Death and Taxes Blog

Illinois's so-called "slayer" statute (section 2-6 of the Illinois Probate Act) states that "[a] person who intentionally and unjustifiably causes the death of another shall not receive any property, benefit, or other interest by reason of the death." This section is applicable to any interest the killer might have taken, so it applies to probate and non-probate property alike. (For instance, the killer couldn't take under the decedent's Will or as a beneficiary of the decedent's life insurance policy.)

The Fourth District Court of Appeals recently considered the slayer statute's application in a case (Dougherty v. Cole, Jr. -- here as a PDF) involving insanity. The facts are fairly simple: Jack had a manic episode and beat and stabbed his mother, Jane, to death. Jack was found not guilty of Jane's murder by reason of insanity.

May Jack inherit from Jane? He may not, according to the above decision. The slayer statute was amended in 1983 to focus on the two main points: "intentionally" and "unjustifiably." The Court does a nice job of reviewing the rationale behind the 1983 amendment, which was really an expansion of the statute. Its finding: criminal intent does not matter. Jack intended to kill Jane, knew she was his mother, and knew that he was killing her. It doesn't really matter that Jack did so because he was being told (by the voices in his head) that she was the enemy.

Chicago attorney Margot Gordon has a nice article in the new (May) issue of the Illinois Bar Journal, in which she discusses statutory custodial claims. The article is here, for ISBA members.

I've written about these types of claims before, but Ms. Gordon makes some good points that I haven't raised:

1. The statute states that a statutory custodial claim "shall take into consideration the claimant's lost employment opportunities, lost lifestyle opportunities, and emotional distress experienced as a result of personally caring for the disabled person." There's been some question in the past as to whether this language is meant to establish additional requirements for the claimant to meet. Ms. Gordon cites the Estate of Lower case (which I mentioned here) for the idea that "a claimant may recover even if he or she did not suffer these latter three losses."

2. Most of the statutory custodial claims cases I handle involve estates with not a lot of money. But it is possible that you could have a large estate (perhaps due to a personal injury settlement) where a statutory custodial claim would be appropriate. In such a case, the claim might be a clever way to reduce the tax burden. Statutory custodial claims are taxable as income under Section 61 of the Internal Revenue Code, but deductible for estate tax purposes under Section 2053. Because income tax rates are lower than (typical) estate tax rates, a statutory custodial claim may lead to a tax savings. (Ms. Gordon's example is of a $15 million estate -- a successful $3 million statutory custodial claim would save $377,000 in taxes.)

If a deceased person owned less than $100,000 worth of property in his or her own name at death (not including real estate), it may be that a probate isn't needed in order to administer the property. Instead, an attorney can prepare a small estate affidavit to transfer the property where it needs to go (to the beneficiaries under the deceased person's Will, if there is one, or to his or her heirs if there isn't).

I talked about small estate affidavits a long time ago, here, but wanted to delve a bit more into what information you'll need to furnish to your attorney, so he or she can prepare the affidavit. Here's my list:

1. Deceased person's name and last address.

2. Description and estimated value of each asset owned by the deceased person in his or her own name at death. (For example: "Fidelity money market account #12345 valued at $15,000.")

3. Names of deceased person's surviving spouse, minor children, and adult dependent children, if any.

4. Answers to the following:

a. Has a probate estate been opened, or do you plan to open one in the future?
b. Have the deceased person's funeral expenses been paid?
c. Do you know of any claims (bills) of the deceased person that have been or may be submitted for payment?

The attorney will also need copies of the deceased person's death certificate and Will (if any). If the deceased person had no Will, the attorney will discuss heirship with you (so you want to make sure you know the names and contact information for the deceased person's closest relatives).

Attention Cook County probate practitioners: Judge James W. Kennedy of the Cook County Probate Court has retired, effective as of last Friday the 22nd of January. To replace him, Judge Mary Ellen Coghlan has moved over into deceased estates from guardianship, leaving the following judges for deceased estate matters:

Calendar #2: Judge Budzinski (Chief Judge of the Probate Division), Room 1803
Calendar #8: Judge Coleman, Room 1804
Calendar #7: Judge Coghlan, Room 1802
Calendar #11: Judge Malak, Room 1801

OK, this will be my last post on Dunn v. Patterson (for a while, at least). Previous discussions: here and here.

I spoke to someone with knowledge of the case, and learned the following:

1. Lawrence Patterson was NOT named as a successor trustee in the documents.

2. One of the perplexing things about the facts laid out in the opinion: why didn't the Dunns at least take a meeting with Patterson? Obviously, doing so would have been cheaper than going to court. Well, according to my source, the Dunns DID attempt to set up a meeting with Patterson. He wound up canceling.

