Summary of Miller v. Dept. of Mental Health, 432 Mich. 426, 442 N.W.2d 617 (1989)
Facts: Carol Miller has been in the care of the Dept since 1985. Neither she nor her family have paid the Dept for her support. Her father est. a trust to provide for her support, maintenance, and welfare. The Dept claims it costs $55K a year for her support.
Issue: Whether Carol Miller’s interest in a trust est. by her father is an asset that the MI Dept of Mental Health can claim reimbursement for service to her?
Holding: If the trust is a discretionary trust, she has an ascertainable interest and the department could claim against,
Procedure: Dept Admins hearing determined assets of trust should be included in determining the amount of Carol’s financial ability to pay for services. Ad Law judge affirmed. Probate Ct reversed: trust est. was a discretionary trust w/o ascertainable interest. Ct of App reversed: trust was a support trust. MI Sup Ct reversed and remanded for further proceedings
Rule: Creditors can reach a trust created est. an entitlement to a definite portion, unless there is a spendthrift clause providing beneficiary’s interest shall not be transferable or subject to the claims of creditors. Ordinary creditors cannot reach a support trust w/ or w/ SpendT Cl, nor a discretionary trust b/c the beneficiary’s interests are unascertainable. However, claims for alimony, divorce, or those of the U.S. or a state can reach a trust of ascertainable interests or interest in support trust–not a discretionary trust.
Rationale: The trust instrument does not contain a spendthrift clause, which is immaterial here b/c the claim asserted could be asserted whether or not one existed, unless this is a discretionary trust.
The trust did not est. an entitlement to a certain sum. That instrument did not provide that the trustee shall pay such amts as “are necessary," but rather as the trustee “deems proper." Some jurisdictions read those terms to mean a support trust and others a discretionary trust.
Carol’s father had not legal obligation to pay any amt for her support, and in fact had not. It is the intent of the settlor that is paramount. B/c the trust was est for her care and support, her interest in the trust may be unascertainable, but this calls for an evidentiary hearing.