Death and Taxes Blog

I've finally finished Step 1 of my probate project -- posting the Illinois Probate Act in its entirety on my website, here.  Next up:

1. Putting interactive probate forms for Cook County up on my site. [expected completion date: 1/07]

2. Making another pass through the Probate Act, inserting hyperlinks and some analysis, and fixing formatting problems. [expected completion date: 4/07]

3. Posting an in-depth (i.e. book-length) narrative on probate in Cook County. [expected completion date: 12/07]

I'll probably add other statutes related to probate in the future, but I'm not sure when that process will begin.

I previously posted here about the Will of William Shakespeare (aka "Will's Will").  Yesterday, my pocket guide to the 2007 Stratford Festival of Canada arrived, and I noticed this listing:

Shakespeare's Will
by Vern Thiessen
Opens July 7
June 23 to September 20

On the eve of William Shakespeare's funeral, a solitary woman considers the poet's last will and testament.  What emerges in this one-woman Canadian play is a fascinating story of Anne Hathaway, wife to the world's greatest  playwright - and a woman hiding dark sorrows of her own.

More details are here.  I hope I can attend; if you do, let me know how you liked it!

Blogging is light this week with the Christmas holidays, but you may want to check out Juan Antunez's post (here) about the controversy in Billy Graham's family, over where Mr. Graham and his wife will be buried.

I've spoken previously about in terrorem (or "no contest") clauses, most recently here.  In this month's Illinois State Bar Association Trusts & Estates newsletter, Seth A. Kaplan reviews the Illinois caselaw on this subject.  Mr. Kaplan's conclusion:

To date, no Illinois Appellate Court has enforced an in terrorem clause against a beneficiary.

Basically, courts have gone out of their way NOT to enforce these types of clauses, relying on arguments like "the clause is against public policy".  While this is bad news for people who want to limit the ability of their beneficiaries to contest provisions of their Will, I would point out that in terrorem clauses can still serve an important function in cases involving unsophisticated beneficiaries, who don't realize that these provisions are unenforceable.

I wish there was a mechanism for essentially certifying in terrorem clauses during the testator's life, either by a court proceeding or by a visit from a neutral third party (sort of a probate arbitrator).  The judge or probate arbitrator could issue a ruling stating that he or she has examined the testator and the testator's situation, and found that the testator is acting of his or her own volition, without undue influence.  Maybe the reasons for the disinheritance could also be set forth.

Being a baseball fan, a former resident of Japan, and a student of ADR, I followed the negotiations between Japanese pitcher Daisuke Matsuzaka (and his agent, Scott Boras) and the Boston Red Sox with interest. 

To review: The team with which Mr. Matsuzaka is under contract in Japan, the Seibu Lions, "posted" him.  This allowed major league baseball teams in the US to submit bids (a "posting fee") to Seibu for the right to negotiate with Mr. Matsuzaka.  The highest bidder received exclusive negotiating rights -- if the team and Mr. Matsuzaka reached an agreement, Mr. Matsuzaka would pitch for the team and Seibu would get to keep the posting fee.  If no agreement was reached, Mr. Matsuzaka would continue to pitch for Seibu, and the US team's posting fee would be returned to them.

As you can probably tell from the above, the posting process is a screwy one.  Seibu wanted Mr. Matsuzaka to leave, and wanted the posting fee, but had no involvement in Mr. Matsuzaka's negotiation with the Red Sox.

Boston wound up with the highest posting fee: a little more than $51 million.  Then the real negotiation began.  What did everyone want?

Mr. Matsuzaka apparently wanted -- badly -- to pitch in the US. 

Mr. Boras wanted what his client wanted.  To maximize Mr. Matsuzaka's salary (and, as a result, his commission)?  Of course.  To get Mr. Matsuzaka into the US to play ball?  Of course.  Mr. Boras may have also wanted to try and overturn the posting system, although this is questionable; if it is the case, there's a potential conflict of interest involved.

Boston wanted to sign Mr. Matsuzaka while minimizing his salary.

