Death and Taxes Blog

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.

"Fiduciary duty" is one of those concepts that's essential to probate litigation, but is somewhat hard to explain. There's no statute in Illinois that says "these things, and these things alone, constitute a breach of fiduciary duty." Instead, fiduciary duty law is cobbled together from Illinois caselaw.

The Estate of Talty case give us an example of what a court (in this case, the Third District Appellate Court) views as a breach of fiduciary duty. You can find the case here, as a PDF. The case pitted a decedent's executor (his brother and business partner) against the decedent's widow. The case revolved largely around appraisals of the business owned by the decedent and his brother, and the court found that the executor abused his discretion in obtaining lowball appraisals and hiding more accurate appraisals from the widow.

-----

Blog posts will be light to non-existent between now and January 7, as I work on my article and do a bit of wassailing. My sister's blog does a nice job of documenting what constitutes a Schoenmeyer Family Christmas (vodka slush, my Great Aunt Irlitta's Christmas Strawberries, etc.). Happy Holidays!

Last year I blogged about the fight over the estate of Cincinnati Bengals founder Austin E. "Dutch" Knowlton. Evidently the fight is over, and his kids lost. Here is the article.

This was essentially a Will contest, involving allegations of undue influence, lack of capacity, and forgery. Those cases are hard to win in the best scenarios, and Mr. Knowlton's kids didn't have the best scenario. For one thing, the kids had apparently been disinherited since 1971 (so dad lacked capacity or was unduly influenced for 30 years?). For another, the beneficiary of the estate isn't a person (who could potentially be perceived as greedy or corrupt) -- it's a charitable foundation.

I'm generally pretty pro-creditor. I believe in paying debts when they come due, in my personal life and my business, and that's my advice to my clients as well. I don't understand it when heirs try to wiggle out of a decedent's valid debts just because they want more money for themselves.

That being said, I'm starting to become a little less creditor-friendly as a result of an estate I'm handling. The decedent didn't have much money (just a condo, which is on the market but hasn't been sold), but she owed money to about fifteen different entities at her death (mostly credit card companies). Now these entities are starting to call me. A lot. And even though I tell them the status (and point out that they won't get their money until the claims period expires at the earliest), they continue to call. (This is dumb for another reason: I have to spend time on these calls, and under Illinois law -- drafted by attorneys, of course -- I get paid before these creditors. So the creditors, in taking up my time, reduce the size of the estate and increase the chance that they won't get their money.)

The creditors also file claims. Or, rather, have their attorneys file claims. That's fine, but their attorneys tend not to practice in this geographic area -- for instance, an Omaha, Nebraska attorney recently filed a claim (on behalf of a credit card company) against the estate in Cook County. Other attorneys from different areas of the country have done the same. So, the attorney...

-doesn't show up to court (but of course I'm expected to do so);

-doesn't prepare the correct claim form; and

-doesn't return my telephone calls or respond to my letters

What can I do? Well, yesterday I went into court and convinced the Judge to dismiss the claim filed by the Nebraska attorney (the grounds: failure to appear). And now I'm going to do the exact same thing with every other claimant who wants their money, but refuses to behave in a reasonable, professional and competent manner.

George A. Smith IV disappeared from a cruise ship in 2005, while on his honeymoon. His body has never been found, but he is presumed dead. His wife, Jennifer Hagel Smith, filed a wrongful death claim against the cruise line (Royal Caribbean). Ms. Smith has reached a settlement with Royal Caribbean, which (according to this article) would "net the estate more than $1 million and give her access to shipboard data and witness statements that presumably would shed more light on what happened on the cruise ship." However, the settlement needs to be approved by a probate judge, and Mr. Smith's parents appear ready to contest the settlement.

My concern is with the fact that all parties want the hearing on the settlement agreement to be closed to the public. Here's Ms. Smith's attorney, Douglas Brown:

"We're in a situation where we're going to have to explain the pros and cons of the settlement to the court," Brown said. "You do not want Royal Caribbean to know all of your reasoning for why you might not think your case is strong in the event you are going to have to turn around and sue them."

I understand his point, but the courts are a public resource, paid for by the public. The parties get the ability to resolve their disputes at very little cost (court fees tend to be very low), but in a public proceeding. You shouldn't get the advantages of the court system while also eliminating the inconveniences, no matter how rich or important you think you are.

Claims and citations are both meant to deal with a situation where you have a potential right to something in the possession of a deceased person or his or her estate. What's the difference?

A claim is filed when a decedent owed you money. For instance, credit card companies and mortgage companies file claims when a person to whom they have loaned money passes away. Similarly, if you loaned a friend $5,000 and the friend dies before paying you back, then you have a claim against the friend's estate.

A citation is filed when a decedent was holding property belonging to you at the time of his or her death (and vice versa -- a decedent's estate may file a citation against you if it believes you were holding property belonging to the decedent when the decedent died). In many citation cases, we aren't talking about a particular piece of property -- "hey, the estate has a car that belongs to me!" -- but are talking about a TYPE of property. Maybe the decedent was an attorney and overbilled you for fees (or is holding a personal injury settlement in his client trust account). You're trying to get that property back, and have the court rule that it belongs to you. In some cases, you may believe property belonging to you is being held by the estate, but you don't know how much. That's why the citation process has two steps: (1) citation to discover information (like discovery -- enables you to find out what the estate has) and (2) citation to recover assets (asks the court to rule that the property belongs to you).

