February 28, 2008

The Dirty Secret about Creditors and Claims in Probate

People are often upset to hear that a deceased person's debts must be paid as part of the probate process. But the dirty little secret is this: because of the laws, and the incompetence of creditors and their attorneys, you can often avoid many debts.

Let me give an example: I'm administering an estate. The decedent had a pretty big credit card balance (over $15,000) at the time of her death. There were probably 9 or 10 other debts that she owed at the time of her death (mostly unpaid utility bills).

Upon opening the probate estate, I sent notice directly to all known creditors. I also published general notice to creditors in the local newspaper. These notices are required under Illinois law, which also bars claims that are not filed within a certain period of time (usually six months after notice is published in the newspaper).

The notice period for this estate expired on February 23rd. Can you guess how many creditors filed claims prior to the expiration? Not a one, which means all of these claims are barred.

Special "praise" should be reserved for the law firm representing one of the creditors (the credit card company). My experience with them:

-I send them notice of my client's death.
-I am contacted by one of their representatives (not an attorney) about settling the debt.
-I ask the representative to fax me information about the debt (monthly statements), so that I can ascertain whether the debt is legitimate.
-I don't receive the information; when I call and tell the representative this, he becomes belligerent.
-The representative finally mails me some information about the debt, although not the information I requested. He also sends me copies of the fax cover sheets for the faxes he supposedly sent to me. Unfortunately, these sheets show that the representative was using the wrong fax number.
-This is the last I hear from the representative.

So now the claims period has expired, which means the credit card company won't be getting paid. And they have their attorneys to thank.

Posted by Joel A. Schoenmeyer | | Email This Post

Posted In: Probate - Illinois Law

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February 26, 2008

What I Learned About DNA Testing

I recently had a case that involved DNA testing. My client asked me to help her prove that she was the child of a recently-deceased man (who never married my client's mother). After a lot of fits and starts, we were successful. A few things I learned during the process:

1. In probate proceedings involving an out-of-wedlock child, you need to rely upon Sec. 2-2 of the Illinois Probate Act: "If a decedent has acknowledged paternity of a child born out of wedlock or if during his lifetime or after his death a decedent has been adjudged to be the father of a child born out of wedlock, that person is heir of his father...."

2. It's important to do your detective work. I was able to locate DNA of the decedent by contacting various hospitals, one of which had retained a tissue sample for the decedent from about 20 years prior to his death.

3. Exhuming a body for DNA testing is VERY expensive, in most cases prohibitively expensive. I was given a conservative quote of $15,000. Testing of existent samples is much cheaper.

4. DNA testing results can show whether the decedent is excluded as a possible father and, if not, the probability that the decedent is the father. This can be expressed two ways: as a percentage (like, "there is a 99.8% chance that decedent is person X's father"), and via what's called a "combined paternity index." The combined paternity index is just the inverse of the percentage -- a 99.8% probability that decedent is person X's father means a combined paternity index of 500 (99.8 = 100-[100/500]).

5. 99.8% (or a combined paternity index of 500 or more) is needed to prove parentage under the Illinois Parentage Act of 1984 (see 750 ILCS 45/11(f)).

Posted by Joel A. Schoenmeyer | | Email This Post

Posted In: Probate Litigation

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February 25, 2008

A Peterson Update

Sorry I've been so bad at updating here lately! Last week our three-person family racked up three flus, bronchitis, and a double ear infection.

So, to get back to "news," there's some movement in the Drew Peterson case. (You'll remember that Mr. Peterson is the Bolingbrook, Illinois police officer whose fourth wife Stacy disappeared under mysterious circumstances.) You will recall that wife #3, Kathleen Savio, died from drowning. In her bathtub. Right before her divorce from Mr. Peterson was finalized.

I previously blogged (here) about how Ms. Savio's family was seeking to re-open her estate. The goal appears to be to file a wrongful death action against Mr. Peterson. The most recent step, taken recently, was a ruling by the Will County State's Attorney's office that Ms. Savio's death was indeed a homicide (here is the article). Now, of course, Ms. Savio's estate would still have to prove that Mr. Peterson did indeed kill Ms. Savio. This doesn't appear to be a case involving Illinois's so-called "slayer statute" (which prevents a person responsible for an individual's death from inheriting from the individual) -- my understanding is that Mr. Peterson didn't inherit much, if anything, at Ms. Savio's death.

Posted by Joel A. Schoenmeyer | | Email This Post

Posted In: Probate Litigation

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February 12, 2008

Powers of Attorney and Emergency Consent for Children

Yesterday a client called me with an issue that probably arises fairly often.

Client's husband's father lives in a foreign country, and is dying. Client and her husband will go and see him for a couple of weeks, but will leave their minor children at home with a relative.

The issue was, how do you allow this relative to handle medical emergencies that may arise with the minor children? There are a few options:

1. Power of attorney for health care. Section 4-3 of the Illinois Power of Attorney Act states that "[t]he health care powers that may be delegated to an agent include... all powers a parent may have to control or consent to health care for a minor child." Of course, the Illinois statutory form for power of attorney doesn't mention health care for minor children, so inserting specific language in the form may be necessary.

2. Short-term guardian appointment. Alternatively, section 11-5.4 of the Illinois Probate Act allows a parent to "appoint in writing, without court approval, a short‑term guardian of an unmarried minor or a child likely to be born. The written instrument appointing a short‑term guardian shall be dated and shall identify the appointing parent or guardian, the minor, and the person appointed to be the short‑term guardian." The written instrument has to be signed by the parent and at least two credible witnesses. The nice thing about this option is that you can set the actual term of guardianship (like, say, two weeks).

3. Contact your doctor or hospital and obtain a form from them. Here is a sample from Condell Hospital in Libertyville, Illinois.

