What Not to Do When You're Challenging a Trust

Our preview of the September term of the Illinois Supreme Court continues with In re Estate of Boyar [pdf].

So you’ve decided there was something not quite right about a parent’s will. Can you take the money and then file a will challenge? The answer nearly everywhere is thoroughly settled: No.

But what if Dad had a trust instead of a will?

That’s the question raised by Boyar. Years prior to his death, the decedent set up a trust; his operative will simply said to distribute all the property through the trust. The trust was amended several times over the years, but until 2010, one provision remained constant: the beneficiaries could remove the trustee by majority vote. Then in the sixth and final amendment, this power was withdrawn and a new trustee appointed.

Only three weeks after the trustee was appointed, the decedent died. In September 2010, petitioner, one of the decedent’s five children, filed a challenge to the sixth amendment, arguing (among other things) that the decedent had lacked the mental capacity to execute it because of progressive dementia. Six weeks later, the trustee sought a citation to discover and recover assets belonging to the trust, alleging that in May and July 2010, petitioner had removed items of personal property belonging to the trust from the decedent's home. The citation was granted, and in response, plaintiff acknowledged receipt of certain items "as a partial distribution of [his] interest from the [trust]." The trustee then moved to dismiss petitioner's challenge to the trust, citing the doctrine of election, which teaches that a party may not accept benefits under an instrument and subsequently challenge its validity. The Circuit Court agreed and dismissed.

Before the Appellate Court, petitioner argued that the doctrine of election is recognized in Illinois only with respect to wills, and should not be extended to trusts. The Court disagreed, observing that Illinois as a general rule applies the same rules to interpreting both wills and trusts, and that trusts have proliferated in recent years as a preferred method of passing assets to one's heirs. The Court cited the decisions of appellate courts in several other states, each of which have extended the doctrine of election from wills to trusts.

Petitioner argued that the doctrine of election should not bar his particular claim because the property he accepted was "nominal" in value. The Appellate Court disagreed, pointing out that the Illinois courts had rejected the same argument with respect to wills.

Next, petitioner argued that the doctrine of election was inapplicable where the party accepting benefits lacked full knowledge of the facts. However, the Appellate Court pointed out that petitioner's letters about his father's alleged dementia -- the basis of his challenge -- were signed before his challenge was filed. Nor was the second recognized exception - where a provision of the trust was contrary to law or public policy -- applicable. The Court acknowledged a third exception to the doctrine, where a party timely tenders accepted benefits back to the estate and the estate is not prejudiced, but the Court pointed out that while most courts applying the exception had required a re-tender before the challenge was filed, petitioner had not tendered the personal property back to the trust until his challenge to the trust had been dismissed.

Boyar will be argued at the 9:30 am session of the Court on Wednesday, September 19, 2012. Join us back here tomorrow for a preview of the argument in Rodriquez v. The Department of Financial and Professional Regulation.

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