Estate Law Questions? Ask an Estate Lawyer.
Hello, did you have a question?
I posted it last night and already have one answer.I may come back to you although
Sorry I was tied up earlier then had to go our.We have a little bit of a problem and maybe my attorney has it solved but I need to find out on my own.
An Illinois 1989 living trust,one grantor who was the sole benificiary but not a trustee and three equal benificiaries two of the three are trustees.
2003 the non trustee benificiary is in China.His 33% was put in trust under his name with he as the benificiary and his children as trustee.He find out six years later after his mother is deceased.In a lawsuit the opposition presents to the Judge that a trust can not sue trustees.The Judge agrees.So you have athr trust benificiary that cant sue for an accounting or any other wrong doings,then a 1/3rd owner of my trust which is a 1/3rd benificiary of my mothers trust and my three children who are trustees of my trust.According to the opposition none of us have standing.
I agree that a trust cannot sue trustees, but the beneficiaries of the trust can sue the trustees for breach of fiduciary duty or breach of trust terms.
As far as the relationship of the other 2 beneficiaries to the original trust and sub-trusts, I'm not clear. I know one sub-trust or a separate trust was established from assets of the original trust and for the benefit of one of three beneficiaries.
Were the other two beneficiaries supposed to get outright distributions from your mother's trust or were sub-trusts or separate trusts supposed to be established for the other 2 beneficiaries' lifetimes?
In any event, the other two beneficiaries should be able to sue the trustees of the original trust (if they didn't fund sub-trusts or separate trusts properly -- by not following trust terms or by funding with less than what was appropriate because they spent the money on unauthorized things). If it was not the fault of the trustees of the original trust, the beneficiaries can still sue the trustee of the subtrust or separate trust (either of which was funded by the original trust) for the same purposes.
It's not really a matter of standing --it's all about how the suit was brought -- a trust can't bring the suit but the beneficiaries can.
You understand that your use of or communication on this forum, in any and all ways, is intended for general informational purposes only and shall not constitute and/or be relied upon as legal advice or be construed as creating an attorney-client relationship. Further, you agree not to rely on anything I say and will obtain appropriate legal and or tax advice with an attorney or other professional licensed to practice in the jurisdiction where your legal or other issue arises.
Finding of the court
Then the solution is very simple, amend the petition so that the plaintiffs are suing not only in their individual capacities but also as trustee of the Regnery Trust -- very simple. And the court has already established that it would have jurisdiction beyond that point -- because a representative of a trust can sue on its behalf and all of the parties in the case are diverse (satisfying the court's diversity of citizenship jurisdictional requirements).
I need tro think about that but thank you this is what they rely on that a trust cant sue an individual.I dont believe it dont banks trust departments sue.
and can sue or be sued through its trustee in a representative capacity on behalf of the trust."
At the same time this states that my children as trustees of my trust can sue my sisters as trustees of my mothers trust.
Are you sure of you recommendsation.Right now my trust is out of the picture.My three children are trustees of my trust I am the benificiary of my trust.
My trust is a 1/3rd benificiary of my mothers trust.Does your way give us the 18 years of accounting that they claim can only go to a benificiary.
I will pay you $60.00 to review this.I have severaltimes before but I am curious to see what you think.I dont think these attorneys understand what a contingent remainderment benificiary is and their right to sue.They keep talking about income benificiaries in order to sue.
I am interested in our ability to get the 18 years of accounting.There is an appelate court ruling that trustees can not take legal fees from the trust.Is there any way to enforce this or file a motion with the court to end it now.I am also thinking after 28 months of forcing the payout of the trust.Becauswe we are in litigation is there any reason the judge would get in the way.It really is not a court issue.It is a contract and the trust document states after the taxes and expenses are paid the trustees should dpay out the funds.As this is their responsibility I should not have to ask.Is this a breach of their duty
As to your first question, you have to make a distinction in your mind from a trust itself, which let's call ABC Trust and its trustee(s).
The trust itself, ABC Trust, cannot sue or be sued. So you'll never have a case: "ABC Trust v. DEF Trust". However, the legal representatives of the trust can sue or be sued: "XYZ, Trustee(s) of ABC Trust v. ZYX, Trustee(s) of DEF Trust".
Yes, trust departments sue and are sued all the time -- they are the trustee of various trusts and sue and are being sued in their representative capacity.
As to your next question, I will review the document and get you a response as soon as possible.
I am not sure my other questions came through
1.Illinois has an appellate ruling trustee in a suit cant use trust funds.Judge deniis asset freeze.Is there any type of motion we could file to stop this.
2.28 months since mother died.Simple living trust which states after taxex and bills are paid corpus is distributed.When my sisters signed the trust contract they were obligated to follow ever point.I should not have to ask.Should I demand a distribution.The last balance we received waw 12/31/2008.Everything was paid.Should I bring them back to that number and say 1/3rd plus interest.
2000 market crash.I got out and demanded my mother get out.They refused until it hit the bottom $700,000 los.Then five years later between them the had $1.0m in the market and got out when I did.Any penalty
Sisters are trustees and benificiaries.The trust has a clause that relates to a benificiary-trustee that you cant take money from the trust or am I misinterpeting it.
Trust says no principal without grantords signature.,I dont think my mother signed once.Are my sisters liable or does the Judge turn his head the other way.If so will he lose on appeal.
When you say contingent remainder beneficiaries, are they truly contingent remainder or only remainder?
To answer that question, does the trust currently provide for benefits to go to a person during life and after that person's death, others are the beneficiaries? If so, those beneficiaries are not contingent remainder beneficiaries, they are only remainder beneficiaries. The fact that the lifetime beneficiary may use up all the trust and they might not receive anything does not make them contingent beneficiaries. They would only be contingent remainder beneficiaries if something other than the death of the lifetime beneficiary has to happen before they will ever receive anything (such as a beneficiary named before them has to also die before the current lifetime beneficiary, etc.).
I may be asking this and the answer lies within the document you have asked me to review. If so, just let me know that and I will answer my own question.
Again, I'll get your answers as soon as possible.
Three children a mother who is sole benificiary and grantor.Two children are trustees who havedepleated the trust.If a contingent benificiary has no standing how to sue trustees after mothers death?
Every eaar or almost every year gifting took place to children and grandchildren.Can any of that be considered income?
I have thrown a lot of questions at you.If it is o>k> I would like to solve te contingent benificiary and right to sue first.
