Guide ILCS Chapter 755 2013: Estates

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The trial court granted judgment for the defendant trustees relying on trust provisions that gave broad authority to the trustees and especially on an exculpatory provision contained in section 4. The appellate court in Axelrod further held at Ill. The Axelrod Court reasoned at Ill App. The clause in MAJS, supra at provided that:. It is further understood and agreed that neither the Albany.

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Emphasis in original. Therefore, there could be no ambiguity as to whether the omission at issue was covered by the exculpatory clause. In fact, the plaintiff might have had a better result had it argued that the exculpatory clause was so overbroad that it was contrary to public policy. See: e. Vena , Ill. In Metz v. Shortly thereafter, the investment adviser absconded with the money. Plaintiff sued the trustee for breaching the prudent man rule in failing to ascertain the background of the investment adviser before releasing the funds to him.

The trial court entered summary judgment for the trustee and the 7 th Circuit affirmed. Liabilities and expenses incurred in connection with any. The court concluded its ruling by stating at F. In Jewish Hosp. I specifically absolve my Trustee from any responsibility for. There are limits to what an exculpatory provision can provide.


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In Vena v. The court concluded that such a clause was contrary to public policy because of the limitations it placed on redress for serious intentional or reckless trustee misconduct. One of the beneficiaries objected and filed a counter-claim alleging that Vena had breached his fiduciary duties as trustee.

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The trial court granted summary judgment for the trustee and dismissed the counter-claim based on the majority approval provision. Additionally, the majority approval mechanism gave the trustee too much control over arranging who constituted the majority that approved his accounts and reports. Specifically, the court was concerned that the trustee could manipulate the process by picking those beneficiaries most likely to approve his reports and accounts to form the majority Id. The court believed that the process could give a trustee an incentive to favor a majority of the beneficiaries, who would then approve his actions, to the possible detriment of the minority.

Accordingly, the appellate court viewed the majority approval process as not protecting the rights of the minority beneficiaries from possible serious misconduct by the trustee. Relying on the limitation on trustee exculpation articulated in Axelrod, supra, and its progeny, the Vena Court stated at Ill. Thus, the provision is an improper method for exculpating the trustee of serious misconduct—of acts done in bad faith, of intentional breaches of trust, or of breaches of trust committed with reckless indifference to the interest of the beneficiary.

The dicta from MAJS Investment case and the holding in the Vena case indicate that care needs to be taken in drafting a trustee exculpatory clause. Because exculpatory provisions are strictly construed, the provision must be broad enough to provide the protection from possible liability to the trustee that the grantor wishes to provide.

On the other hand, in certain circumstances an over-broad clause is subject to being stricken. Because there was no way to interpret the exculpatory provision in Vena in a fashion which eliminated what the court found was improper in the provision, it was stricken. However, because exculpatory clauses do not enjoy special favor, it behooves the draftsman not to draw an exculpatory clause so broadly as to purport to immunize the trustee from bad faith, willful misconduct or reckless indifference to the interests of the beneficiaries.

In Countiss v. Whiting , Ill. The trial court entered a decree requiring the husband to return the monies he had received from the trust with interest and held that the trustees had waived their right to compensation for their services. The Trustees shall not be liable for any action taken by them.

In making its ruling, at Ill. However, recent cases have referred to Countiss v. Whiting , Ill App.


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Similarly, even where an exculpatory clause may preclude holding a trustee liable for a loss, as the Countiss Court ruled, the Trustee may still be denied compensation for erroneous judgment or negligent actions or omissions. See also : Sauvage v. Gallaway , Il. In an effort to make an end-run around trustee exculpatory clauses, beneficiaries are likely to characterize questionable trustee conduct as either being taken in bad faith or amounting to willful misconduct or reckless indifference to the beneficiaries interests.

In Burke v. Dolan , Mass Super. It means a breach of known duty through some motive of interest or ill will. First National Bank of Boston , F. As a matter of self-protection, a trustee should document and keep a written record of the reasons behind any significant discretionary decision taken and how the trustee went about making the decision, including any input he received from the beneficiaries, as well as his communications he had with the beneficiaries in making that decision.

Finally, when in doubt or where the trustee is faced with a significant or controversial decision that the trustee believes could lead beneficiaries to make claims against him, the trustee should consider petitioning the Court for instructions. If the Court assists the trustee in reaching a decision on a discretionary matter, the Trustee should be insulated from liability.