You may remember the case of Andrew Kissel, which I discussed here and here.

A quick refresher (taken from this article):

Andrew Kissel was found stabbed multiple times and bound hand and foot in the basement of his 10 Dairy Road mansion the morning of April 3. His body was found days before he was scheduled to be sentenced to five years or more in prison on federal bank fraud charges.

Police have declined to discuss possible motives, but have investigated the theory that Kissel may have hired someone kill him so his children could collect a hefty life insurance payout....

Now, according to this article, the attorney for Mr. Kissel's estate is running into problems as well:

A motion filed by two creditors, Fidelity National and Chicago Title Insurance companies, asks that Patrick Gil, appointed to handle Kissel's heavily indebted estate, be held in contempt and blocked from using $235,682 gained by the sale of Kissel's interest in Epona Stables to pay his [Kissel's] ex-wife an allowance awarded in Greenwich Probate Court.

The motion, filed in U.S. District Court in Bridgeport, complains that Gil violated a 2005 federal court order giving the two companies the right to garnish Kissel's assets up to $10.3 million, according to court records.

The problem appears to be that Mr. Gil has an obligation to comply with the probate court order giving Mr. Kissel's wife an allowance. The article goes on with the following:

Furthermore, the money in question was generated by selling Kissel's half-interest in Epona Stables on Riversville Road, which a state Superior Court judge had ordered be distributed through the Greenwich Probate Court, [Mr. Gil's attorney, David] Moger said.

"Mr. Gil is caught between conflicting orders," Moger said. "As an administrator he has relatively little decision-making power and does things at the direction of the probate court. I have been looking in vain for an order which he directly violated."

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.

When I was a young associate, I handled an estate involving a number of charitable beneficiaries.  Under the decedent's Will, money was also to go to a charity that didn't exist (something like the Pet Society of Chicago), which raised all sorts of questions about the decedent's intent.  Most of the other charities agreed that the money should go to another of the animal-related charities mentioned in the decedent's Will, but one charity (we'll call it ARThur's Institute) resisted.  Essentially, their argument was, "we're not going to leave money on the table -- we want a share of the money that was to pass to the Pet Society of Chicago, even if we're not entitled to it."

I was reminded of that case when I read this article, about the UW (University of Wisconsin) Foundation and the estate of Harold Mennes.  The timeline is fairly clear:

1996: Mr. Mennes executes a Will leaving most of his estate (about $800,000) to UW.  In the Will, he disinherits his daughter, Mary Ellen Jenson, from whom he was then estranged.

2000: Mr. Mennes and his daughter reconnect and are close until Mr. Mennes' death.

2001: Mr. Mennes, in a letter that was notarized and witnessed, leaves his daughter $100,000 from an investment account upon his death.

2004: Mr. Mennes dies.

Did the letter constitute a codicil (amendment) to Mr. Mennes' 1996 Will?  What about the fact that Mr. Mennes got rid of the investment account before he died?

This case was finally settled, although the UW Foundation's tactics have been criticized by the administrator of the estate.   As the article puts it:

The case highlights a dilemma for nonprofit groups: how hard to pursue money they believe is theirs. Fight too hard and they risk antagonizing potential donors, but too soft might mean they lose money for their cause.

Bankrate.com has a nice article (here) summarizing what an in terrorem (or "no contest") clause can do for you:

The in terrorem provision, known less formally as a "no-contest" clause, is a paragraph or more of legal boilerplate aimed, as its Latin name implies, to scare off legal challenges by heirs who don't feel they've been given their fair shares of               the enchilada.

In essence, the provision states that if you contest this will or trust, you forfeit your inheritance. In fact, to continue with the spooky theme, typical language instructs the court to consider contentious heirs as having died childless before the deceased.

The article also presents some interesting differences in state laws.  Evidently in terrorem clauses are not recognized (or enforced) by Florida courts, and in a few states you can actually have your Will declared valid while you are still alive.

I previously blogged about in terrorem clauses here.

Juan Antunez has a nice post (here) about "Florida's unforgiving 2-year non-claim statute."  Mr. Antunez starts with a good summary of the forces at work in Florida (and most other probate statutes):

An overarching theme of Florida’s probate code (and recurring point of discussion on this blog) is the tension between basic due-process rights on the one hand and Florida’s strong public policy favoring the speedy administration of estates on the other. In order to move things along as quickly as possible (with the least amount of litigation expense possible), Florida law provides extremely short windows of opportunities for litigants to file claims.

The question in the case discussed by Mr. Antunez involves whether the 2-year limitation on claims can be overriden if a decedent's Will directs that “just debts, funeral and administration expenses be paid as soon after [her] death as may be practical . . ."  The court finds that it can't, because this would leave an estate open to claims indefinitely, which defeats one of the main purposes of the probate code.

This case is of interest in Illinois because our state has a similar 2-year bar on claims after death.  I would add that a claim filed more than two years after a decedent's death is in fact not a "just" debt or expense, since it's not recognized as a valid debt or expense under the law. 

From an executor or administrator's perspective, it's important to realize that such a debt or expense CAN'T be paid without a violation of fiduciary duty.  You may feel bad for the creditor, and feel like it's unfair that it isn't being paid money it may have been owed, but you shouldn't act on those feelings (unless you have the consent of all of the beneficiaries).