Phelan v. Baskin -- Trust and Will Execution
The general rule in Illinois, as I learned it when I started practicing law, is that a valid estate plan requires the client to sign his or her living trust before signing a Will that references such living trust.
A typical scenario is for an individual to have a Will leaving the residue of his or her estate to the trustee of his or her living trust. If, when the individual signed his or her Will, the living trust wasn't in existence, then the gift to the living trust is said to have failed.
A new First Division Appellate Court case (Phelan v. Baskin, available online as a PDF here) casts some doubt on the above rule. The case involves the Will and living trust of a man named John Phelan. At trial in Cook County, Judge Malak found that Mr. Phelan executed his living trust after he executed his Will, meaning that the living trust wasn't "in existence" when the Will was signed. Therefore, the residuary gift in Mr. Phelan's Will (to the living trust) failed, and the residue of his estate had to pass via intestacy.
The Appellate Court reversed Judge Malak's finding, stating that the living trust WAS "in existence" when the Will was signed. The Court's ruling is based on things like the fact that the Will and living trust were part of the client's "total estate plan," and were signed "contemporaneously."
This is a ridiculous opinion, the kind that gives judges a bad name. The Appellate Court has essentially disposed of a bright line rule that everyone knew in favor of a touchy-feely test. I can understand staying with the current rule. I can also understand overthrowing the current rule, and simply saying that there's no requirement that a trust be "in existence" when it is referenced in a Will (as long as it's in existence when the testator dies, who cares?). What I can't understand is coming up with a new rule that is based on the facts and circumstances of every particular case, just because you don't like the result in THIS case. So now we're going to see a lot of time devoted to analyzing what the court's opinion actually means -- What if the Will was signed one day (or one week) before the trust? Is a trust that I want to create but haven't created "in existence"? etc. etc.
That doesn't help the public or their attorneys.