3. Also -- and this is consistent with other complaint I spoke about -- Patterson planned to charge the Dunns at his hourly rate ($350) for this meeting.

Let's say that you've followed tips 1-4, and the claimant still won't go away. What choices do you have? There are two, really:

1. Settle; or

2. Go to trial.

Tip #5 is to try and settle the claim.

When real life people have debt, it can be a big pain. You are, in many ways, at the mercy of bill collectors. If you fail to make a payment, they can ruin your credit rating, making it difficult for you to rent or purchase a home (or, perhaps, get a job). They can also be an incredible nuisance, calling at all hours of the day.

By contrast, dead people (or their representatives) have a number of advantages over creditors:

a. They don't care about their credit rating -- it's irrelevant.

b. Wherever you go when you die, I doubt you receive calls from bill collectors.

There's also the advantage of time, which is usually seen as a disadvantage but may be a real asset. Most creditors want their money ASAP. But most creditors understand enough about probate to know that the release of funds takes time. That makes them willing to accept much less than the amount owed if they can get the money right away. For instance, a credit card company with a claim of $10,000 may be able to accept $7,000 or $8,000 (or even less) if they can receive payment ASAP. There's only one way to find out, and that's by asking for a discount. The worst thing that can happen is the creditor tells you "no."

One final note: if you do settle for less than the value of the debt, the difference between the debt amount and the settlement amount is income to the estate (as forgiven debt).

4. As I said previously, the key to dealing with claims is to go on the offensive. That means following up on the claims in court.

Many times a claimant either won't have an attorney, or will have an attorney who isn't familiar with court procedures (a dead giveaway: the attorney who filed the claim is out of state). The latter is especially true for Cook County probate court, which has its own system for dealing with claims. Basically, once a claim is filed with the court, the claim is assigned to "claims call." Claims call is held on the fourth Monday of every month - here's November's claims call, if you want to see a sample. (New claims calls will be posted at the Cook County Probate Division's web page, under the Online Case Info tab. If you visit this page, be sure to check out the picture of RuPaul!)

Section 12.10 of the Cook County Court Rules states that:

(e) It is the duty of the attorney for the representative to appear in court on the call of a claim listed on the claim calendar. Subject to the discretion of the court, failure of the attorney to appear shall be deemed to be a consent to the allowance of the claim unless a responsive pleading has been filed.

So the estate's attorney should be present at all court hearings. But this goes the other way as well. Section 18-7 of the Illinois Probate Act states that "[o]n the call of a claim it may be allowed, set for trial, continued or dismissed." My experience is that a probate judge will dismiss a claim (if asked to do so) if the claimant's attorney doesn't show up for two court hearings in a row.

3. Last time I talked about how you can minimize the claims period by giving notice. If things break correctly, maybe the creditor won't even file the claim.

But sometimes a creditor does file the claim -- informally, by sending it to the personal representative or his or her attorney instead of filing it with the court. The personal representative can then send a "Disallowance" of the claim to the creditor, using the procedures set forth in Section 18-11(b) of the Illinois Probate Act. The Disallowance can cut the time for the creditor to file his or her claim with the court, to two months from the time the Disallowance is sent to the creditor.

2. Tips 2-4 are similar in that they all require that you (the personal representative) do a full-court press to deal with the claims. This is somewhat counter-intuitive -- I think we're all familiar with the idea of a defendant (like in a foreclosure action) who delays, delays, delays. We want to do the opposite here, since here we're dealing with a notice requirement, and statutes of limitations. Basically the personal representative has to give:

-actual notice (via letter) of the probate to the decedent's known (or reasonably ascertainable) creditors; and

-notice via publication of the probate to all other ("unknown") creditors.

(See Section 18-3 of the Illinois Probate Act for details.) Having to give notice is the bad part. The good part is that the statute of limitations expires in 3 months (for creditors given actual notice) or 6 months (for creditors given notice by publication). If a creditor doesn't file his or her claim within those periods, the claim is barred.

Tip 2: You can and should give or publish notice in a way that minimizes the "window" during which creditors may file claims. To do so, you immediately publish notice once the probate is opened, then wait three more months and give written notice to all creditors you know of (after making a reasonable search by reviewing the decedent's papers and mail).

You would be surprised by how often creditors simply fail to file their claims within the above periods. This is especially the case with large creditors, where notice may get "lost in the shuffle."

