Death and Taxes Blog

Robert S. Held has a nice article in this month's Illinois Bar Journal (registration required -- but it's here) regarding the doctrine of election. What is the doctrine of election? According to the author, it's a "common law doctrine... which prevents a beneficiary from accepting benefits under a will and then challenging that same document." So, if you're left $5,000 under your dad's Will (with the rest going to your ugly stepsisters), you can't accept the $5,000 and then contest the Will. It's an either/or proposition. Mr. Held also indicates that the doctrine probably applies to bequests under a trust as well as bequests under a Will.

Putting on my probate litigation hat, the above makes me think about new ways to deal with potential Will contests. Let's say you represent Son (who is left 99% of Mom's estate and who is her executor) -- Daughter is left only 1%, and may challenge the Will. Upon Mom's death, get in touch with Daughter ASAP and try to give her the 1% to which she's entitled. If she accepts, then you don't have to worry about a Will contest.

Is it the bad economy, or something else? It seems like I've had a lot of clients walk through my door of late, presenting the same scenario:

-Parent died

-One sibling "took over" the probate (either because they were named in the Will as executor, or just because they took the initiative)

-That sibling isn't doing his or her job

By "isn't doing his or her job," I mean that the sibling is not carrying out the fiduciary duties associated with administering an estate. Things like:

1. Failing to give the other beneficiaries an inventory of the decedent's property.

2. Failing to give updates about the status of the estate (is property being sold? are bills being paid?).

3. Self-dealing ("$1 for the estate, $1 for me").

This Detroit Free Press article presents a similar Michigan case that's a cautionary tale. In that case, the parent is still living, but suffering from dementia. She put two of her daughters as co-owners on her bank accounts, to help her pay her bills. But the daughters allegedly looted the estate for almost $800,000.

I've talked previously about citations in the probate context (here is an introduction). These actions are usually brought by the personal representative, to find out about (and, if successful, re-acquire) property held by a third party that rightfully belongs to the estate. There are two different types of citations:

-citation to discover information (like a discovery deposition, but much broader in scope; Judge Malak, who I cite below, states that "a citation to discover... is a total 'fishing expedition'")

-citation to recover assets (you ask the court to rule on who owns certain property)

Usually you file your citation to discover, and then, using the information you have gleaned from that citation, you file your citation to recover. But HOW you file your citation to recover is important. Here's Cook County Probate Court Judge Jeffrey Malak's take (this is from his chapter in IICLE's Litigating Disputed Estates, Trusts, Guardianships, and Charitable Bequests, available for sale here):

The proper order to be entered upon completion of a citation to discover... is that the citation is discharged. If the petitioner is in position to file an amended petition to recover assets, leave to do so may be granted at the time of such discharge. If the petitioner is not in a position to amend to a recovery citation, he or she may request that at a later time, but new service will be necessary. (Emphasis added)

I've placed those last five words in bold because they're important. It's a pain in the butt to serve the respondent in a citation action. You have to do it with the citation to discover, so why do it again? When you go in to discharge the citation to discover, do what Judge Malak indicates, and go in with a motion for leave to amend the citation to discover and turn it into a citation to recover. Then you won't need to serve the respondent a second time. (One more cite: amending a citation to discover -- to turn it into a citation to recover -- is specifically allowed under the Estate of Chernyk case, 485 N.E.2d 1169 (1st Dist. 1985).)

The Wills, Trusts & Estates Prof Blog has this post about a case involving contingent fee arrangement in an estate. 40% of $100 million. Wow.

The court couldn't decide, without additional facts, whether the 40% fee was unconscionable? Gosh -- I don't know how many additional facts you'd need. The "typical" contingent fee amount is either 30% or 33%, and that's for contested matters.

I've got two problems with contingent fees in probate:

1. The value of the estate rarely bears ANY relationship to the amount of time required. Or, to the extent there is a relationship, it's an inverse one. I've had huge probate estates, with millions of dollars in assets, that required little of my time. That's because we'd done a fair amount of planning before death. And I've had a lot of tiny probate estates that required a ton of time. (I've got a bunch of those right now, it seems.)

2. How much of your typical estate is contested? In a PI case, you can argue that every dollar you as plaintiff receive is due to your attorney. That's not really the case in the estate context, where you are just collecting assets, is it? A few years ago, I took over as attorney for two estates (husband and wife). The previous attorney had charged a contingent fee of 30% for collecting estate assets! Yes, that involved some negotiations with insurance companies, but the arrangement always struck me as questionable (especially given the facts of the case, and the identity of the executor).

