and a list of income generated by the
trust since 2007 along with "a yearly disclosure of
those monies paid to Evelyn . . . from said income."
Petitioners were given two weeks to respond. The court
scheduled a hearing on the "petition to allow
account(s)" for September 13, 2017. However, respondents
never filed a petition or motion to allow the accounts.
Moreover, no hearing was ever held. The court adjourned the
hearing to October 17, and then to October 31. As will be
discussed later, the court rendered its final decision before
the hearing was conducted.
were not satisfied with the proffered accounting, contending
that respondents engaged in creative accounting by claiming
money was paid to children when it was not, and citing a
number of cash transfers with no stated purpose. After a
telephone conference with the attorneys, the court ordered a
forensic review and accounting of the trust by an independent
accountant, which was completed and filed on October 26,
2017. In the meantime, respondents filed supplemental remarks
to the initial accounting. Respondents noted that petitioners
had recently presented additional information, including a
"Quick Book Ledger for a certain bank account."
Those checks improperly identified Mikhail as a trustee.
After reviewing several check copies, petitioners accused
Mikhail of writing checks funded by the trust to make repairs
on his personal properties and for services on Sandra's
house that were actually funded by an insurance payout.
the presentation of the forensic accounting, and before the
October 31 date of the rescheduled hearing, the probate court
"denied" petitioners' first amended verified
petition. The court noted that it had held "various
hearings" and ultimately "took the matter under
advisement." None of those "hearings" were