See: also Vena v. Vena, Ill.

The Incredible Shrinking Limitations Period

The purpose of this article is to set forth who has standing to bring an action in Illinois against third parties for the preservation and protection of a private trust. As the article explains, in most instances and subject to certain rules, only trustees have standing to bring the action against third parties who are not themselves trustees of the trust.

Except in the narrow circumstances articulated in this article, a beneficiary does not have standing to bring suit on behalf of the trust against third parties who are not trustees of the trust at issue. Beneficiaries, including beneficiaries of discretionary trusts and certain contingent beneficiaries, have standing to maintain an action against a trustee for defalcation of duty.

Lincoln Title Company v. Nomanbhoy Family Limited Partners , Ill. Greer v. Illinois Housing Dev. Eisenberg , F. In the context of trust law it is usually only the trustee who has standing to sue third parties on behalf of the trust. In Godfrey v. Kam in , U. Mosay v. Buffalo Bros. Management, 20 F. See also: Pierce v. Johnson Electric Co. Weisberger , N. Sullivan v. Kodsi, Ill. Thus, in Madden v. University Club of Evanston , 97 Ill. The majority believed it was in the interests of the beneficiaries to hold onto to the property as long as possible.

Therefore, a trust grantor should be able to vary the rule on when a specified trustee, who dissents from the majority, has standing to sue or otherwise act on behalf of the trust. As the appellate court held in Carter v. Lexis :. In re Estate of Feinberg , Ill. While governed by a different statutory provision, Northern Trust Co. In making its ruling, the Northern Trust Court stated that this provision of the instrument that created the trust took the case out of the purview of an Illinois statute that required a majority of charitable trustees to agree on an action before it was taken—except where the language of the trust agreement or instrument provided otherwise.

Godfrey v. Kamin , 62 Fed Appx. Instead, that individual trustee would have to await the appointment and agreement of the corporate trustee before an action could be filed. Where a deadlock exists between trustees as to a contemplated action, any of the trustees may file an action with the Court to obtain resolution of the deadlock. Madden v. In Axelrod, supra , the court held that trust beneficiaries had no standing to pursue derivative actions against former trustees where the successor trustees determined the costs of suit outweighed the potential recovery. Comment e to the section provides that if the trustee properly exercises his discretion to not pursue litigation against a third party, the beneficiary has no right to maintain the action.

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In the recent case of Tipsword v. If the trustee refuses to bring the action, after demand, or fails to. The necessities of the case entitle the beneficiary to proceed directly. Ready , 33 Ill. In Ready , the decedent left farm property to his wife and descendants through a testamentary trust. One of the trust beneficiaries brought a class action seeking an accounting purportedly on behalf of all the beneficiaries against an agent of the trustee.

The agent argued that the beneficiary lacked standing and the Court held that:. Only a person occupying the position of trustee can be required to. If the trustee refuses to.

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Trusts and Trustees, vol. The complaint in this. Ready , supra at Emphasis added. In other words, the contingent interest that is being relied upon to confer standing must be in existence at the time a law suit is filed and that interest is asserted as the basis for standing.

If the contingent interest is dependent on the occurrence of a future event in order to come into existence—the future fulfillment of a condition precedent—there is no standing. For example, in Barnhart v. Barnhart , Ill. In so ruling, the Supreme Court stated, at Ill. In Burrows v. Palmer , 5 Ill. The Burrows Court stated at 5 Ill. Similarly, in Giagnorio v Torkelson Trust , Ill. In contrast to the above cases, in Schlosser v.

Schlosser , Ill. Recompiled editions are typically shipped three times a year, with 12 to 14 shipped annually. Your browser is not supported by this site. Please update to the latest version, or use a different browser for the best experience. Westlaw Edge Introducing the most intelligent legal research service ever. Artificial intelligence See how legal AI can help you work faster and strengthen your practice. Product details: Format: Book - hardbound. Publication frequency: Varies. Update method: Varies. Can we help? Email this page. One time purchase Full set. Our report on the oral argument is here.

Plaintiff alleged that the decedent told her he wanted to name her the pay-on-death beneficiary of the account. A few weeks later, the decedent signed a power of attorney in favor of the defendant, revoking all power previously given to plaintiff; two months after that, he executed a will containing a residuary clause leaving everything to the defendant and his wife. For the next few years, the plaintiff and the decedent stayed in touch. The decedent ultimately died in early