Note: I do occasionally agree to accept litigation cases on a contingent fee basis (Will contests, claims, etc.).

During a recent discussion on a ISBA (Illinois State Bar Association) listserv, the case of Society of Lloyd's v. Estate of McMurray case (available here) was brought to my attention. Given my interest in claims against non-probate property, it seems worthwhile to discuss it.

To begin with, this is a Federal (7th Circuit Court of Appeals) case. The issue is whether Society of Lloyd's can extra payment of a judgment from a decedent's trust. The order of events:

-9/11/96: deadline for payment of premium by McMurray
-9/18/96: McMurray creates (and later transfers property to) a living trust
-8/28/97: McMurray dies
-3/11/98: Society of Lloyd's obtains a judgment against McMurray in English court

The court's decision here seems pretty clear -- they use the language of the living trust to find that Society of Lloyd's is a valid creditor of the trust:

The trust instrument provides... in crystal-clear language, that at McMurray's death "the trustee shall pay from the residuary trust estate without reimbursement my legally enforceable debts."

Equally clear is the fact that the court does not hold trust creditors to the same limitations period as probate creditors:

Although the judgment is no longer legally enforceable against McMurray's estate, that fact is irrelevant for purposes of enforcing it against the trust.

What's tricky for estate attorneys, though, is the issue of what would happen if the trust did NOT allow for the payment of legally enforceable debts, or for the payment of any debts at all? Could the trust be forced to pay in that situation? If the answer to that question is no, then why would we as attorneys include language allowing the payment of debts in the trusts that we draft?

At bare minimum, I think it makes sense to draft a trust debt payment provision with specificity regarding when the debt is no longer considered valid. For instance, you could say that claims against a trust are only valid if they comply with the claim filing requirements of the Illinois Probate Act.

Evidently Massachusetts recently made some extensive changes to its Probate Code -- the story is here. I don't know much about the other provisions, but the provision that says "[i]n the case of no will, the spouse gets the entire estate if the children are all of the marriage" is a good one.

As I tell people when I give my Estate Planning 101 speech, if you die without a Will, the Illinois state legislature will gladly make one for you. And they'll probably mess it up. Currently, if you die intestate (without a Will) survived by a spouse and children in Illinois, your estate goes 1/2 to your spouse and 1/2 to your children. I have yet to meet a person who likes this arrangement, at least in the case where the children are the children of both parents. Mostly people state their wishes like this: "If I die, give everything to my spouse. If both of us die, give everything to our kids." Yet that's not what Illinois law says.

When I advise same-sex couples on their estate planning, one of the issues we have to discuss is how the couple is viewed by siblings and parents. This is important because, in the past, family members have sometimes been successful in overturning a gay or lesbian testator's Will in cases where the Will left everything to the testator's partner. That's why the New York case mentioned in this article is so interesting.

The Judge's opinion was that a same-sex couple that marries (in this case, the couple married in Canada) was a married couple for purposes of probate. Here, H. Kenneth Ranftle died with a spouse (J. Craig Leiby) and no children. As a result, Mr. Leiby is Mr. Ranftle's sole heir, and no notice must be given to Mr. Ranftle's three siblings. (I presume that heirship in New York works just as it does in Illinois -- if you are survived by a spouse or by children, then those individuals are your only heirs.)

If the Judge's opinion holds, then parents and/or siblings of a gay or lesbian who is married would have no standing to be involved in a probate, since they would be neither heirs nor legatees.

This ain't no party, this ain't no disco this ain't no fooling around This ain't no mudd club, or C. B. G. B. I ain't got time for that now

-Talking Heads, "Life During Wartime"

The famed NYC club CBGB is in the news in a probate context, according to this New York Times article. The dispute -- between the estate of Hilly Kristal and his ex-wife, Karen Kristal -- centers on rights to the club's name and property. (The club closed in 2006, but the CBGB brand does big business selling merchandise to poseurs.)

The probate issue involves lack of capacity and undue influence, but the twist is that Karen is taking these positions with respect to her own signing of a agreement with Hilly:

In court papers the estate says that Ms. Kristal voluntarily signed over ownership to her former husband in January 2005, just as CBGB was beginning to have troubles with its landlord over unpaid rent, which ultimately led to the club’s closing.

