ILLINOIS TRUST LAWSUIT : DAUGHTER SUES FATHER OVER GRANDFATHER’S MILLIONS ——- TRUSTEE RECOVERS MISAPPROPRIATED TRUST $$ FROM BENEFICIARIES : trust requires marriage within the faith; punitive damage claims

A February 3rd Illinois   trust litigation   case shows you how involved Estate Litigation can get.  This case involved two Illinois estates, claims of punitive damages,  misappropriation of the estate funds,   a daughter suing her father and aunt over granddad’s money and a trust inheritance,  two family trusts, a trust clause which required beneficiaries to marry within the faith, and hundreds of thousands of dollars in trust attorneys fees.

• Max died on December 4, 1986.
• Max was survived by his wife, Erla and two adult children, Michael and Leila
• Michael has two adult children from his prior marriage:  Michele & Aron  (Michele ends up suing her dad over grandfather’s estate and family trusts )

MOM & DAD BOTH HAD REVOCABLE TRUSTS

• When Max died, he and his widow, or surviving spouse, Erla, each had a trust and similar estate plans.
• Max’ revocable trust was split into  two trusts shares   which both provided for his widow, the surviving spouse Erla, for her life.
• At the death of the surviving spouse, the trust money went to descendants
• But there was a catch !!

TRUST SAYS YOU CAN’T MARRY OUTSIDE THE FAITH

• Erla, the widow, had a limited lifetime   power of appointment    over one trust share: she could give it to “her descendants”, and ….
• The Trusts for Max and Erla had a   trust provision    which required the beneficiaries, the descendants, to    marry  inside  the  faith : ” any descendant, other than [the children], who married outside……….  the … faith would be ………         DIS-INHERITED
• There was a trust amendment permitting a spouse outside the faith to convert within a year of marriage

MOM SIGNS POWER OF ATTORNEY —– exercises power of appointment !!

• In 1994, Erla signed a durable   power of attorney   naming her children, Michael and Leila, as her agents.
• In 1997, Erla exercised her lifetime   power of appointment   over the Max Trust—kids and grandkids each get a 1/4 Million Dollar trust distribution
• Erla executed another trust amendment giving each grandchild $100,000 and removing the requirement from her trust that descendants only marry within the faith
• Erlied died in 2003.

DAUGHTER SUES FATHER OVER MILLIONS OF DOLLARS IN GRANDFATHER’S ESTATE !!

• In 2004, one of Max’ grandchildren sued her father !! (Max’ son Michael) !
• Michelle sued her father Michael ! …. And her aunt, too !!

TRUST LITIGATION: granddaughter claims father misappropriated millions of dollars from Max’s and Erla’s estates

Daughter Michelle sued her father, Michael,  for :

1. intentional interference    with expectancy — inheritance
2. conspiracy to intentionally    interfere  with  expectancy    or inheritance
3. a constructive trust for assets and funds which they had   misappropriated   from Erla and from the estates of Max and Erla

HOLD ON —GRANDAUGHTER CAN’T SUE OVER THE TRUST — SHE MARRIED outside the faith !!!

How’s this for legal twists and turns in this trust litigation:

• The trial court held that the trust clause which required a descendant to marry within the faith   was   invalid !
• It was against public policy !!
• Grandaughter’s trust lawsuit can continue ! ….. not so fast !
• The state Supreme Court reversed ! Max’ estate plan, along with Erla’s, did NOT violate public policy !!
• The clause requiring a descendant to marry within the faith is valid !

BANK SUES MAX’ KIDS TO RECOVER ESTATE MONEY

A bank which was named as a fiduciary, sued Max’ two children, as co-executors of Erla’s estate.

The   estate lawsuit   and    trust litigation  sought to recover assets and property which belonged to the Trusts and which were allegedly misappropriated by Max’ children:

• funds withdrawn from Erla’s various  convenience bank accounts
• funds to maintain and improve Erla’s condominiums
• funds taken from a Vanguard   investment account
• cash belonging to Erla in a   safe deposit box

The grandaugher also sued for punitive damages !!

ESTATE & TRUST LITIGATION HIGHLIGHTS

• Son Michael was ordered in a 2011 probate court ruling to return $788,957 to the Erla Trust !!
• On March 9, 2012, the trial court entered an order granting the Bank, as trustee of the Erla Trust, a total of $540,000 in attorney fees
• On May 17, 2012, the trial court awarded the granddaughter $100,000 in attorney fees

The appeals court opinion has all the details and a lengthy update to the probate and trust lawsuits at the trial level.