To be certain, I would have to conduct research, but notwithstanding the statute cited by the defendants, all beneficiaries, both immediate and remote through the marital trust would be entitled to an accounting. Otherwise, the trustees could use up all the marital trust assets and then be free of any scrutiny simply because those that were remainder beneficiaries of the marital trust assets would have no standing to sue. That would be an absurd result. In fact, I think it could be argued that although the beneficiaries suing were not income beneficiaries of the marital trust, they were ultimately entitled to the benefit of the income of that trust and even under the statute entitled to an accounting.
Your attorney really needs to look outside the trust act to the relevant common law of trustee duties to beneficiaries (perhaps even a look to the restatement of law on trusts) to get support for the fact that you all do have standing to request an accounting of the marital trust, etc.
At some point, I may have time to do that research myself, but I will have to expend a good amount of time conducting that research, so I would expect to be compensated accordingly. Please let me know if you would like me to engage in that research and we can decide what a fair amount of compensation would be through this website.
This same law applies to the defendants' argument that you are not entitled to an accounting and that, at best, XXXXX XXXXX plaintiffs in their representative capacity are only entitled to an accounting past a certain period. Their argument is absurd in light of common law principles.
In addition to that, you should be entitled to an accounting because you are a co-trustee of the marital trust. You, as co-trustee, have as much standing to seek an accounting as any beneficiary would. You also have the ability to sue. In fact, you have a duty to seek information and recourse for the trust as one of its trustees. Not doing so can subject you to liability to the beneficiaries for not fulfilling your duties as a trustee.
The statute of limitations argument has some merit on the surface. An accounting was furnished to your mother and she nor her heirs and assigns objected within the three year period. However, that accounting is only binding on the beneficiaries that received an accounting. An accounting was never rendered to the remainder beneficiaries of marital trust A. And there were remainder beneficiaries -- the money had to have gone somewhere after your mother's death. Those persons that received that trust money after her death were the remainder beneficiaries and should not be denied an accounting by the fact that only your mother was furnished an accounting (they didn't receive the accounting and the limitations period never started to run against them). This argument may not fly, at least without supporting authority, but it's a logical and very sound argument.
This same argument applies to the limitations argument made for your mother trust named after her.
Thank you for using JustAnswer. Your "accept" (by clicking the green "Accept" button) would be greatly appreciated. Otherwise, neither I nor JustAnswer can be compensated for the time and resources expended.
You are great.Let me get something clear.Marital trust and living trust my children and I have standing for accouning and to sue?????As far as the research go ahead I trust you you dont need a price.If you need a copy of the trusts let me know.
I will do some research as soon as I have a chunk of free time and let you know preliminary results as I have them -- we'll keep that way until I am satisfied that I have researched the matter thoroughly.
It would be helpful if you could post the actual trust documents for my review the same as you did with the court's order.
I know you need to do some work but with the living trust are we going to be O.K.
A trust document is signed by the trustee and the grantor it is a legally binding contract.The trust and trustee act are trust laws thjat must be followed by the truste.They to are legally binding.Both call for an annual accounting.The trust and trustee says any accountings not yet furnished must be furnished.A trustee became a trustee by signing a toctument governed by the law and the trust and trustee cover things that may not be covered by the trust document.
If the trustee is in violation of these laws they must correct their omissions.A benificiary who owns the trust property should not have to hire an attorney and convince the court that the trustee breached their duty.
If I tell my sisters I want to see all accountings since 1989 the must produce them.If the trust agreement states principal can only be taken by written authority of the grantor and my accountant comes up with X taken out the my sisters have to produce X of my mothers signatures.
When I read my sisters attorneys pleadings it as if I am the guilty party and my sisters have done every thing they have supposed to.What I know ois I brought $10.0m into our fmily in 19867 and to give my mother some peace in her life allowed my sisters to become trustees.Now in the ensuing 18 years maybe $13.0m has gone through their hands and no one has seen a receipt.What I do know is from 1989-2006 numerous breaches of fiduciary duties have taken place.From 2006- 1/2/2007 my mothers death,two trusts were taken from my mother by forgery and fraud and one forgery of $420,000 has taken place.
Somehow based on attorneys and plays on words I am the one who has to prove and justify my position and fight for what a contract and state trust laws aere supposed to protect.
On the marital trust I am one of three trustees.I can at any time request every document from the marital trust and do my own accounting.If anything is missing my sisters must account for it.
The marital trust at the present is not of concern.If there was no contingent remainder benificiary in the living trust only contingent benificiaries then I must find a way to force an accounting from the inception of the trust that is binding.There is fraud forgery undue influence duress concealment from start to finish.We must get the accounting
Not long ago the oppositon said because we were not income benificiaries during my mothers lifetime we could not sue.
Then this came
.Restatement of the Law of Trusts, section 173, provides: "The trustee is under a duty to the beneficiary to give him upon his request at reasonable times complete and accurate information as to the nature and amount of the trust property, and to permit him or a person duly authorized by him to inspect the subject matter of the trust and the accounts and vouchers and other documents relating to the trust." In commenting upon this section the authors of the Restatement have stated: "Although the terms of the trust may regulate the amount of information which the trustee must give and the frequency with which it must be given, the beneficiary is always entitled to such information as is reasonably necessary to enable him to enforce his rights under the trust or to prevent or redress a breach of trust." I think the below answers your question about standing
 In Barnhart v. Barnhart, 415 Ill. 303, 323, 114 N.E.2d 378 (1953), our supreme court wrote:
 "We believe the better rule to be that while a contingent remainderman should not be denied the right to bring an action against the trustees regardless of circumstances and merely because his interest is remote and contingent, nevertheless, the scope of the right should be limited to that which is necessary to protect his possible eventual interest, ie., the protection and preservation of the trust res . It should be afforded only where waste, mismanagement or dissipation of assets appear or can be shown. We hold, therefore, that the final paragraph of the decree was correct."
 A couple of years later, the supreme court further outlined its position on the right of a contingent remainderman to pursue actions against a trustee in the case of Burrows v. Palmer, 5 Ill. 2d 434, 125 N.E.2d 484 (1955).
 "In the recent case of Barnhart v. Barnhart, 415 Ill. 303, 114 N.E.2d 378, we stated that a contingent beneficiary should not be denied the right to bring an action against the trustees merely because his interest is remote and contingent, but that he should have the right to such relief as is necessary to protect his possible eventual interest, i.e., protect and preserve the trust res. A trustee owes the same fiduciary duty to a contingent beneficiary as to one with a vested interest in so far as necessary for the protection of the contingent beneficiary's rights in the trust property." Burrows, 5 Ill. 2d at 440.
I forgot if it makes a difference.My aunt was the successor trustee until my mother became incapacitated and my sisters and the attorney partner drafted a new trust with the as trustees.When discovery starts shortly we will depose thje two doctors who did the neurological studies.We also have 10 witnesses.If my aunt was successor trustee whe would have standing to sue my sisters and ask for an accounting I would think.