Over the past 10 or 20 years, Illinois has worked to make it easier for ex-spouses to collect unpaid child support. Two ways in which this is done:

1. Section 12-108 of the Illinois Code of Civil Procedure, which eliminates the statute of limitations for child support. ("Child support judgments... may be enforced at any time."); and

2. Sections 2-1303 and 12-109 of the Illinois Code of Civil Procedure, which indicate that interest judgments SHALL accrue at 9% per year.

You should view probate as another (and your last) bite at the apple if you have a claim against someone. So, a woman might sue her ex-husband's estate for unpaid child support if there's an unpaid balance at his death, even if the balance is from many years ago. How might that play out? From my experience, here are the issues that will arise:

-Is the claim in any way barred, by the statute of limitations or by another theory (like equitable estoppel or laches)? You would think that this is a moot point, given the language of 12-108 mentioned above, but that language was only added in 1997. Is it possible that unpaid child support from prior to that date cannot be collected? Unlikely. The closer issue involves unpaid child support that became barred prior to 1997 (when there was a 20-year statute of limitations on child support). My experience is that the court will still require payment from the decedent's estate.

-Is interest a sure thing? No it isn't, at least not in the 1st District of Illinois. Yes, there's "shall" language in 12-108. But there is a long line of cases -- including, most recently, the case of Illinois Department of Healthcare and Health Services v. Wiszowaty (913 N.E.2d 680), decided on August 14, 2009 -- in which courts have stated that judgments in divorce-related proceedings (including judgments relating to child support) are not subject to mandatory interest. Rather, interest is at the discretion of the judge (although, if granted, the interest must be paid as set forth in the statute).

I previously wrote about how to file a Will in Cook County at Avvo.com.

Recently I had a question from an attorney who watched my free "Probate" video at MentorCLE. He was completing the forms to open a Cook County probate estate, and was perplexed when it asked for the Will number, written as ___ W ___. What did this mean? What was he supposed to fill in?

When you file a Will in Cook County, the clerk records the date of filing in a big book, and assigns it a number (like 2009 W 000001, for the first Will filed in Cook County in 2009). Sometimes the clerk will stamp this number on your receipt for the Will; sometimes they forget. You can ask them to do it, or ask them for the number, when you file. Or, if you forgot to do that, you can check online at the clerk's website, here. Here's what you do:

1. Click on "Online Case Info."

2. Click on "Probate Wills Docket Search."

3. Input the name you want to search, and it will give you the Will number. (For example, Mike Royko's Will is 1997 W 004517.)

Here's a piece of legislation that might actually help(!).

For a long time there's been an issue involving a decedent and joint accounts. Mom is elderly, and you (daughter) help her out with her banking. Mom adds you to her checking account with a $50,000 balance. Did Mom mean for you to...

1. Simply write checks on her behalf, for her convenience? OR

2. Inherit the account upon her death?

You might say #2; your siblings might say #1. In any case, it's a mess. But maybe P.A. 96-123 will help. As estate planning and probate guru Patricia Brosterhous explains it:

Effective January 1, 2010, a “depositor” (primary account holder), can create such an account for the purposes of permitting a “convenience depositor” access to pay or deposit funds for the convenience depositor. Deposits made to such an account will not affect the title, the depositor shall not be considered as having made a gift, and the convenience depositor shall not have any right of survivorship in the account.

Sometimes you (the probate attorney) may not want to keep acting as such. Maybe the client is difficult, or there's some other reason you'd like to step aside. Or, sometimes you (the client) decide you want to get rid of your attorney. Can you do these things?

The answer is yes, so long as there is someone willing to take on the case. In other words, probate judges (at least in Cook County) will let the current attorney step down as long as someone else is willing to step up. You can coordinate the transfer by presenting the court with a motion to substitute (signed by the client, the old attorney, and the new attorney) and an appearance form (signed by the old attorney, withdrawing his appearance, and the new attorney, entering his appearance). If you have these documents, the judge should give you what you want.

That being said, it's important for the client and the old and new attorneys to be on the same page with respect to things like fees (owed to the old attorney) and files (held by the old attorney).

A couple of weeks ago I recorded an hour-long video presentation on "Handling Your First Illinois Probate Estate" for the mentorcle website. This site has a great business model: anyone can watch a video for free -- attorneys only pay if they want CLE credit for watching. A link to my presentation is here. I've tried to make it accessible to attorneys as well as laypeople.

1. Bring the following to Room 1201 of the Daley Center (50 West Washington Street, Chicago):

a. Your checkbook
b. Original claim form, completed and signed by your client (note that claim form should include both pages of this form)
c. Two (or more) copies of the original claim form

2. The attorney should complete page 2 of the form to show that the required notice to the personal representative and his or her attorney has been sent the day the claim is filed (see below).