Boston had the upper hand in these negotiations, for two reasons:

(1) It was widely known that Mr. Matsuzaka wanted to pitch in the US.  It may be that Mr. Matsuzaka had no "BATNA" (Best Alternative to a Negotiated Agreement), other than returning to Japan.  And I've read some commentary suggesting that, in Japan, this would be considered a shameful thing.

(2) Boston had a secondary goal: keeping Mr. Matsuzaka away from its main rival, the New York Yankees.  Boston's high posting fee pretty much guaranteed that would happen, since Boston would either sign him or Mr. Matsuzaka would return to Japan.  The only way the Yankees might have a crack at Mr. Matsuzaka would be if the Red Sox didn't reach an agreement and were found by the commissioner of MLB to have been bargaining in bad faith.  In that case, the team with the second-highest posting fee might be allowed to negotiate with Mr. Matsuzaka.  (It's unclear who this second team might be, although it was rumored to be the Mets.)

After lots of drama (which is to be expected, given that the Red Sox and Mr. Boras were involved), an agreement was reached.  One of the interesting parts of the negotiation involved the question of whether Seibu could "kick back" a portion of the posting fee to Mr. Matsuzaka and/or the Red Sox.  The answer is "no."

Finally, one ridiculous thing I read in the wake of the agreement was that Mr. Boras had somehow "lost" the negotiation.  Days before the agreement was reached, rumors circulated that Boston had offered a 6 year, $48 million contract while Mr. Boras countered at 6 years, $66 million.  Some folks have taken the final number (6 years, $52 million) as proof that Mr. Boras failed.  But given his client's wishes, I disagree.  Mr. Boras represents his client, and if his client wants to reach an agreement, Mr. Boras must help him to do so.  And that's just what he did.

When my wife and I bought our current home, we were told that it was built in 1906.  That made me curious about (1) whether this was indeed true and (2) the previous owners of our house.  So, I made a trip to the Cook County Recorder's office yesterday to see what I could discover. 

The Recorder's office is located in Room 120 of the City Hall - County Building at 118 North Clark Street (here's a map). 

If you are planning on doing this type of research, you should bring along a deed for the property you are researching, including the PIN (Permanent Index Number) and the legal description.

You'll need to go through Room 120 and down the stairs to the basement.  There you can ask an employee to help you find the book where records for your property are located.  Books are arranged by information included in the legal description.  My home is located in "Section 18, Township 39 north, Range 13 east," so I was pointed to one of the books labeled 18-39-13.  There I found two pages containing a list of all of the recorded documents for my home since it was built in 1906 (ending in 1985 -- all documents after this date are available online here).  Some of these documents (especially those related to mortgages) aren't really important to me, but I am interested in the deeds by which previous owners bought and sold the property. 

There is a document number next to each document, which you can copy down and take to the microfilm library down the hall.  (For some older documents an employee will need to help you by converting the old numbers to microfilm numbers.)  You can then get the microfilm and a viewer, and print out the documents you want.

Happy hunting!

The Onion has its take on the Ken Lay - Enron debacle in this article, entitled "Ken Lay's Children Inherit 4,000 Pensions."  An excerpt:

"We were surprised and deeply moved that Dad had arrangements in place to provide for us after his passing," said the mogul's son, Mark Lay. "With his unbelievably generous legacy, we'll never have to worry about money again, unlike a lot of people here in Houston."

The younger Lay said that, as youths, he and his siblings were taught by their father to take an interest in the business he built and defrauded, and never to forget where their wealth came from.

...

In addition to providing for the financial security of his family, Lay stipulated in his will that a large part of his embezzled fortune be donated to the many charities he and his wife Linda supported, including the Houston YMCA, where many former Enron employees now reside.

I met with some potential clients last week. The clients own a business but are getting ready to retire, and would like to "get" the business to their oldest son, who has been involved in running it for a number of years.  The question is whether "getting" the business to the son should be done by selling it to him, gifting it to him, or by some gift/sale combination.

The bigger question I brought up at our meeting was how this transaction -- whichever form it takes -- will be viewed by the clients' other children.  And once again, that involves the meaning of "equal." 