This is another good attorney.I am told if I revoke my trust I fall back as a 1/3rd benificiaries of my mother
Restatement of the Law of Trusts, section 173, provides: "The trustee is under a duty to the beneficiary to give him upon his request at reasonable times complete and accurate information as to the nature and amount of the trust property, and to permit him or a person duly authorized by him to inspect the subject matter of the trust and the accounts and vouchers and other documents relating to the trust." In commenting upon this section the authors of the Restatement have stated: "Although the terms of the trust may regulate the amount of information which the trustee must give and the frequency with which it must be given, the beneficiary is always entitled to such information as is reasonably necessary to enable him to enforce his rights under the trust or to prevent or redress a breach of trust." I think the below answers your question about standing
Wednesday, April 07, 2010 12:16 PM EST
The case law that you have been citing, is quoted from GIAGNORIO v. TORKELSON, 1997.IL.712 , 686 N.E.2d 42, 292 Ill. App. 3d 318 (10/10/97).
The defendant's motion for judgment on the pleadings is based upon 760 ILCS 5/11, which became effective 08-02-2001. Thus, it is possible, that the statute overrules prior case law. The statutory language is somewhat open ended, i.e., it doesn't expressly prohibit a contingent beneficiary from demanding an accounting to protect the beneficiary's contingent rights. But, a court could hold that the statute "does" prohibit the accounting, and thereby overrule the prior case law, upon which you seek to rely. If nothing else, it provides fertile ground for an appeal on the meaning of the law, which could keep your case mired in the courts for many years to come.
Since defendant's motion does not raise the timing of the statute, and further does not attempt to distinguish its argument from the holdings of prior case law, it's possible that the court will not address this, which would certainly work to your advantage.
But, I wouldn't count on it. If you intend to rely on Barnhardt, then you must be prepared to explain away the fact that the statute that your opponent is using became effective after the date of of your supporting case law opinion.
IN THE APPELLATE COURT OF ILLINOIS SECOND DISTRICT_________________________________________________________________One for the good guys
PAMELA GIAGNORIO, ) Appeal from the Circuit Court ) of Du Page County. Plaintiff-Appellant, ) ) v. ) No. 95--MR--0354 )EMMETT C. TORKELSON TRUST; )JOAN M. TORKELSON; and ) JAMES TORKELSON, ) Honorable ) Bonnie M. Wheaton, Defendants-Appellees. ) Judge, Presiding._________________________________________________________________
This is on point
2d 434 (1955). "In the recent case of Barnhart v. Barnhart, 415 Ill. 303, we stated that a contingent beneficiary should not be denied the right to bring an action against the trustees merely because his interest is remote and contingent, but that he should have the right to such relief as is necessary to protect his possible eventual interest, i.e., protect and preserve the trust res. A trustee owes the same fiduciary duty to a contingent beneficiary as to one with a vested interest in so far as necessary for the protection of the contingent beneficiary's rights in the trust property." Burrows, 5 Ill. 2d at 440.
A few more from the web.It seems more and more Judges are allowing contingent benificiaries to sue
Trust Litigation -- Suing and Defending a Trustee Mar 31, 1996 ... Con DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA the contingent beneficiary vests upon the death of the settlor, the beneficiary may sue for breach of a duty that the trustee owed to the ...tingent be[PDF]
The last part of this were the original pleadings done in 8/2008.Every attorney was supposed to up date none did.I worked with a JA attorney to combine what is on file plus some claims.
NOW COME the Plaintiffs, Frederick W. Regnery, ("Plaintiff"), Lindsay Regnery ("Lindsay"), Frederick L. Regnery, ("Fred"), and Geoffrey Regnery ("Geoff"), by and through their attorneys, Fuchs & Roselli, Ltd., and as and for their Verified Complaint against the Defendants, Gretchen Regnery Wallerich ("Gretchen") and Lynn Regnery ("Lynn"), and Juaine Broadbent, in her capacity as Executrix of the Estate of Verla K. Regnery ("Juaine"), (Gretchen and Lynn collectively referred to hereinafter as "Defendants"), Plaintiffs state as follows:
Jurisdiction and Venue
1. Plaintiff is an Illinois resident who resides within the Village of Westmont and within the County of DuPage.
2. Lindsay, Fred, and Geoff are Plaintiff's children who are named as necessary parties insofar as they are co-Trustees of the Frederick W. Regnery Trust.
3. Gretchen is an individual, who and at all times herein relevant, resides in the state of California.
4. Lynn is an individual, who at all times herein relevant, resides in the state of North Carolina.
5. Juaine is an Illinois resident, named as a Defendant solely in her capacity as the Executrix of the Estate of Verla K. Regnery.
6. Pursuant to Section 5/2-101 of the Illinois Code of Civil Procedure, this Court situated in DuPage County is, by operation of the facts alleged herein, the proper venue for this action.
Facts Common to All Counts
7. Plaintiffs hereby restate and reallege Paragraphs 1 through 6 of Jurisdiction and Ray Sorry The last paragraaph is still a littconfusing
Venue as and for Paragraph 7 of this Facts Common to All Counts as though fully set forth herein.
8. Plaintiff, along with Gretchen and Lynn are siblings with the Plaintiff being the son of, and the Defendants being the daughters of Verla Kiehl Regnery ("Verla") and Frederick L. Regnery ("Frederick").
COUNT I FRAUD
In August of 2006 with sore swollen legs hips and ankles my mother was taken on a 7000 airline trip and ended up having a stroke and severe dementia.
9) My mother's living trust owned 635 shares of our families business (My shares) an eight year lawsuit began with the understanding if we prevailed the proceeds would be mine.My sisters were the trustees. They convinced my mother the lawsuit may not prevail and she may be counter sued. She sold the stock to them but no money exchanged hands just a signed note from my mother to the trustee that she sold the stock to my sisters. As it turns out this transaction took place after the court ruling establishing the value $500,000 at a later date they sent gifts to my children.I could never determine the percentage because of the taxes.
10)FLR and VKR trust 13 year releases Fred is trustee, in China not notified. Verla is represented by the trustees attorney, also signs a lifetime forgiveness document for all loans, advances and gifts and has no idea of what she is signing. Her sister was with her.
This was a fraudulent scheme between Letizia,Gretchen and Lynn against Verla and Fred. $5.0m
This was carefully planned and carried out.
