Articles Posted in Trusts & Estates

by
Successor agent owed no fiduciary duties to principal before occurrence of contingencies stated in power of attorney. Ruth was named as executor of the estates of her parents, Thomas and Doris, following their deaths in 2012. As executor, Ruth filed two actions on behalf of the estates against her brother, Rodney, involving quitclaim deeds signed by Thomas in 2011 which conveyed farmland to Rodney. At the time of these transactions, Rodney was designated as the successor agent under both Thomas’s and Doris’s powers of attorney. The estates alleged that Rodney breached his fiduciary and statutory duties as an agent by personally benefitting from the real estate transactions. The Grundy County circuit court dismissed both actions. The appellate court affirmed the dismissal of the action involving Thomas’s estate and reversed with respect to Doris’s estate. The Illinois Supreme Court concluded that both actions were properly dismissed. The plain language of Thomas’s power of attorney appointed Rodney as agent only upon the occurrence of a specific contingency. Rodney’s authority to act on behalf of Thomas did not arise until Doris died, became incompetent, or became unwilling to act as an agent. Until that time, Rodney owed no fiduciary duties to Thomas. View "In re Estate of Shelton" on Justia Law

Posted in: Trusts & Estates

by
On October 14, 2010, OneWest Bank sued Standard, as trustee, and unknown trust beneficiaries, to foreclose a “reverse equity” adjustable-rate mortgage on property held by the trust and executed in 2009. Standard filed an answer and counterclaim on July 19, 2011, seeking to rescind the mortgage, alleging violations of the Truth in Lending Act (TILA). 15 U.S.C. 1601. The circuit court dismissed. The appellate court affirmed, reasoning that Standard was not an “obligor” under TILA and was not entitled to rescind the transaction. The Illinois Supreme Court reversed. The trustee has legal and equitable title to the property and is the only party with an ownership interest in the property since the beneficiary’s interest is in the trust itself and is considered personal property. Standard, was entitled to receive TILA disclosures, including notice of the right to rescind after it entered into the consumer credit transaction. Because TILA disclosures were not provided to Standard, the three-day right to rescind period was extended to three years. Standard timely exercised its right to rescind when it gave notice on June 2, 2011. View "Fin. Freedom Acquisition, LLC v. Standard Bank & Trust Co." on Justia Law

by
Brunton sued her brother, Kruger, as trustee of the trusts established by their late parents and as representative of their estates, and individual family members. Brunton, who was not named a beneficiary of the trusts, alleged undue influence and her mother’s diminished capacity. The elder Krugers had consulted with an accounting firm (Striegel) for estate planning. They provided Striegel with confidential information about their family, income, assets, and goals. Striegel provided information to the attorney who prepared the Krugers’ trust documents and wills. Brunton and the Estates issued subpoenas seeking discovery of the information and documents. A CPA at Striegel complied with the Estates’ subpoenas, but did not provide the documents to Brunton. Striegel invoked the Illinois Public Accounting Act (225 ILCS 450/27), governing confidentiality of records. The circuit court ordered Striegel to produce tax documents, but held that the estate planning documents were privileged. Brunton then issued deposition subpoenas to a Striegel CPA and a non-CPA employee, seeking production of the estate planning documents. The court again found the estate planning documents privileged, but held that Striegel had waived the privilege by providing the documents to the representative of the Estates. The appellate court and Illinois Supreme Court affirmed. The privilege belongs to the accountant, not the client, and there is no testamentary exception to the privilege, but the accountant waived the privilege by disclosing information to one party. He cannot claim the privilege to avoid disclosure of the same information to the other party. View "Brunton v. Kruger" on Justia Law