Most people think of equal in the estate planning context as meaning something like this:

John and Mary Smith die with an estate of $4 million.  They have four grown children.  Under their Wills, they leave 1/4 of their estate to each child.

But what if we add additional facts to this example?  What if John and Mary's oldest son Tom...

-Is the only one of his siblings to work in the family business, which is worth $2 million?  Should Tom get the business?  What if Tom has run the business and increased its value significantly? 

-Is the only one of his siblings who ISN'T successful, and could really use a bigger inheritance?  What if this is due to the fact that Tom has had problems with drugs or alcohol?  Or what if instead this is due to the fact that Tom teaches at an inner-city school that doesn't pay very well?

-Has borrowed a significant amount of money from John and Mary to start a business?

-Dropped out of college to take care of John and Mary, both of whom had serious illnesses before their died?  What if Tom's career and social life suffered greatly as a result of this decision?

You get the point.  Too often parents take the easy way out, and make life difficult for their survivors, by simply dividing their property equally.  But you should always ask, "is equal REALLY equal?"

The second point is this: Maybe you decide NOT to treat your children equally.  In that case, it's important that everyone who might be affected by this decision be made aware of what you are doing and why, before you die.  That can go a long way toward cutting off any litigation after you are gone.

The November/December issue of Probate & Property has an interesting article written by Russell E. Haddleton and entitled "What to Do with the Body? The Trouble with Postmortem Disposition."  The article -- which I can't seem to find online -- gives a nice rundown of different types of burial, including (but not limited to):

-burial at sea (with citations!  see 40 C.F.R. §229.1); and

-freeze-drying ("the decedent's body is flash-frozen to minus 18 C..., then dipped in liquid nitrogen at a temperature of minus 196 C.... The body, which is then brittle, is subjected to sound waves that reduce it to powder.  The body can then be cremated or buried in a coffin made of cornstarch, which, when placed in the ground, will degrade in about a year").

In Part 1 of my two-part article on "Oak Park's Kelo Problem," I noted that "[t]he village of Oak Park owns a LOT of real estate, and its portfolio continues to grow."  How much real estate are we talking about?  The Wednesday Journal recently published a list of Village-owned properties:

1125-1133 Lake St. (the Colt Building)

1145 Westgate (office building)

1113 Lake St. (Los Cazadores restaurant)

1121-1123 Lake St. (retail building)

1112-1118 Westgate (office/retail building)

2-10 Chicago Ave. (mixed-use building)

2 North Boulevard (parking lot)

708 Lake St. (Tasty Dog restaurant)

130 N. Marion St. (former Sawyer Business College)

301 S. Oak Park Ave. (empty lot)

710-24 Madison St. (empty lots (3))

250-60 Madison St. (former Shepherd Volvo)

239-45 Madison St.

301-07 Madison St.

826-28 S. Oak Park Ave. (empty building)

The same issue lists tax revenues from twenty new construction projects undertaken in Oak Park since 2000.  The tax revenues from these projects? $4,131,914.  I wonder how much tax revenue the fifteen village-owned properties would generate if they were privately owned?

A few months ago, I recorded a deed by which my clients transferred their residence into their living trusts.  My clients were then contacted by a company that said my clients should purchase a certified copy of the deed for their property -- from the company, natch -- for a fee of $150.  I told my clients not to bother. 

This month's IICLE Flash Points newsletter on Real Estate Law (written by Steven B. Bashaw) says that my clients' experience was not an isolated incident:

[T]he Recorder of Deeds of Cook County, Eugene Moore, is alerting lawyers to scams that may impact their real estate clients. The first scam involves letters sent to unwary senior citizens suggesting that something may be wrong with the title to their home and they had better investigate. The method suggested to do this is to order a “certified” copy of the deed to their property at a cost of $150.00. Of course, the same document can be viewed on-line without cost (www.ccrd.info) and a hard copy obtained for less than $1.00.