11)FLR trust three trustees 18 years all three must sign.2000 letter from Gretchen and Lynn to Blair says only two must sign (reverts back to simple majority before codicil $2.0m)There seems to be a concern Fred did not open his mail. From 1982-2000 very few withdrawals. I did a great deal of oversees traveling.2000 after the change of trustees the volume of withdrawals went up at least four fold. Lynn and Gretchen knew for a fact I did not open my statements as when I was in China they were at my mothers. Five houses I lived in during that period and 30% of my time in China. For this to happen, Blair and my sisters would have to work together to defraud my mother and me.
12) VKR irrevocable trust taken from Alvin kiehl trustee,Verla's brother. while Verla is incapacitated. Alvin was forced off after 20 years of service.A forged signature became the new trustee. Then, $420,000 withdrawn by using four forgeries. Alvin and Verla deprived from buy back. clause. Letizia notarizes forged signature.13) My mother was incapacitated for 15 months. During that time $1.0m was spent. Instead of $150,000 if she were living at home.. My mother owned a $3.4m irrevocable trust and a $2.5m 2003 living trust. In November of 2006 both trusts were rewritten while my mother was mentally incapacitated and I was in China. As a beneficiary I was to be notified,the irrevocable trust in writing.I was not.In January of 2007 my mother wanted to go home so I went to North Caroliana to get her..My sisters would not let her go.I asked both of them if there were any changed to my mothers trust in my absence and their answer was no.Had they not lied to me and concealed the changes of the trusts in November I would have take my mother home. Damages $850,000 from the difference spent by my sisters to the amount my mother living at home would have spent. $5.0m in principal depleated in 10 years no accounting.1997-2007., $700,000 loss in 2000 stock market.Trustees lost nothing as they sold their stoch before the market crash.
14) At the time the 2006 trust was drafted both sisters were very much awareof my mothers mental condition .The most telling part of the trust change was removing my mothers sister as successor trustee and taking her $1.000.00 per months guarantee away.
That clause is gone. Verla was 88 and unsophisticated as an investor. She trusted her daughters. She trusted the attorney. Each major revision,restatement,forgiveness or release was made in 2003 and 2006 I have a passport that will coincide with those dates.
15) There were four major documents or trusts that my mother was deceived or threatened into signing.Each time her son was in China. Each time she did not know the content of what she was signing.Each one they would not give her a copy of for her file for fear of me fnding it.
.The father was the grantor of a trust funded in 1966 an irrevocable trust From 1982 my sisters and I were its trustee.All activity in the trust must be signed off by the trustees. the grand slam was completed As impossible as it may seem working together with their attorney the daughters pulled off taking control of all three trusts by forgery,fraud,and elder abuse This was done with complete and utter silence and concealment and involved $7.5m.The mother had no idea of what she was signing and the son was 8000 away.
16)The mothers brother was removed after 20 years, a sister removed after 10 years and her son. My mother since 1980 relied on my advice before making any major financial decisions. It was very easy for someone to tell my mother one thing to get her to sign it when it really said something else.
17)While staying in Mill Vallley my sister did not want my mother to go home under any circumstance.$5.5m and two trust changes would have been discovered plus $1.0m in withdrawals.
18) Her son was on his way from China to pick up his mother in California My sister had hired an attorney at $400.00 per hour to keep me from taking my mother home.She has taken nearly 200,000 since to pay his legal bills He helps my sister end my mother's life and then pays himself from my mothers trust funds From 1989 to mothers death they were the sole trustees.No investment skills.2 of 3 children and a large estate.On at least seven occasions my mother tried to remove them as trustees or neutralize them each failed.Beginning in 2002 my mother says nothing is done in the future without three signatures 2003 I am in China and four major changes take place.2006 I am in China and the the irrevocable trust forgery and fraud and 2006 trust incapacity take place $5.5m in totalher died in 1980.One of his assets was 803 (12%) shares of a family business which was in serious financial trouble and $12.0m in debt. The value was $500.00 per share. One year later I purchased 635 shares for the same price to remove the president. The per share price was $500.00. Five years later I was forced to sell the company for $7500 per share. I purchased a $3.0m life insurance policy with the proceeds from my stock and made my sisters 1/3 beneficiaries each which were my sole decision. In six years since my sister Lynn pushed to sell her stock for $500.00 or $130,000 my sisters each received a windfall of $3.0m and had no involvement with the company. In 1989, I temporarily allowed my sisters to become trustees a bank was to take their place over the years. At least seven attempts were made to have our trusts professionally managed.
20) Frederick died on May 17, 1980. Prior to his death, on or about August 11, 1955, Frederick executed his Last Will ("Will"). On or about February 2, 1966, Frederick executed a Codicil to same ("Codicil"). The Will and Codicil provided that, in the event Verla survived Frederick by a period of thirty days, Marital Trust A ("Trust A") was to be created for the benefit of Verla. A true and accurate copy of the Will and Codicil of Frederick L. Regnery are attached hereto and incorporated herein as Exhibit A and Exhibit B respectively.
21) In or about 1982, Plaintiff and Defendants were named successor Trustees of Trust A. The Third and Fifth Articles of the Will and Codicil provide with respect to the creation and administration of Trust A:
"THIRD: (b) All of the income from Trust "A" from the date of my death shall be paid to my wife, VERLA REGNERY, in convenient installments, at least quarter-annually, so long as she shall live. In addition to the net income of Trust "A", the Trustees shall pay at any time and from time to time to my wife, VERLA REGNERY, so long as she shall live, such amounts from the principal of Trust "A" as the Trustees in their absolute and sole discretion shall deem necessary, appropriate or advisable.
(c) Upon the death of my wife, the assets then remaining in Trust "A", with the income accrued thereon, shall be distributed to such person or persons or to the estate of my wife, free of all trusts created hereunder, in such manner and in such proportions as my wife may designate and appoint in and by her Last Will. Such power of appointment hereby conferred upon my wife shall be exercisable by her exclusively and in all events.
(d) If for any reason upon the death of my wife any part or all of Trust "A", including the income accrued thereon, shall fail to pass under the previous provisions of this Article, the entire assets then remaining in Trust "A", with all income accrued thereon, shall be added to Trust "B" and thereafter be administered and distributed pursuant to the provisions of Trust "B"."