by
Edmonds was admitted to the Illinois bar in 1975. He became a member of St. Mark Church. In1998, Sloan asked Edmonds to rewrite Sloan’s will to benefit St. Mark’s. Edmonds knew Hannah, a lawyer who, in 1992, was suspended for neglecting and misrepresenting client matters, failing to maintain a client trust account, and commingling. In 1994, Hannah was suspended until further order; he never sought reinstatement. Edmonds was unaware of Hannah’s disciplinary status and believed that Hannah was an estate planning expert. Edmonds introduced Hannah to Sloan, who transferred some assets to American Express for Hannah’s management. Sloan’s trust held $3.36 million at one point. Sloan died in 2000. Edmonds acted as executor and trustee. At his direction, the trust and estate bought Range Energy stock recommended by Hannah. Hannah eventually became president and CEO of Range, which, by 2001, held all of Sloan’s personal assets and most of the trust assets. In 2003, the British Columbia Securities Commission suspended trading of Range stock, which ultimately became worthless. Edmonds did not inform St. Mark’s about the situation. The church eventually filed suit. In 2009, the successor trustee closed the trust with a balance of $1,149. The ARDC Hearing Board found that Edmonds breached fiduciary duties, engaged in dishonest conduct, neglected an estate matter associated with the trust, and commingled his funds with client or third-party funds. The Review Board reversed the findings of breach of fiduciary duty and dishonest conduct and recommended that Edmonds be suspended for 60 days. The Illinois Supreme Court imposed a three-month suspension. View "In re Edmonds" on Justia Law

by
Powell was adjudicated a disabled adult due to severe mental disabilities in 1997. His parents, Perry and Leona, were appointed as co-guardians of Powell’s person, but were not appointed as guardians of his estate. In 1999, Perry died following surgery. Leona engaged the Wunsch law firm to bring a claim against the doctors and hospital, Leona was appointed special administratrix of Perry’s estate. Wunsch filed a complaint under the Wrongful Death Act on behalf of Leona individually and as administratrix estate. The estate’s only asset was the lawsuit. A 2005 settlement, after attorney fees and costs, amounted to $15,000, which was distributed equally between Leona, Emma (the couple’s daughter) and Powell. The settlement order provided that Powell’s share was to be paid to Leona on Powell’s behalf. Leona placed both shares into a joint account. The probate court was not notified. Wunsch had referred the action to attorney Webb, for continued litigation. Emma waived her rights under a second settlement, Leona and Powell each received $118,000. A check was deposited into the joint account. The order did not provide that Powell’s was to be administered under supervision of the probate court and Powell did not have a guardian of his estate. Wunsch purportedly advised that it was “too much trouble” to go through the probate court for funds every time Leona needed money for Powell. In 2008, Emma petitioned to remove Leona as guardian of Powell’s person. The probate court appointed Emma as guardian of Powell’s person and the public guardian as guardian of his estate. Leona had withdrawn all but $26,000 and provided no accounting. The public guardian sued the attorneys and Leona. The trial court dismissed as to the attorneys, finding that the complaint failed to sufficiently allege defendants owed Powell a duty and to allege proximate cause. The appellate court determined that an attorney retained by a special administrator of an estate to bring a wrongful death action for the benefit of the surviving spouse and next of kin owed a fiduciary duty to those beneficiaries and remanded, with respect to the second settlement. The Illinois Supreme Court affirmed. View "In re the Estate of Powell" on Justia Law

by
Karavidas, admitted to practice law in Illinois in 1979, worked for the City of Chicago, the Attorney General, and several law firms. In 1988, he opened his own practice. His father executed will and trust documents prepared by another attorney in 2000, and died later the same day. Karavidas was named executor and successor trustee. His dealings with the estate resulted in charges of conversion of assets entrusted to him; breach of fiduciary obligations; conduct involving dishonesty, fraud, deceit, or misrepresentation, in violation of Illinois Rules of Professional Conduct; conduct prejudicial to the administration of justice; and conduct tending to defeat the administration of justice or to bring the courts or the legal profession into disrepute. The Review Board of the IARDC recommended that charges be dismissed. The Illinois Supreme Court agreed. Before professional discipline may be imposed under Supreme Court Rule 770, the Administrator must demonstrate that the attorney violated the Rules of Professional Conduct. Personal misconduct that falls outside the scope of the Rules may be the basis for civil liability or other adverse consequences, but may not result in professional discipline. View "In re Karavidas" on Justia Law