This weekend's Chicago Tribune reported (here - registration may be required) on some exciting new changes to the Zillow website.  You can now:

1. List your home for sale, either by owner or with the assistance of a realtor.  If you are selling by owner, you can also consult the site's Real Estate Wiki; or

2. If you're not sure you want to sell but want to test the waters, set a "Make Me Move" price for your home (i.e. the price at which you would be willing to sell).

Buyers can also now perform searches of homes that are for sale or for which the owners have established a "Make Me Move" price.

Previous changes to the site allow owners to "claim" their home and create a more accurate estimate of its value by adding more accurate information about amenities and repairs.

Fun stuff, to be sure.  But the question is, will sellers and buyers really come to Zillow to transact business? 

According to the IRS, the annual gift tax exclusion will stay at $12,000 for 2007.  The gift tax exclusion is the amount that you can give to as many people as you wish, per year, without paying gift tax or even needing to file a gift tax return. 

If you are in Illinois, is there any reason to delay filing a Will in your possession?  I can think of one case where you may wish to wait: where the decedent may have enough contacts with another state that a probate will be initiated in that state, and not in Illinois.  In this case it wouldn't make sense to file the original Will in Illinois and then have to have a copy of the Will admitted in the other state. 

If this is a possibility, the named executor will want to compile a list of the decedent's assets with specific reference to the state where the assets are located.  An example:

Genghis Cohen used to reside in Illinois -- it's where his Will (now in the possession of his attorney) is located.  But Mr. Cohen moved to Florida shortly after his Will was executed, and all of his property is in Florida.  In that case, Mr. Cohen's executor should inform the attorney in possession of the Will NOT to file the Will in Illinois but rather to make arrangements to file the Will in Florida.

As I've mentioned before, I'm working on integrating this blog into my regular website, and am expanding the number of articles I will be posting there.  One of my major projects currently underway is a narrative that explains the entire probate process in Cook County, with hypertext links to forms, portions of the Probate Act, etc.  The following is an excerpt from that narrative, detailing the steps needed to file a Will.  Section references are to the Probate Act.

Anyone in possession of a Will of a decedent has a duty to file the Will “immediately” following the decedent’s death.  §6-1(a).  Notice the wording – “a Will,” meaning that it doesn’t matter whether the Will is the LATEST Will of the decedent, or even whether you think the Will is valid.

Yes, you can get in trouble for “secreting” or destroying a Will -- §6-1(b) contains language making these acts felonies, although there are big problems of proof.  The more common problem involves someone (usually an attorney) holding a Will for a client and not knowing that the client has passed away.  Overall, judges tend to understand that the holder of a Will may not know that he or she has the Will or even that the decedent has passed away.

The Will should be filed with the “clerk of the court of the proper county,” which presumably is the county where a probate would take place if needed.  Where would that be?  According to §5-1, it’s…

(a) the county where the decedent has a known place of residence;

(b) if the decedent has no known place of residence in Illinois, the county in which the greater part of the decedent’s real estate is located at the time of his or death; or

(c) if the decedent has no known place of residence and no real estate in Illinois, the county where the greater part of the decedent’s personal estate is located at the time of his or her death.

If the proper county for filing is Cook, you should go to the Clerk’s office on the 12th Floor of the Daley Center (50 West Washington Street in Chicago) with the original Will.  Before going, you should make your own copies of the Will (you won’t get it back – under §6-7, once it’s filed, it belongs to the Clerk) and find out the decedent’s date of death. 

When you file the Will with the Clerk, you’ll be given a receipt, which you should obviously keep with your important records.

The court battle over 104-year-old socialite Brooke Astor has been well documented in the news media (Wikipedia has a nice summary here).   A settlement agreement was recently signed by the parties, and now the bills are starting to come due.  According to this New York Times article,...

In the seven weeks since the agreement, those involved in the case have filed bills with Justice John E. H. Stackhouse of State Supreme Court in Manhattan for fees totaling about $3 million for the services of 56 lawyers, 65 legal assistants, 6 accountants, 5 bankers, 6 doctors, 2 public relations firms and a law school professor. Under state law, such payments would come out of Mrs. Astor’s assets, valued at over $120 million.