Ms. Kristal said that she had no memory of signing this document, which is also signed by Mr. Kristal, but not by any lawyers or witnesses.

Ms. Kristal suffers from hydrocephalus, according to her lawyers, which can affect short-term memory, and in an interview she repeated many of the same anecdotes numerous times.

Her lawyers argue that even if Ms. Kristal did sign the document, she had been manipulated by her daughter and former husband.

Posted by Joel A. Schoenmeyer | Permalink | Email This Post

Posted In: Estate Plans of the Rich and Famous , Probate Litigation

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It's always interesting when I'm facing the same situation in two different cases but from opposite perspectives. That's where I find myself with respect to the following issue:

beneficiary (child of X) has questions about the actions taken by executor (also child of X) before X's death, as an agent under X's power of attorney

The question is, to account or not to account? By which I mean, does the executor take the time to prepare an accounting of his or her actions as agent for the beneficiary? In Illinois, such an accounting is not required -- in order to obtain it, the beneficiary would have to file a citation action. But my preference, as an attorney trained in alternative dispute resolution, is to try to resolve court battles before they start. So, what's the harm in providing such an accounting, if it can actually allay the beneficiary's fears?

In my opinion there IS no harm, unless you are convinced that...

1. the beneficiary intends to start a court battle anyway; or

2. the beneficiary has acted unreasonably at other times, and you don't want to reward such behavior.

I guess these two points are related -- the executor has to make a cost/benefit analysis about whether it's worthwhile to provide the requested information. That means the beneficiary should strive to create an atmosphere in which there's a clear benefit offered to the executor for doing what is requested, and a clear detriment to NOT doing what's requested.

Is there a parent alive who WANTS his children to fight over his estate? I hope not.

But what can you do to avoid fighting? Well, one thing you can do is to disclose your plans, by handing out copies of your estate planning documents to your children. The problem with this approach is that you may wish to change your documents in the future. Also, some folks like to maintain a little privacy.

Another approach is a letter to your children, touching on "hot button" issues and telling how they should be resolved. The "hot button" issues may not include how your estate or trust is to be distributed (usually there will be an equal distribution anyway). Rather, it could touch on things like:

-how you want your executor or trustee to be compensated OR

-how your personal property should be divided.

These are things that can take up a lot of space in an estate planning document, but they seem perfectly appropriate issues to raise in a letter that starts, "here's how I feel about the following."

Here's an interesting one: Linda Damm was killed by her daughter's boyfriend, Bryan Grove. Her daughter, Tess, was 15 when she evidently helped to "plan and facilitate" her mother's murder. The question is whether Colorado's so-called "slayer statute" applies to prevent Tess Damm (a minor) from inheriting from her mother's estate. This article details the situation. One lawyer calls the argument "interesting" -- the parties are currently going into mediation.

The Illinois statute (Section 2-6 of the Illinois Probate Act) reads in relevant part as follows:

Person causing death. 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, whether as heir, legatee, beneficiary, joint tenant, survivor, appointee or in any other capacity and whether the property, benefit, or other interest passes pursuant to any form of title registration, testamentary or nontestamentary instrument, intestacy, renunciation, or any other circumstance. The property, benefit, or other interest shall pass as if the person causing the death died before the decedent, provided that with respect to joint tenancy property the interest possessed prior to the death by the person causing the death shall not be diminished by the application of this Section. A determination under this Section may be made by any court of competent jurisdiction separate and apart from any criminal proceeding arising from the death, provided that no such civil proceeding shall proceed to trial nor shall the person be required to submit to discovery in such civil proceeding until such time as any criminal proceeding has been finally determined by the trial court or, in the event no criminal charge has been brought, prior to one year after the date of death. A person convicted of first degree murder or second degree murder of the decedent is conclusively presumed to have caused the death intentionally and unjustifiably for purposes of this Section.

As you can see, Illinois also talks about "person," just as Colorado does. Is someone under the age of 18 a "person" for purposes of the statute? I would think so, although the Probate Act doesn't define the term. Interestingly enough, there is a provision in the part of the Probate Act that applies to guardianship and disabled adults -- Section 11a-2 -- that talks about a "disabled person" as a "person 18 years old or older who...."

