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 :
- intentional interference with expectancy — inheritance
- conspiracy to intentionally interfere with expectancy or inheritance
- 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.