See, Exhibit A, p.2-4;
"THIRD: (a) If my wife, VERLA REGNERY, shall survive me for a period of thirty (30) days, I give, devise and bequeath unto CHARLES H. G. KIMBALL, FRED C. GRIFFITHS, and my brother, HENRY REGNERY, as Trustees, as a separate trust fund designated as Trust "A", an amount equal to one-half (1/2) of the value of my adjusted gross estate as finally determined for federal estate tax purposes, less an amount equal to the value, as finally determined for federal estate tax purposes, of any property or interests in property passing or which have passed to or for the benefit of my wife other than pursuant to this my Last will and with respect to which a martial deduction is allowable for federal estate tax purposes in connection with my death. The gift made by this Article shall be limited to and satisfied out of property included in my estate for which a martial deduction is allowable for federal estate tax purposes in connection with my death. Each asset of my estate distributed in kind to the Trustees of Trust "A" pursuant to the above provisions of this Article shall be valued for purposes of the said distribution at its value as finally determined for federal estate tax purposes in connection with my death or at its cost if such asset of my estate was purchased subsequent to my death. Also, assets of my estate distributed to the Trustees of Trust "A" pursuant to the above provision of this Article shall have an aggregate fair market value at the time of distribution fairly representative of Trust "A" fund's proportionate share of the appreciation or depreciation in value of all property included in my estate then available for distribution to the Trustees of Trust "A" which has occurred after my death."
"FIFTH: (m) If for any reason the Trustee of either Trust "A" or Trust "B" shall not be able to agree unanimously with respect to the exercise of any power, authority, duty or discretion delegated to them pursuant to this, my Last will, then the act of the majority of said Trustees shall govern and control and shall be binding upon the beneficiaries of and all persons dealing with Trust "A" and Trust "B" and the dissenting Trustee shall execute such document or instrument and take such action as may be required of him by the majority of said Trustees as may be necessary or appropriate to enable the majority of said Trustees to exercise any power, authority, duty or discretion granted to the Trustees of trust "A" or Trust "B" pursuant to this, my Last Will
See, Exhibit B, pp.1, 3.
22) Under the terms governing Trust A, before any action could be taken by any two Trustees, all three of the Trustees would be required to confer and determine whether or not a unanimous decision could be reached and all three trustees must sign off agree or consent
23) The Will further provides that all of the income earned from the Trust AN accounts was to be paid to Verla during her lifetime in convenient installments. See, Exhibit A, pp.2-4.In addition, the Trustees were permitted to pay such amounts from the principal of the Trust accounts to Verla which they deemed necessary, appropriate or advisable. See, Exhibit A, pp.2-4. Between at least the years of 2000 through the present, there have been maintained by William Blair & Company ("Blair") at their Chicago Offices, the following Trust AN accounts: Nos. 409-75939-1-9-136, 409-75939-1-9-906, 452-75939-1-9-906, 150-75939-1-9-906 ("Trust A Accounts").
24) In direct breach of the Third and Fifth Article of the Will and Codicil, as cited above, Defendants have on numerous occasions, through Blair's Chicago Offices, taken action by telephoning, mailing and faxing to Blair various requests for the unilateral withdrawal and/or transfer of funds from the Trust A Accounts without first advising, conferring with, or notifying Plaintiff in anyway whatsoever:
a) January 2002: $310,000.00
b) April 2002: $150,000.00
c) June 2002: $551,706.58
d) March 2003: $150,000.00
e) April 2003: $300,000.00
f) May 2003: $276,650.00
g) September 2007: $50,000.00
h) January 2008: $10,000.00
i) February 2008: $10,000.00
j) March 2008: $10,000.00
k) April 2008: $10,000.00
l) May 2008: $10,000.00
m) June 2008: $10,000.00
Total 2002-2008: $1,848,356.50 This needs to be updated
25) In addition, Defendants made distributions, upon information and belief, that were in excess of the income earned on Trust A and did so without ever advising Plaintiff.
26) In breach of the clear terms of Trust A and in order to keep Plaintiff from learning of their conduct, on or about February 9, 2000, Defendants authored and delivered their letter to William Kasten at Blair's Chicago Offices proclaiming that all decisions, including any withdrawals or transfers, out of any Trust A Account must be agreed in writing by two of the three trustees. A true and accurate copy of the February 2000 letter to William Kasten is attached hereto and incorporated herein as Exhibit C.
27) In authoring and delivering Exhibit C, Defendants intentionally misrepresented and ignored those specific terms of Trust A which require all three Trustees (including Plaintiff) confer and determine whether there was a unanimous decision before the "majority rule" and all three trustees must sign off If there is no attempt to achieve unanimous consent majority rule does not apply.
28)Between at least the years 2000 to the present, Defendants engaged in a scheme through which they repeatedly directed that some or all of the $1,848,358.50 in funds be transferred from the Trust A Accounts -- as were then being maintained at Blair's Chicago Offices -- into checking/banking accounts at both Harris Bank and Wachovia Bank among others, from which accounts Defendants would then issue checks/withdrawals which were used by them for their own personal benefit and gain. In perpetrating their scheme, Defendants failed and refused to advise, notify, seek or obtain Plaintiff's consent all in direct violation of their fiduciary and trust duties to Verla and Plaintiff under the terms of Trust A.
29) As a result, the Trust A Accounts have been depleted from a starting value of $2,363,544.00 in January 2000 to $496,769.00 in June 2008 by the actions and conduct of Defendants taken at Blair's Chicago Offices and without Plaintiff's knowledge or consent.
30) On or about May 18, 1989, the Verla K. Regnery Trust was formed and executed in Hinsdale, Illinois. The Verla Trust along with its Restatements ("Verla Trust") was created for the primary benefit of Verla.
The 2002 trust marked a change and new standard for the future. All new trusts, amendments or trust related changes must be signed off by all three of Verla's children
31) On or about May 1, 2003, the Verla K. Regnery Trust was amended and restated in its entirety and was executed in Hinsdale, Illinois ("2003 Restatement"). A true and accurate copy of the 2003 Restatement is attached hereto and incorporated herein as Exhibit D .Fred was in China.His first knowledge of this trust was in January 2008. Undue influence and duress would force Verla to sign three multi million dollar changes without the presence of an attorney representing her.
32) The 2003 Restatement was again formed by Verla as Grantor with Gretchen and Lynn designated as Co-Trustees. Verla's sister Juaine was renamed as the co-trustee
33) The 2003 Restatement was amended to provide that the remainder of the trust estate shall be distributed into equal one-third (1/3) parts to each of the Grantor's three children, with Defendants to receive their portions outright and with Plaintiff to receive his portion in trust, the Frederick W. Regnery Trust of which Lindsay, Fred and Geoff were to serve as Co-Trustees. See, Exhibit D at Art. III, §3.
34) Therefore, as Co-Trustees of Plaintiff's Trust, Lindsay, Fred and Geoff are trust beneficiaries and thus, are owed certain fiduciary obligations under the Verla Trust.
35) The 2003 Restatement again provided that the Defendants acting as Co-Trustees, upon written request of a beneficiary were obligated "to render annual statements of the receipts and disbursements and of the financial condition of the trust to such beneficiary." See, Exhibit D at Art. VII, §1(v).
