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How Far Does Direct Benefits Estoppel Extend?

April 16, 2015

Authors

Luke Lantta

How Far Does Direct Benefits Estoppel Extend?

April 16, 2015

by: Luke Lantta

Under direct benefits estoppel (or the doctrine of election), a beneficiary must choose: either challenge the will (or trust) or accept the benefits provided under that instrument.  You can’t have it both ways, meaning you can’t both take benefits under an instrument and challenge that same instrument’s validity.  But how far can a fiduciary extend this defense?

In Harrison v. Harrison (unpublished Rule 23 order), an Illinois appellate court drew a line in the sand.  While direct benefits estoppel may apply to direct challenges to the validity of a will, it will not apply to actions construing a will.  The appellate court ruled that, even if a litigant accepts benefits under a will, he is not necessarily estopped from arguing that certain provisions of the will are void as against public policy and

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Will At Issue Was Not A Joint And Mutual Will

April 3, 2014

Authors

Luke Lantta

Will At Issue Was Not A Joint And Mutual Will

April 3, 2014

by: Luke Lantta

If spouses want to execute a joint and mutual that binds the surviving spouse to a joint testamentary scheme, then they need to be very deliberate about their intent.  In Estate of Martin (Rule 23 Order), an Illinois appellate court determined that the “Joint Last Will and Testament of Daniel D. Martin Sr. and Florence M. Martin” was not, in fact, a joint and mutual will that prohibited Florence from changing the disposition of property after Daniel, Sr.’s death.

In 1990, Daniel, Sr. and Florence owned real estate in Chicago as joint tenants with rights of survivorship.  The “Joint Last Will and Testament of Daniel D. Martin Sr. and Florence M. Martin,” executed on March 12, 1990, left that property equally to their two sons, Michael and Daniel, Jr.  Daniel, Sr. died in 1998, and, Florence, as the surviving joint

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Illinois Caregiver Remains Trust Beneficiary

November 14, 2013

Authors

Luke Lantta

Illinois Caregiver Remains Trust Beneficiary

November 14, 2013

by: Luke Lantta

Caregivers sometimes end up getting written into a will or a trust.  When they do, it’s not surprising if litigation ensues.  In Gardner v. Cole (Rule 23 order), we get to see an Illinois caregiver and her husband withstand a challenge by the grantor’s surviving relatives to impose a constructive trust over the trust assets and bank accounts that went to the caregiver and her husband.  So, how was the caregiver successful?

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Estate Planning Lawyer Liability To Beneficiaries

September 3, 2013

Authors

Luke Lantta

Estate Planning Lawyer Liability To Beneficiaries

September 3, 2013

by: Luke Lantta

Over the last decade or so, courts have relaxed the strict privity requirements for legal malpractice claims in the estate planning arena.  In many states, estate and trust beneficiaries now have standing to sue the lawyers who helped create the estate plan or trust.  It is now common to see not only the fiduciary sued by a disgruntled beneficiary, but the lawyer and law firm that provided the legal representation to the grantor or testator being sued, too.  Just how far these malpractice claims extend is a matter of much current fiduciary litigation.  A ‘hot topic’ for litigation in this area is the duty to disclose information that affects a beneficiary.

In Scott v. Chuhak & Tecson, P.C., the United States Court of Appeals for the Seventh Circuit explored the extent of a grantor’s lawyer’s duty to disclose pertinent information about a trust to

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Illinois Supreme Court Punts Question Of Whether Doctrine Of Election Extends To Challenges To Trust Amendments

May 2, 2013

Authors

Luke Lantta

Illinois Supreme Court Punts Question Of Whether Doctrine Of Election Extends To Challenges To Trust Amendments

May 2, 2013

by: Luke Lantta

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.

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Form Health Care Power Of Attorney Does Not Create A Presumption Of Undue Influence For Property Transactions

April 16, 2013

Authors

Luke Lantta

Form Health Care Power Of Attorney Does Not Create A Presumption Of Undue Influence For Property Transactions

April 16, 2013

by: Luke Lantta

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.

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Federal Court Orders Trustee To Provide A Trust Accounting

April 10, 2013

Authors

Luke Lantta

Federal Court Orders Trustee To Provide A Trust Accounting

April 10, 2013

by: Luke Lantta

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

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Diversification And The Prudent Investor Rule

March 19, 2012

Authors

Luke Lantta

Diversification And The Prudent Investor Rule

March 19, 2012

by: Luke Lantta

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

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Illinois Trustee-Beneficiary May Have A Conflict Of Interest

October 19, 2011

Authors

Luke Lantta

Illinois Trustee-Beneficiary May Have A Conflict Of Interest

October 19, 2011

by: Luke Lantta

Plenty of trust instruments are set up to permit a beneficiary to act as trustee.   When the trust has more than one beneficiary, however, the testator or grantor potentially sets that trustee-beneficiary up for conflict of interest claims.  In these situations, prudent testators or grantors typically appoint a neutral co-trustee to serve with the trustee-beneficiary and require the trustee-beneficiary to take no part in self-encroachments or self-distributions.

In Faville v. Burns, the Illinois Court of Appeals considered whether a trustee-beneficiary has a conflict of interest with his co-beneficiaries of a trust.  The trial court had dismissed the co-beneficiaries’ efforts to remove the trustee-beneficiary based on a conflict of interest.  The Court of Appeals, however, reinstated the removal claim. 

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Illinois Federal Court Enforces Arbitration Provision In Account Agreement

September 21, 2011

Authors

Luke Lantta

Illinois Federal Court Enforces Arbitration Provision In Account Agreement

September 21, 2011

by: Luke Lantta

If you actually want to forego the courtroom and cast your lot with an arbitrator, incorporating an arbitration provision into your standard client contracts can be an effective tool because these provisions tend to be strictly enforced by courts.  It’s an example of where boilerplate may have some benefits.  Recently, in Hemenway v. Millennium Trust Company, LLC, the United States District Court for the Northern District of Illinois essentially terminated – at least least temporarily – a lawsuit against Millennium Trust Company by enforcing an arbitration agreement contained in a standard client contract.

Edward L. Hemenway”s Roth Individual Retirement Account Agreement and his Traditional Individual Retirement Account Custodial Agreement had an identical and standard arbitration provision which broadly encompassed “disputes between the parties.”

Nevertheless, Hemenway filed a lawsuit in federal court alleging that the money he contributed to his Roth and IRA accounts was lost, that Millennium Trust Company

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