Argument Report: Does the Doctrine of Election Apply to Trusts?

Our reports on the oral arguments of the Illinois Supreme Court's September term continue with In re Estate of Boyar.

Can you accept money from your parents' will and then challenge it in court? No; that's settled in nearly every state.

But, as counsel for the trustee in Boyar told the Court, living trusts have become a commonplace substitute for wills; that way, the decedent's "estate" can be distributed without probate. Does the doctrine of election apply to trusts?

Our preview of the argument, summarizing the facts and holding below, is here. Years before his death, the decedent set up a trust. Through several trust amendments, one provision was unchanged: the beneficiaries could remove the trustee by majority vote. Then, just before his death, the decedent amended the Trust one final time -- the Sixth Amendment -- revoking the power to remove and appointing a new trustee. The petitioner challenged the Sixth Amendment, arguing that decedent lacked the mental capacity to execute it. When the petitioner acknowledged that he had received personal property belonging to the trust as a partial distribution of his interest, the trustee moved to dismiss the challenge, citing the doctrine of election: a party may not accept benefits under an instrument and then challenge it. The Circuit Court dismissed and the Appellate Court affirmed.

Justice Garman noted that the petitioner's case presented two questions: (1) does the doctrine of election apply to trusts; and (2) if it does, did the trial court abuse its discretion in applying the doctrine here. Counsel responded that the issue was whether the doctrine of election should be applied to an entirely severable codicil to the trust. Justice Karmeier asked whether, if the petitioner were challenging the distribution, he would still argue that the doctrine of election did not apply. Counsel conceded that he was not arguing that the doctrine would never apply to any trust at any time; the question depended on the facts and circumstances. Justice Garman asked whether petitioner knew the facts of the Sixth Amendment when he accepted the distribution, and whether it made a difference. Counsel responded that one of the factors in applying the doctrine of election is whether a party knew the facts; a doctrine based on equity should be applied without hard-line, black-letter rules, with a grasp of the particular facts. Justice Karmeier asked whether it made any difference to petitioner's argument whether the petitioner knew of the terms of the Sixth Amendment when he accepted the property. Counsel answered that petitioner did not and could not have known that the items of personal property he accepted were owned by the Trust, and that the doctrine of election has never been applied to a severable amendment to a trust anyway.

When the counsel for the trustee began, Justice Karmeier asked whether it made a difference if a trust was changeable during the lifetime of the settlor. Counsel responded that a beneficiary could accept gifts during the life of the settlor, but not after. Justice Garman asked whether the petitioner knew of the facts involved in the challenge; counsel alleged that the petitioner had learned of the trustee's identity and the terms of the Sixth Amendment by a direct conversation and two letters. Justice Thomas asked why there was a conflict between accepting benefits from the trust and challenging a provision that had nothing to do with the distribution. Counsel answered that the petitioner had waived his severability claim, and argued that far from being severable, the Sixth Amendment was a critical component of an integrated document. Justice Theis noted the Appellate Court's comment that the petitioner could file a petition to remove the trustee, and wondered why the doctrine of election did not bar that remedy as well. Counsel responded that a removal petition would have to rest upon alleged misconduct in the administration of the trust. Justice Karmeier echoed Justice Thomas' earlier question, wondering what was inconsistent about accepting a distribution and challenging a severable trustee provision; counsel responded that the petitioner should be barred from challenging any provision of the instrument. Justice Karmeier wondered whether the court should look to the underlying reason for the doctrine -- preventing parties from taking inconsistent positions -- but counsel again insisted that the Sixth Amendment was part of a single integrated document.

In rebuttal, counsel for the petitioner conceded that the petitioner was aware of the existence of the trustee before accepting the distribution, but again insisted that the petitioner was unaware of the specifics, or of what property the trust owned. Justice Garman wondered whether it was essential to the petitioner's argument that he was challenging a severable provision; moments later, Justice Karmeier asked whether petitioner's argument would be the same if the separate amendment dealt with distribution. Counsel responded that in his view, each case had to be evaluated on its individual circumstances. Responding to Justice Karmeier's question, counsel agreed that he was not seeking a bright line rule that challenging a separate amendment to the trust could never be subject to the doctrine of election.

 

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