May 2nd, 2013

In Estate of Boyar, the Supreme Court of Illinois had an opportunity to address an important question of Illinois trust law:  whether the “doctrine of election” applicable to will contests should be extended to challenges to amendments to living trusts in cases where the trust serves the same purpose as a will.  The trial court decided it did.  The Illinois appellate court also decided it did.  The Illinois Supreme Court, however, decided that there was no reason for the lower courts to address whether the doctrine of election should be extended to living trusts because that doctrine couldn’t be invoked under the circumstances present in the case.  Nevertheless, we get some good insight into when the doctrine of election could come into play in whatever contexts it might be applicable.

First, some quick facts. (more…)

April 16th, 2013

We’ve previously noted that litigation involving powers of attorney is popular right now.  Powers of attorney take on particular importance in undue influence cases because they can turn the case on its head by creating a presumption of undue influence.  The reason why is that a power of attorney can create a fiduciary relationship between the principal and agent.

But not all powers of attorney are created equal.  In In re: Estate of Stahling, an Illinois appellate court recently answered the important question of whether a health care power of attorney creates a fiduciary relationship with respect to the execution of a deed transferring property to the agent which, as a matter of law, raises a presumption of undue influence. (more…)

April 10th, 2013

We often see trust beneficiaries sue a trustee to compel an accounting of the trust’s receipts, disbursements and assets.  A court should start with the trust instrument to determine whether an accounting is required and, if so, to whom and what it should contain.  That’s what an Illinois federal court did in Drewry v. Keltz.

The trust instrument there required that “[e]ach Successor Trustee shall render an account of his/her receipts and disbursements and a statement of assets to each adult vested beneficiary.”  The plaintiffs were adult vested beneficiaries of the trust who had made requests for the successor trustee to provide an accounting, which the trustee did not provide.  The federal court ordered the trustee to provide the plaintiffs with an accounting of his receipts and disbursements on behalf of the trust and a statement of the trust assets within 30 days of the order.

We’re interested in this opinion for two issues that weren’t central to the court’s decision.

(more…)

March 19th, 2012

We get asked a lot about two categories of cases: (1) cases about discretionary distributions; and (2) cases about concentrations and diversification.  And, it’s easy to understand why – fiduciaries are often given a great amount of discretion in exercising their duties, but then may get sued over it.  While there seems to be a growing number of decisions dealing with matters like undue influence and lack of capacity, the numbers of authorities regarding the exercise of discretionary powers and diversification/concentrations are still limited.

That’s why when an opinion like that of the Illinois Court of Appeals in Carter v. Carter comes along, we have to take notice.  In this case, the court considered a breach of fiduciary duty claim arising from the trustee’s alleged strategy of investing only in tax-free municipal bonds.  The appellate court determined that this strategy did not violate the prudent investor rule or any fiduciary duty owed by the trustee.  Let’s see why. . . (more…)

February 9th, 2012

Pursuing fiduciary litigation cases in federal court can be tricky.  Not only does a plaintiff have to contend with the possibility of jurisdiction destroying defendants, but a plaintiff also has to deal with the ‘probate exception’ to federal jurisdiction.

In Downey v. Keltz, the United States District Court for the Northern District of Illinois did a succinct job of explaining that a petition for an accounting does not implicate the ‘probate exception’ and likely does not require that all trust beneficiaries be parties to the litigation.  A petition to remove a trustee, however, likely would invoke the ‘probate exception’ and would require all trust beneficiaries to be parties to that litigation.

Let’s take a look at how the Court got there. (more…)