36) Despite Plaintiffs' repeated requests for annual accountings of the type required to be rendered under the 2002-2003 Restatements, the Defendants never once rendered a single accounting or supplied any annual accounting statements to them and instead intentionally concealed and withheld such information from them and Verla .
37) On May 1, 2003, Verla executed a Last Will and Testament of Verla K. Regnery ("Verla Will") that was admitted to probate in the Circuit Court of DuPage County, Illinois, on June 6, 2008.. A true and accurate copy of the Verla Will is attached hereto and incorporated herein as Exhibit E. True and accurate copies of the "Letters of Office" are attached hereto and incorporated herein as Exhibit F.
In Article III of the Verla Will, Verla appointed whatever property remained in Trust A to the Verla Trust as amended and restated.
See, Exhibit E at Art. III.
38) As part of their continuing scheme, in or about the summer of 2003, Defendants caused their attorneys, Thomas E. Swaney of the Chicago Law Firm of Sidley Austin Brown & Wood, LLP. ("Sidley"), to prepare blanket releases which were designed to insulate Defendants from liability for their many violations of their duties as Co-Trustees and fiduciaries including their failure to disclose or otherwise account for their spending and ongoing misappropriation of trust funds and assets as Co-Trustees. This was the first time the defendants used Sidley Austin.Their personal attorney Dan Letizia handled all previous trust matters for the trustees.
39) As part of the process of selling the family's Hinsdale home in 2003, Verla purchased (through her Trust) and took up residence in an undivided interest in a single family home located in Fairview Village (the "Fairview Village Home"), an assisted living facility in the Village of Downers Grove and within DuPage County. After selling the Hinsdale home, Verla took up residence in the Fairview Village Home which she thereafter maintained as her primary place of residence.
40) On or about September 2, 2003, Verla, at the urging and insistence of Defendants, was pressured to execute two separate "Approvals of Accounts and Release of Trustees" ("Releases") for both the Verla Trust and Trust A.Verla was not represented at the signing.Juaine Broadbent her sister accompiting her to Dan Letizia.Dan Letizia had been and still was Gretchen and Lynn's attorney since 1998 True and accurate copies of the Releases are attached hereto and incorporated herein as Exhibit G and Exhibit H respectively. Through these Releases prepared by Sidley, Verla was attributed with a statement, not of her own making: "I hereby approve any and all actions taken by the Trustees...through December 31, 2002, and hold the Trustees harmless against any and all liability to any person arising out of the trusteeship." See, Exhibit G at ¶5; Exhibit H at ¶6.
41) Not only had the Defendants failed to disclose, identify or account for their dissipation and misappropriation of trust assets anytime before having Verla sign the Releases, the tion way for Defendants to attempt to insulate themselves from and avoid any potential liability for their misappropriation and mishandling of the funds and assets belonging to both Verla's Trust and Trust A.
Neither Release was supported by any consideration and the preparation and execution of both was undertaken by Defendants who similarly failed to disclose, identify or account for their dissipation and misappropriation of trust assets anytime before having Verla sign the Releases.
Neither Release restricts Plaintiffs' rights and interests to obtain -- as beneficiaries and interested parties under the trusts - and Defendants duties and obligations to provide - as Co-Trustees and fiduciaries of the same trusts - accountings and to render annual statements (for every year in which they served as Co-Trustees) of the receipts and disbursements and of the financial condition of the trust to each such beneficiary. None of these rights or duties are abrogated in any way by the Releases - which aside from being ill-gotten and unenforceable as against Verla - are instruments to which none of the Plaintiffs agreed, knew of, or were made a party to and to which none are consequently bound. Fred was a trustee and benificiary.He was in China.He first became aware of this release in January of 2008
42) Moreover, in light of the fact that the Verla Trust specifically provides that the trustees could only distribute trust principal to Verla during her lifetime and could only distribute income to a party other than Verla only as Verla might "from time to time direct in writing," any principal distributions made by the trustees to parties other than Verla are arguably invalid as contrary to the provisions of the Verla Trust. In addition, those distributions of income could have been made only after prior written directives were issued by Verla, regardless of whether Verla approved the distributions through the Release issued after the distributions were made. As a continuation of their scheme and grand slam of 2003.My sisters withdrew
43) On or about February 7, 2005, while Verla was vacationing with Lynn in North Carolina, Lynn had Verla assessed by Memory Assessment and Research Services ("Mars") to establish a baseline of memory functioning. The 2005 Mars evaluation revealed that Verla had previously suffered two heart attacks, the last one being 8 years prior, and concluded that Verla's memory was impaired when compared to that of her peers and was significantly below the expected level of functioning but that her recall of visual material and working memory were intact. In or about July of 2006, Verla was taken from her home in Downers Grove not feeling well and first taken to a wedding and in total 6000 on an airplane.With her heart condition and severe edema Mrs Regnery should not have left.her home. On her way back from California, Verla traveled to Washington D.C., Maryland and North Carolina. At some point during this trip, Verla suffered a stroke or a series of strokes for which she was ultimately hospitalized in North Carolina.
44) On or about November 21, 2006, Lynn brought Verla into the same Mars facility in North Carolina for a second evaluation. The 2006 Mars report concluded that Verla displayed "significant decline... across all measures of memory functioning." A true and accurate copy of the 2006 Mars Report is attached hereto and incorporated herein as Exhibit I.
The 2006 Mars Report further found that Verla's "current cognitive test scores indicate clinically significant impairment in virtually all measured areas of cognitive functioning," and "represent a vascular dementia.
45) Only four (4) days before the Mars evaluation, on or about November 17, 2006, the Defendants caused the Verla Trust to be once again restated ("2006 Restatement"). A true and accurate copy of the 2006 Restatement is attached hereto and incorporated herein as Exhibit J.
46) The 2006 Restatement was prepared by an Oak Brook Terrace attorney, Dan Letizia, and names Verla as Grantor with Gretchen and Lynn designated as Co-Trustees with the remainder of the trust estate to be distributed as it was in the 2003 Restatement, equal one-third hen(1/3) parts to each of the Grantor's three children. It should be noted that Plaintiffs are contesting the 2006 Restatement. However, unlike the 2003 Restatement, the 2006 Restatement deleted those portions of the Trust which provided that upon Verla's death: (i) Defendants would cease to act as Co-Trustees; and (ii) that Juaine Broadbent (Verla's sister) would serve as successor Trustee. See, Exhibit D at Art. I, §2.
