In the closing days of its January term, the Illinois Supreme Court agreed to decide a question of considerable importance to the trusts, wills and estates bar – who has standing to challenge an amendment to a trust document? The Court allowed a petition for leave to appeal in Trzop v. Hudson, a decision from Division 5 of the First District Appellate Court.
Trzop began in 2007 when an elderly man and his wife (since deceased) signed a declaration of trust. The trust document named the grantor and his wife as trustees and primary beneficiaries. After the death of both grantors, the instrument provided that the trust should be distributed to twelve different individuals, including the couple’s four children and various grandchildren.
In 2014, the surviving grantor signed an amendment to the trust. The amendment struck the entire beneficiary provision, providing instead that the entire trust should be distributed to two of the four children, thus disinheriting the other two children and the various grandchildren. The amendment was signed by three witnesses.
Plaintiffs, each of whom had been omitted from the trust by operation of the amendment, filed suit to challenge the instrument. According to the plaintiffs’ complaint, the grantor was entirely dependent on the defendant, one of his daughters, with whom he resided and who was entirely responsible for his care. The complaint alleged undue influence, tortious interference with inheritance expectancy, fiduciary fraud and a declaration of constructive trust. The defendant answered, alleging that a contest had been expected, given the decision to disinherit two children and various grandchildren, and as a result, an interpreter had been hired for the grantor and the execution of the trust amendment had been videotaped.
Nearly two months after the lawsuit began, the elderly grantor filed a petition for leave to intervene in the litigation. He attached to his petition a motion for summary judgment dismissing the complaint, alleging among other things that the plaintiffs lacked standing to challenge the trust amendment. While the motion for summary judgment was still pending with a briefing schedule in place, the intervenor filed a motion to dismiss the complaint, once again challenging standing. The plaintiffs’ opposition to the motion to dismiss argued, among other things, that the grantor lacked standing to seek dismissal of the plaintiffs’ tort claims against the defendant daughter, and that the motion to dismiss was untimely. The trial court granted the motion to dismiss, holding that the plaintiffs lacked standing to challenge the amendment since they were no longer beneficiaries of the trust.
The Appellate Court reversed. First, the grantor’s motion to dismiss was not timely, the Court held. According to 735 ILCS 5/2-619(a), a defendant must bring a motion to dismiss “within the time for pleading.” Of course, the grantor was not a defendant, and was not technically required to plead at all. But the defendant had not pled lack of standing as an affirmative defense, and her time for pleading had expired by the time the grantor filed his motion. Besides, the Court held, the Supreme Court has made it clear that the intent of the rule is to provide that pleading motions be brought at the outset of litigation. Since the grantor had waited several weeks before filing his motion to dismiss, the Court concluded that the motion should have been denied on timeliness grounds.
Even if the motion had been timely, the Appellate Court found that the grantor lacked standing to move to dismiss the tort claims against the defendant. The grantor argued that he was seeking to protect his property interest in the trust, but the Court pointed out that a judgment against the defendant wouldn’t affect his property interest.
Turning to the issue of the plaintiffs’ standing to sue, the Court noted the holding in In re Estate of Henry that beneficiaries of a will did not have standing to challenge the will until the testator had died. But Henry did not apply to trusts, the Court found, because although a beneficiary has no interest in the testator’s estate until the testator dies, the beneficiary has an interest in a trust as soon as it is executed. This was the holding of the Appellate Court’s post-Henry case, In re Estate of Michalak. The intervenor and defendant responded that even if the plaintiffs had standing to challenge the original trust instrument, they lost that standing pursuant to the amendment, but the Court pointed out that the argument was circular – the amendment could not deprive the plaintiffs of standing unless it was valid, and that was exactly the question at issue.
We expect Trzop to be decided in eight to ten months.