by
A February 2008 automobile accident resulted in the death of the driver who was purportedly at fault. His son was issued letters of office to serve as independent administrator of the driver’s estate. The limitations period for plaintiff’s claim of personal injuries was two years. Just before that limitations period was to expire, plaintiff filed suit, apparently unaware of the driver’s death. Her action against a dead person was invalid. Attempts to serve process were unsuccessful, but a special process server eventually notified the plaintiff that the defendant was dead. The Code of Civil Procedure, 735 ILCS 5/13-209, allows a two-year extension of the limitations period under certain conditions, including when a plaintiff moves to substitute the decedent’s personal representative as defendant. The plaintiff did not do so, but obtained the circuit court’s permission to have an employee of plaintiff’s attorney appointed as “special administrator” to defend the estate, a procedure that has no statutory authorization. The circuit court dismissed the action on limitations grounds, but the appellate court reversed. The Illinois Supreme Court reinstated the dismissal. Upon learning of the defendant’s demise, the plaintiff should have sought leave to amend the complaint to substitute as defendant the decedent’s son, as decedent’s personal representative, and should have then served process on that representative. The plaintiff failed to use reasonable diligence. View "Relf v. Shatayeva" on Justia Law

by
Bjork was a nurse for Dama’s late wife. O’Meara was Dama’s dentist. Dama, then 90 years old, told Bjork that O’Meara had been asking for money and that “he did not want O’Meara to get everything.” Dama’s banker, Williams, informed Bjork that Dama wanted to name Bjork as death-beneficiary on a bank account and sent Bjork a “Power of Attorney,” signed by Dama. Bjork signed and returned it to Williams. Later, Dama signed a power of attorney, appointing O’Meara as agent, and revoking powers previously granted to Bjork, then executed a will, leaving his entire estate to O’Meara. Bjork and Dama remained in contact by mail, telephone, and visits until shortly before Dama’s death. O’Meara filed the will and was appointed independent representative of Dama’s estate. Bjork filed citation petitions (Probate Act, 755 ILCS 5/16-2). After the estate closed, Bjork sued for intentional interference with testamentary expectancy. The circuit court dismissed, citing the six-month limitation period of the Probate Act. The appellate court affirmed. The Illinois Supreme Court reversed. Bjork’s tort claim does not implicate concerns regarding certainty in property rights or efficient estate administration. The probate proceeding did not provide meaningful relief and the claim does not seek to invalidate Dama’s will. View "Bjork v. O'Meara" on Justia Law

by
In 1994 Sessions created a trust for his personal benefit, with a "spendthrift" provision prohibiting use of trust assets to pay creditors. In 1995, he irrevocably promised $1.5 million to Rush Medical Center for a building and provided for it in his will. The building, now in operation, bears his name. Sessions later blamed Rush for not diagnosing sooner the cancer of which he died in 2005, without having paid the pledge. Six weeks before his death, he executed a new will making no provision for the pledge. Rush filed a successful probate claim, but estate assets were insufficient to fulfill the pledge. Rush filed a supplemental proceeding to reach assets in the 1994 trust, worth almost $19 million in 2005. The trial court entered summary judgment for Rush; the appellate court reversed, based on the Uniform Fraudulent Transfer Act. The Illinois Supreme Court reversed, reinstating the award. At common law, a person cannot settle his estate in trust for his own benefit so as to be free from liability for his debts. The fact that the Act specifies certain instances in which transfers can be considered fraudulent does not mean that the statute abrogates the common law rule. View "Rush Univ. Med. Ctr. v. Sessions" on Justia Law