47)"Defendants undertook an active role in overseeing and insisting upon the changes in the 2006 Restatement, providing that Defendants would continue to serve as Co-Trustees even upon Verla's death. Defendants' actions in this regard -- undertaken at a time when Verla lacked the mental capacity to restate her Trust much less appreciate the legal meaning and significance of the 2006 Restatement - were initiated by Defendants as part of a continuing scheme of financial exploitation against Verla by removing her only living sister as successor Trustee in favor of Defendants. See, Exhibit J, at Art. I, §1.
48) At all times herein relevant, there were certain accounts maintained by Blair in the name of the Verla Trust: account numbers 409-75938-10 and 150-75940-16 ("Verla Trust Accounts").
49)Throughout the period they have served as Co-Trustees, Defendants have depleted the Verla Trust Accounts in violation of the terms of the Verla Trust and in breach of their fiduciary duties which activities they have attempted to conceal by failing and refusing to render to Plaintiffs a single annual statement of the receipts and disbursements or of the financial condition of the Verla Trust, despite their repeated demands and by using the trust owned funds and assets for their own personal purposes rather than towards the care, support and comfort of Verla.
50) Between at least 2002 and 2008, Gretchen and Lynn have used the funds and assets belonging to the Verla Trust Accounts for their own benefit and gain in direct violation of their fiduciary and trust obligations owed to Plaintiffs as Co-Trustees of the Verla Trust.
Upon information and belief, Gretchen and Lynn have repeatedly directed that funds be transferred from the Verla Trust Accounts into checking/banking accounts at both Harris Bank and Wachovia Bank among others, from which accounts Defendants would then issue checks/withdrawals which were used by them for their own personal benefit and gain. As part of this scheme, between at least 2002 and 2008 Defendants failed and refused to account to Plaintiffs despite their repeated demands, all in direct violation of their fiduciary and trust duties to Plaintiffs under the terms of Verla Trust and in violation of their duties to furnish annual accountings as required under Section 11(a) of the Illinois Trusts and Fiduciaries Act. 760 ILCS 5/11 (West 2007).
51)Between at least 2002 and 2008, Defendants have repeatedly authorized the transfer of funds from the Trust A Accounts into the Verla Trust Account for the intended purpose of gaining more complete control over these funds as Co-Trustees without the involvement of Plaintiff (who at all times remained a third Trustee of Trust A); some or all of these funds were used by Defendants for their own personal benefit and gain in violation of both Trust A and the Verla Trust as well as their fiduciary duties under each such trust.
52) At the time of her death, Verla was visiting with Gretchen and staying in the latter's California home where she died at age 88 on November 2, 2007.
53) At all times material, Verla maintained, through her Trust, ownership of the Fairview Village Home which she furnished and where she received her mail and housed her personal files, papers, jewelry, clothing, artwork, personal belongings and effects.
54)In or about June of 2007, Defendant-Lynn appeared at Verla's Fairview Village Home while Verla was visiting Defendant-Gretchen in California, and then and there gained entry into the home and removed and purloined substantially all of Verla's furnishings, personal files, papers, jewelry, clothing, artwork, personal belongings and effects, some of which belonged to Plaintiff - Fred
55)The actions of Lynn in emptying Verla's Fairview Village Home were undertaken purposefully and maliciously and with the prior knowledge, involvement and/or direction of Gretchen so as to remove from Verla the personal liberty, right and ability to return to her home.
56)Shortly after removing these items from Verla's Fairview Village Home, Defendant -Lynn then transported many of the items to the Village of Woodridge and sold substantially all of the furnishings and much of Verla's other personal belongings in a garage sale which was conducted by her at the home of the in-laws of her daughter Gretchen. Since the sale, Lynn has at no time accounted to Verla, Verla's Trust or Plaintiff for the items taken by her from Verla's Fairview Village Home. Lynn's daughter Gretchen was paid $2,000 from the VKR checking account by Lynn for her help with the removal and sale of Verla's personal belongings. Since Verla's death, Gretchen and Lynn have continued to withdraw and transfer funds from both the Trust A Accounts and the Verla Trust Accounts.Since this complaint was drafted $10,000 per month was withdrawn until March of 2009.An additional $100,000 was withdrawn in July of 2008.
57) In December 2007, a request for a formal accounting was made by Lindsay as to the Verla Trust Accounts. To date, Defendants have failed, despite acknowledgement from their counsel that they have a duty to do so, to issue a formal accounting. In doing so, Defendants have incredulously suggested that the costs to do so would be incurred by Plaintiff's Trust only. A true and accurate copy of the email from Lindsey to attorney Peter Flaxman dated December 26, 2007 is attached hereto as Exhibit K. A true and accurate copy of Flaxman's January 17, 2008 letter in response is attached hereto and incorporated herein as Exhibit L.
58)Most recently, another demand for an accounting was made by Plaintiff with respect to both the Trust A Accounts and the Verla Trust Accounts and Defendants have persisted in their refusal to render or supply any such accounting. True and accurate copies of the letters dated August 29, 2008 sent by Plaintiff to Sidley and Blair are attached hereto and incorporated herein as Group Exhibit M. The Verla Trust provides that the administration of the Trust shall be governed by the laws of the State of Illinois.
59)As Trustees of Trust A and the Verla Trust, Defendants owed a fiduciary duty to manage the trust assets in the best interest of the trust estate and beneficiaries of these trusts.
60) That duty included a duty of good faith and loyalty to act in Verla's best interest and not for the Defendants' own personal interests.
61) Pursuant to 5/ 4 et seq.; 4.14, 4.20 (West 2007), Defendants' fiduciary duty included, but was not limited to:
a) Not to take or use for their own personal use and benefit any trust property; and
b) To maintain and keep records of all trust expenditures and to prudently safeguard, invest and account for all trust property and assets and to refrain from exploiting or using any such property and assets for their own personal gain or benefit
62) Defendants must account for all the funds they have taken and withdrawn from the Verla Trust and Trust A, and a constructive trust must be imposed upon all of Defendants' funds, accounts or assets wherever found in amounts sufficient to reimburse and make whole the Verla Trust and the Trust A of all misappropriated, converted, unaccounted for funds or assets duly belonging to the Verla Trust and Trust A.
Count II Breach of Fiduciary Duty
Plaintiffs hereby restate and re-allege Paragraphs 9-62 of their Verified Complaint as though fully set forth herein.
COUNT III MISREPRESENTATION
COUNT IV VIOLATION OF TRUST AND ABUSE OF TRUST PRINCIPAL
Plaintiffs hereby restate and re-allege Paragraphs 9-62 of their Verified Complaint as though fully set forth herein.
COUNT V DURESS
COUNT VI UNDUE INFLUENCE
OK. Thanks for the information -- that gives me a better place to start as far as researching. I really want to research the issue thoroughly since it already appears that you have done a significant amount on your own and with the assistance of other attorneys. I don't have any doubt at this point that you have standing to sue for an accounting -- I just want to try and find supporting case law, if any is available.