Option #3 may be the best option -- you don't need to hire an attorney, and if you use your hospital's form, you know that it will be acceptable to them.

Thanks to members of the ISBA Transactional Law listserv who shared some of their ideas regarding this question.

Posted by Joel A. Schoenmeyer | | Email This Post

Posted In: Powers of Attorney and Living Wills

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February 11, 2008

Ernest Hemingway's Parents and the Premarital Agreement

Oak Park, Illinois (the town where I live) has had its share of famous residents. But the two most famous* are Frank Lloyd Wright (whose home and studio, along with a number of other houses he designed, are here) and Ernest Hemingway (who was born here and lived here throughout his youth). I've been on numerous Frank Lloyd Wright tours, but until this past weekend had never seen the Hemingway side of Oak Park (perhaps because I'm not a huge fan of his writing).

On Saturday, my family went to the Hemingway Museum as well as the restored Hemingway Birthplace Home. The Home gives nice, 90-minute tours -- it was a slow day for tourism in Oak Park, so we were able to finagle an abridged 30-minute tour, which was perfect for a tour group with a 6-year-old.

Anyway, it was interesting to learn about Hemingway's parents. Hemingway's father was a doctor. According to our tour guide, his mother (Grace Hall Hemingway) apparently was a fascinating woman -- she...

-went blind for a couple of months as a child, from scarlet fever;
-was an opera singer in New York before marrying Ernest's father;
-made Ernest's father sign a premarital agreement;
-made significantly more money than her husband (even though he was a doctor), giving piano lessons and performing concerts in Oak Park; and
-refused to perform what was at the time considered "women's work," such as cooking and cleaning.

I'd love to see a copy of that premarital agreement.

Another interesting tidbit: Grace Hall Hemingway collected the works of an artist named Maud Humphrey (her prints are still available on eBay). Later, Grace's son and Maud's son (an actor) became friends. Maud's son's first name was her maiden name (Humphrey). His last name was Bogart. And, to channel Paul Harvey**, that's... the rest of the story.

*I'm not sure who would come in third in a list of famous Oak Park residents, but it may be Edgar Rice Burroughs, the author of the Tarzan books as well as many others.
**Long-time resident of River Forest, the village next to Oak Park.

Posted by Joel A. Schoenmeyer | | Email This Post

Posted In: Premarital Agreements

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February 8, 2008

Title Insurance, Bugs Bunny, and the Brooklyn Bridge

People buying real estate sometimes ask, "why do I need title insurance?" There are a few reasons for it, but I think the best reason is that you don't wind up in a "Bugs Bunny - Brooklyn Bridge" scenario.

Do you remember that cartoon? (It's called "Bowery Bugs," and can be seen here.) It's the one where Bugs torments Steve Brody -- the cartoon ends with someone "buying" the Brooklyn Bridge from Bugs. Which, of course, Bugs doesn't own in the first place.

I'm reminded of "Bowery Bugs" by this article. Evidently Paul and Jill Willey, of Portage, Indiana tried to sell their house. But in this case, "their house" was just a house they were renting. The funny thing is that they succeeded. They listed the house on Craigslist, and sold it. Then sold it again!

Posted by Joel A. Schoenmeyer | | Email This Post

Posted In: Real Estate

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February 8, 2008

Re-Opening the Estate

Drew Peterson, Chicagoland's most talkative murder suspect, is back in the news. Or, rather, his third wife, Kathleen Savio, is in the news. As you may remember, Ms. Savio "was found drowned in her bathtub shortly before the divorce settlement between her and Peterson was finalized." That's according to this article, which talks about how various relatives Ms. Savio are seeking to re-open her probate estate. (It seems like there is a battle over who should be in control of the re-opened probate estate, but that's another matter.)

When do you re-open a probate estate? When you discover property that needs to be probated. For instance, let's say that you administer a decedent's estate -- publish the correct notices, pay claims, distribute to the legatees, close the estate in court. But you then discover that your decedent had a $200,000 bank account in his own name that you didn't know about, and that never went through the probate process. In order to get the $200,000 to the legatees, you need to re-open the probate estate. The procedure for re-opening an estate is set forth in section 24-9 of the Probate Act.

Posted by Joel A. Schoenmeyer | | Email This Post

Posted In: Probate - Illinois Law

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February 1, 2008

Uniform Transfers to Minors Act (UTMA) FAQ

What in the world is an UTMA account?

It's an account created for a minor. UTMA stands for "Uniform Transfer to Minors Act." Some states have UGMAs ("Uniform Gifts to Minors Act") instead of UTMAs. The terms UTMA and UGMA are interchangeable.

How is an UTMA account established?

Typically you set it up with a financial institution.

Who are the parties involved?

In addition to you (the person making the gift to the UTMA account) there's the beneficiary and the custodian.

What does the custodian do?

The custodian holds the property in the UTMA account for the benefit of the beneficiary. He or she invests the property, and can pay property out of the account for the beneficiary's benefit.

What's the advantage of an UTMA account over a guardianship?

The biggest benefit of an UTMA account is that you don't need to go to court in order to distribute property from the account. That saves time and money (although the downside is little or no court supervision). Also,...

Is the property in an UTMA account ever required to be distributed to the beneficiary?

Yes -- when the beneficiary reaches age 21, he or she gets all of the property in the account. This is another advantage over a guardianship (where property is turned over to the beneficiary upon reaching age 18).

Are there alternatives to an UTMA account?

Yes. The best alternative is creating a gift trust for the minor. Trusts are very flexible vehicles, and you can have provisions holding the property in trust way past the minor's 21st birthday.

Where can I read more?

The relevant statute for Illinois UTMA accounts is here.

Posted by Joel A. Schoenmeyer | | Email This Post

Posted In: Gifts and Gift Tax

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Forest Park, Illinois
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