Sheesh!  Here's more:

The justice denied payments for the public relations firms, the time lawyers spent talking with reporters and the hours logged preparing the fee applications themselves.

I've never hired a PR firm or talked to reporters about a pending case -- I think kind of stuff is generally worthless.  But I will say that -- at least in Cook County -- judges will NOT allow attorneys to be paid for the time they spend preparing their fee petition.  Which makes perfect sense, doesn't it?

Last night I spent 2-1/2 hours (!) watching Superman Returns on DVD.  I knew I was in trouble from the opening scene, in which Lex Luthor (played by Kevin Spacey) apparently inherits a bunch of property from a wealthy older woman by having her sign a new Will -- with Luthor as the only witness -- just seconds before her (suspicious) death.  I suppose it's interesting that the older woman was played by Noel Neill (Lois Lane in the old TV series "Adventures of Superman"), but I really just felt like I was in Bizarro World -- would any court in Metropolis really uphold a Will executed under those circumstances?

As I've mentioned before, I'm working on integrating this blog into my regular website, and am expanding the number of articles I will be posting there.  One of my major projects currently underway is a narrative that explains the entire probate process in Cook County, with hypertext links to forms, portions of the Probate Act, etc.  The following is an excerpt from that narrative, detailing the steps needed to open a testate estate (that is, an estate where the decedent had a Will).

If it is necessary to probate the decedent’s estate, you will need to take the completed original of the Petition for Probate of Will (CCP 0315) and one copy of the Petition to the Clerk’s office on the 12th Floor of the Daley Center (50 West Washington Street in Chicago).

You will also need to complete the Probate Division Cover sheet (CCP 0199) and bring the appropriate fee.  Fees are based on the value of the probate estate as set forth in the Petition:

If the value of the probate estate is less than $15,000, then the fee is $119.00

If the value of the probate estate is more than $15,000, then the fee is $279.00

The Clerk will take your cover sheet, the original Petition, and the fee, and will give you your stamped copy of the Petition (make sure to ask for this), your case number, and the name of your judge.

Make sure to write the case number for the estate on the rest of the documents being used to open the estate, and on all subsequent documents. Note that Cook County judges for decedent’s estates are assigned randomly – the calendar is as follows (all room numbers are at the Daley Center):

Calendar #2: Judge Budzinski (Chief Judge of the Probate Division), Room 1803

Calendar #8: Judge Coleman, Room 1804

Calendar #7: Judge Kennedy, Room 1802

Calendar #11: Judge Malak, Room 1801

Once you know which Judge will be handling your estate, you should go to the Judge’s courtroom (with your copy of the Petition) and schedule a time to open the estate. Be aware that, according to Cook County Rule of Court 12.3(a), “[a] will must be filed at least 3 court days before the hearing on a petition for admission of the will to probate.”

The Illinois State Bar Association's Trusts & Estates Section newsletter for November '06 contains a summary of the interesting case of Hines v. Department of Public Aid (850 N.E.2d 148 (2006)).  Hines is an Illinois Supreme Court case that discusses the following scenario:

Husband starts receiving Medicaid payments from Illinois in 1994.

Husband dies in 1997.

Upon Husband's death, Wife inherits his property as surviving joint tenant.

Wife dies in 2001.

May the Illinois Department of Public Aid successfully pursue a claim against Wife's estate for reimbursement of the Medicaid payments made to Husband?  The short answer is "no."  The longer answer involves a look at the Illinois Public Aid Code (305 ILCS 5/5-13) and 42 USC §1396p, a federal statute.  Essentially, the federal statute allows states to recover Medicaid payments from the estate of the person who received the payments but NOT from the estate of such person's spouse.  Illinois could pass a law defining a Medicaid recipient's estate to include property passing from the recipient to the surviving spouse via joint tenancy, but it hasn't yet done so.  I presume that's due to a "bad PR" problem -- "you're taking granddad's house!" -- but I suspect that, as state budgets get squeezed tighter, we're going to see states like Illinois push harder and harder for language allowing these reimbursements.