3. Go to the desk marked "Claims." The clerk will review your claim form and (hopefully) approve it. The clerk will then give you a receipt, and send you to the cashier.

4. Pay the cashier and bring proof of payment back to the "Claims" desk.

5. The clerk will then file your original claim, and stamp your copies as filed. You will also get a court date and time, which you should fill in on all of your copies.

6. Send copies of the claim to the personal representative and his or her attorney, the same day as the filing. (Yes, I know this seems strange, that you would fill out a form saying you have given notice before you actually have. But I don't see any other way to do it. The statute (755 ILCS 5/18-1(b)) says you send notice within 10 days AFTER the claim has been filed, but the clerks don't seem to accept a claim for filing unless it shows that the claim has already been filed. Ah, Chicago!)

This is an interesting article about how the bad economy has made people more aggressive in pursuing unclaimed property. In most states, unclaimed property is accessed via the state's treasurer -- that's the case in Illinois as well (go here for the state's site).

And, as the website mentions, the property might not be just in your name -- check for deceased relatives as well. However, the article is right to mention that you'll want to do a cost-benefit analysis to determine whether it's worthwhile to collect the property. I am working with the Illinois state treasurer on two estates involving unclaimed property, and let me just say that it's a lengthy process (not that I'm blaming them -- they don't want to be in the position where they pay the wrong people). You may need to present a small estate affidavit or even open a probate estate for a deceased person. And you also may need to present evidence of the decedent's address. All of this means you'll want to make sure that you'll be making money on the transaction, not losing money.

I've complained before about the huge backup in the Cook County Probate Court for deceased estates. This isn't the fault of the judges, who are working as quickly as they can; rather, it's a problem that has arisen because we have only four judges handling all of the deceased estates (new and old) in Cook County.

Luckily, Judge Budzinski has issued a general order aimed at helping to speed up the probate process. Recently, attorneys would have to wait four weeks or even more between filing their initial petition and getting a court date to open the estate. However, the general order (a copy of which is attached here) allows an attorney to schedule a hearing with Judge Cesario to open the estate if the attorney would otherwise not be able to get a court date within two weeks.

The estate of Kathleen Savio, Drew Peterson's third wife, was re-opened last year. Estates are typically re-opened when new assets are found -- in this case, the new asset is a potential wrongful death judgment against Mr. Peterson. I've dealt with re-opened estates in other contexts, though. In one estate I handled early in my career, a deceased person's safe deposit box (containing stock certificates and rare coins) was discovered well after his probate estate was closed. The estate needs to be re-opened because that's the only way that anyone will have legal authority to deal with the assets (pursue a wrongful death action, sell the stocks or coins, etc.).

A somewhat similar situation arises when assets of a long-deceased person (one whose estate was never probated) are located. I have this situation with an estate right now. The decedent died in 1991, but her family only recently learned that significant assets were being held in her name as unclaimed property (by the Illinois Treasurer). To claim those assets, we need to open a probate estate.

So (picking up from Part 1) -- you've sent a final report and an accounting to the beneficiaries. Now what?

Well, you also need to get signed receipts from them. For beneficiaries who receive a specific item of property or set amount of money in the decedent's Will, a very simple receipt will suffice.

If a beneficiary is receiving a share of the estate, which is affected by attorney's fee and the personal representative's fee (if any), then the beneficiary needs to sign a receipt and consent to the payment of those fees.

In any event, receipts have to be returned BEFORE the distributions are made (or at the same time), for reasons I detail here.

In order to close the estate, the attorney will go to court with the original final report, and receipts for all beneficiaries. Once those documents have been presented to the court, the court will issue an order of discharge, releasing the personal representative from his or her duties. The estate is then considered officially closed.

I wanted to discuss, in a few parts, what happens when the administration of a probate estate is completed. How is a probate estate officially closed out?

Note that this analysis only applies if the estate is in what's called "independent administration," which most Illinois estates are. This means there is very little court supervision; basically, the court is happy if the beneficiaries are happy.

Where do we start? With information being provided to the beneficiaries. The personal representative should have been doing this all along, just to keep them happy (and should have been keeping good records of his or her actions). If that's the case, providing information will be a snap. The personal representative will give each beneficiary:

1. A final report, which is a document signed by the personal representative stating that all aspects of the probate are complete (all claims and taxes paid, all distributions made, etc. etc.); and

2. An accounting. This needn't be formal; or, rather, it should be as formal as the beneficiaries want it to be. An accountant or an attorney can prepare this, or the personal representative can do it on his or her own to save money.

In Part 2 (on Thursday), I'll explain what is needed from the beneficiaries.