Here's a double dose of crazy for your reading pleasure:

1. Probate and Switch, by Lou Ann Anderson. My favorite part: "Attorney misconduct is rarely punished so our country is full of attorneys who will bend or break rules. These 'bottom feeders' are the vanguard flag carriers emblematic of why the general public has such disdain for the legal profession."

2. Illiinois [sic] Guardianship Law Similar to Slavery-Law Should Be Stricken as Vague, Prohibiting too Much Speech and Too Discriminatory, by James Timothy Struck. Looking for the link between slavery, Nazi Germany, and guardianship? Here it is!!!

This article tells the pretty interesting story of a Will contest. Some of the facts are typical of these types of cases -- a Will signed when the testator may or may not be competent, and charges of undue influence. But there are also some twists (the testator is a former model, the main asset is a crumbling mansion in Dallas). Plus, there are the non-probate-related court actions:

-the men who purportedly exercised undue influence (Mark McCay and Justin Burgess) over Ms. Bendtsen, and their attorney(!), are facing criminal charges for theft (a rarity in these types of cases in Illinois, although I think everyone is becoming more aware of the issue of elder abuse); and

-Messrs. McCay and Burgess have filed a libel lawsuit against Ms. Bendtsen's daughter and The Dallas Morning News.

Professor Beyer has more information on the case here.

Besides an action to contest a Will, a frustrated beneficiary may attempt to proceed with a tort known as "intentional interference with an inheritance." In some cases, this may be the ONLY way in which the potential beneficiary can proceed.

In the Nemeth case (425 N.E.2d 1187), for instance, the decedent's stepdaughter (not an heir of the decedent) filed an intentional interference with an inheritance action against her step-sister because a successful Will contest would have done her no good.

A number of cases have followed, trying to explain the limits and ramifications of the tort. A recent case involves the estate of a woman named Grace Ellis (found here as a PDF). The case was brought by the Shriners Hospital for Children, beneficiaries under a previous Will, against a man named James G. Bauman (who was named as sole beneficiary and executor under the Will that was admitted to probate). Ms. Ellis evidently died in 2003, but the Shriners took no action to contest anything until 2006. Maybe their itty-bitty cars were in the shop all that time? Or (more likely), perhaps the Shriners had no idea that they were named as beneficiaries in a previous Will.

Anyway, the Shriners file their suit, making the same sorts of allegations as you might see in a Will contest (lack of capacity and undue influence). But, of course, they can't file a Will contest, because Will contests must be filed within six months after the Will in question was admitted to probate.

Can you use the intentional interference with inheritance tort to get around the six month period, since it isn't a Will contest? No, says the court.

Clients often ask me, "why is probate litigation so expensive?" The main reason is that the law tends to behave like an unruly beast. Some questions posed to me are easy to answer -- if you want to know the requirements for executing a valid Will in Illinois, I can give them to you. But other questions are much more difficult to answer.

Take, for instance, pleading requirements for a Will contest. Most Will contests include allegations of lack of testamentary capacity (the person who signed the Will didn't know what he or she was doing) and undue influence (someone "forced" the person who signed the Will to do it). As you might imagine, there's a lot of proof required to win a Will contest -- that's as it should be. But what about getting in the door, and being allowed to prove your case through discovery, etc.? The first step in a Will contest is the filing of a petition. The second step in almost every Will contest is for the other side to file a motion to dismiss the petition, on the grounds that it "failed to state a claim for which relief can be granted."

There is no magic book to turn to in order to find out whether a petition will survive a motion to dismiss. Instead, attorneys have to look to caselaw:

Lack of Testamentary Capacity

Two very old cases -- American Bible Society v. Price and Anlicker v. Brethorst -- suggest that pleadings for lack of testamentary capacity don't have to be very in-depth. But then there's this curious Estate of Sutera case from the 1st District in 1990. It seems to suggest that conclusory statements are insufficient, but it's hard to tell. On the one hand, a very well-known book on Illinois probate states that Sutera does not apply to the issue of testamentary capacity generally, but applies only in cases where the petition includes allegations of an "insane delusion." At least one subsequent court case implies the same thing. But Sutera never mentions the phrase "insane delusion"!

That being said, my experience in court has been that judges still view American Bible Society and Anlicker as setting forth the law on pleading lack of testamentary capacity. But I suppose it depends in large part on how the attorneys frame their arguments, and the judge's take on the caselaw. It is, however, an attorney's job to make sure he or she understands and can argue for or against any of the cases that may come up at the hearing on this issue. And reading and understanding cases takes a LOT of time.

Undue Influence

Undue influence requires more in-depth pleading, but there appear to be (again, "appear to be," since there's no answer set in stone) two ways to approach it:

1. You need to make a "specific recital of the manner in which the free will of the testator was impaired." OR

2. You need to show that the person you are accusing of undue influence had a fiduciary relationship with the person who signed the Will (aka the Testator), that the Testator depended on the person and reposed trust in the person, and that the person "prepared or procured" the Will.

Of course, no case says the above, and clearly indicates that you have two paths to take in proving undue influence for motion to dismiss purposes. Again, this is something of which the petitioning attorney must convince the judge.

In re. Estate of Agnes H. Wright is an appellate case that deals with whether an individual's attorneys can be disqualified. The case is available here as a pdf. I'm less interested in that issue than in the issue that prompted the litigation in the first place. This is an undue influence case, pitting sibling vs. sibling. At issue is a trust amendment signed by Mrs. Wright. The trust amendment says that she loaned her son Peter $1.8 million to purchase a vacation home in Lake Geneva, Wisconsin. The amendment recites other information about the transaction, but the key is that the amendment characterizes the transaction as a loan. Peter, however, says that the transaction was a gift, and that the trust amendment was executed only because Peter's sister Linda exerted undue influence against their mother.

If I had any advice to take from the case, it would be this: resolve issues of loan vs. gift before death, by a writing signed by all parties. The problem in the above case is that the amendment is signed only by Mrs. Wright. If you want to loan money to a child, have the child agree to the terms of the loan BEFORE you hand over the money. Similarly, if you want to gift money to a child, think seriously about making equal gifts to all children OR having all children acknowledge that the gift IS a gift (not a loan).

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)).

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.

The Estate of Bantsolas (pdf here) case is an interesting one in that it discusses a probate issue (a citation to recover assets), land trusts, and what could almost be described as a contractual issue.

The matter involved a land trust, of which a woman named Baseleky Bantsolas was the sole owner. On November 30, 1996, Mrs. Bantsolas signed an amendment to the land trust, naming beneficiaries of the trust upon her death. Evidently, prior to this amendment, there was no beneficiary on the land trust, so upon her death, Mrs. Bantsolas's interest in the land trust would pass to her estate.

Mrs. Bantsolas's attorney got confused, and sent the land trust amendment to the wrong place (Chicago Title, instead of Chicago Trust -- same building, different entities). Eventually, Chicago Trust received the amendment, and accepted it -- a day AFTER Mrs. Bantsolas died.

Was the amendment valid? Or, put another way, does the property in the land trust belong to Mrs. Bantsolas's estate, or to the two individuals she named as beneficiaries of the land trust? Both the trial court judge (Cook County Probate Judge Jeffrey Malak) and this court say it belongs to the beneficiaries. Their reasoning: an amendment is effective upon delivery, and the estate did not meet its burden to show that delivery failed to occur during Mrs. Bantsolas's lifetime.

There are two burdens/presumptions at work here:

1. The burden on the estate to prove that the property belonged to Mrs. Bantsolas at the time of her death.

2. The presumption in favor of delivery.

No, that title isn't from an adult Harry Potter spinoff. Rather, it's the latest really weird installment in the Seth Tobias saga, which is detailed here. Mr. Tobias was a CNBC commentator who, according to reports, lived a pretty interesting life. The latest allegations (found here) are among the craziest -- that Mr. Tobias's widow, Filomena, hired a voodoo priestess named Madam Simbi M'Arue to put a curse on Mr. Tobias. (Allegedly the priestess also was hired to cast spells to "remove evil from [the Tobias] homes and bring more money and sex to [Filomena]."

Illinois has a so-called slayer statute, preventing someone who causes a person's death from inheriting from the person. Of course, I think we have to assume that curses don't actually work. So even if Ms. Tobias meant to kill her husband, would it matter?

More related to a slayer statute are the allegations that Ms. Tobias "drugged Seth by putting sleeping pills into his pasta, then lured him into the pool of their Jupiter, Fla., home with the promise he could have 'kinky sex' with a male stripper named Tiger." Mr. Tobias evidently died by drowning in the pool, although the relationship of pasta, sleeping pills, and the male stripper to his death is unknown at this time.