I probably will not have time to do this until this weekend simply because I will be devoting 3-4 hours of time to research the issues you have presented.
Once I've done that I'll answer with a response addressing the major issues and you and I can then work on clearing up any loose ends as far as my answer is concerned. Please stay with me on this, I will get you an answer -- but please understand it will take some time since it will be so involved. And, of course, you'll have to present this to your local counsel so that attorney can verify the research and incorporate it into your pleadings and motions in the case.
I found several contingent benificiaries who were able to sue the trustee but maybe scares me.This new Judge has me nervous.Anything we do for him has to be with an appeal in mind.I am really not sure if he is honest and based on his innitial rulings I am not sure.He is a senior Judge 79 picks his cases.Why would he want a small family trust case?If there was a way I would ask him to recuse himself.
I know one at a time but after this I have intentional unjustifiable death $3.0m if we win.You won t believe the evidence I have and the time lines in detail.
I did send you at lease one case law.If it got lost please let me know and I will resend
Interesting.Same district.I dont know if it helps or hurts but some good case lae
Appellants, v. Chester T. Kamin, Herbert B. Olfson and Jenner & Block, an Illinois partnership, Defendants-Appellees.
UNITED STATES COURT OF APPEALS FOR THE SEVENTH CIRCUIT
19 Fed. Appx. 435; 2001 U.S. App. LEXIS 28334
June 5, 2001, Argued
September 19, 2001, Decided
NOTICE: [*1] RULES OF THE SEVENTH CIRCUIT COURT OF APPEALS MAY LIMIT CITATION TO UNPUBLISHED OPINIONS. PLEASE REFER TO THE RULES OF THE UNITED STATES COURT OF APPEALS FOR THIS CIRCUIT.
PRIOR HISTORY: Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 99 C 3230. Robert W. Gettleman, Judge. Godfrey v. Kamin, 2000 U.S. Dist. LEXIS 18213 (N.D. Ill. Dec. 13, 2000).
COUNSEL: For ELLEN S. GODFREY, DIANE S. WILLIAMS, Plaintiffs - Appellants: David H. Latham, Chicago, IL USA.For CHESTER T. KAMIN, HERBERT B. OLFSON, JENNER & BLOCK, Defendants - Appellees: Lee A. Freeman, Jr., FREEMAN, FREEMAN & SALZMAN, Chicago, IL USA.
JUDGES: Before Hon. Joel M. Flaum, Chief Judge, Hon. Daniel A. Manion, Circuit Judge, Hon. Ilana Diamond Rovner, Circuit Judge.
OPINION ORDER Ellen Swartz Godfrey and Diane Swartz Williams (collectively, "plaintiffs") are contingent beneficiaries of a trust (the "trust") created by their father, William Swartz. Plaintiffs sued Chester T. Kamin and Herbert B. Olfson, former trustees of the trust, and Jenner & Block, Kamin and Olfson's law firm, for damages and an accounting under Illinois law. The district court determined that the plaintiffs lacked standing under Illinois law and dismissed the lawsuit, and [*2] the plaintiffs appeal. We affirm.I. Background Plaintiffs are contingent beneficiaries of the trust pursuant to the Third Restatement of William Swartz Trust Agreement, entered into on May 26, 1983. The terms of the trust provided that upon William Swartz's death, his wife, Mary Swartz, was to receive all trust income during her lifetime and such amounts of principal as are necessary for her support and care, as determined by the trustees. The trust agreement provided that on the death of Mary Swartz, her two daughters, the plaintiffs, and her son, Robert Swartz, would divide equally the remaining assets. William Swartz is now deceased, and Mary Swartz, who is still alive, is accordingly the sole income beneficiary of the trust income and principal at the time of this appeal.Herbert Olfson was William Swartz's attorney from the 1970s through 1992, and was a partner at Jenner & Block. The trust agreement provided that, upon William Swartz's death, Olfson and Robert Swartz would become co-trustees of the trust. Olfson acted as a trustee of the trust from November 11, 1987 through March 9, 1992, when he resigned. Pursuant to the trust agreement, Chester Kamin, also a partner [*3] at Jenner & Block, succeeded Olfson as co-trustee. Kamin served as co-trustee from April 1992 through his resignation, on July 9, 1997. The Harris Bank and Trust Company succeeded Kamin as co-trustee.Plaintiffs contend that the defendants' handling of the trust's investments was imprudent, arguing that they could have turned much higher profits if the trust had been better managed. They also believe the former trustees improperly made loans from the trust for which they then failed to collect a full repayment. Plaintiffs' amended complaint asserted four counts. Count I sought an accounting from the defendants as well as compensatory and punitive damages for breach of fiduciary duty. Count II sought compensatory and punitive damages for breach of fiduciary duty based on the defendants' investment of the trust principal. Count III sought compensatory and punitive damages from Olfson and Jenner & Block based on loans of trust money to Embosograph, the family company (which was managed by Robert Swartz and also represented by Jenner & Block). Finally, Count IV sought to recover the amount of a $ 1.8 million loan to the Mark William Company, owned by Robert Swartz, as well as punitive [*4] damages against Kamin and Jenner & Block.Defendants moved for judgment on the pleadings under Federal Rule of Civil Procedure 12(c), claiming that the plaintiffs lacked standing to pursue their claims on behalf of the trust. The district court dismissed the first count for failure to state a claim as a matter of law and dismissed the remaining counts for lack of standing. Plaintiffs appeal both holdings.II. Analysis We review de novo the district court's grant of a motion for judgment on the pleadings, see Cassidy v. Indiana Dept. of Corrections, 199 F.3d 374, 376 (7th Cir. 2000), and we begin by considering whether the plaintiffs failed to state a claim as a matter of law in Count I.The district court concluded that plaintiffs' claim for an accounting in Count I of their complaint was unavailable under Illinois statute, 760 ILCS § 5/11(a), which provides:Every trustee at least annually shall furnish to the beneficiaries then entitled to receive or receiving the income from the trust estate, or if none, then those beneficiaries eligible to have the benefit of the income from the trust estate, a current account showing the receipts, disbursements [*5] and inventory of the trust.Because this language limits a trustee's responsibility to furnish an accounting to beneficiaries "entitled to receive or receiving the income from the trust estate," and because plaintiffs are merely contingent beneficiaries not entitled to receive any income at this time, we agree that an accounting is unavailable under the statute. n1- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -1In fact, the trust itself limits the right to approve the trustees' accounts to income beneficiaries, and at this point the plaintiffs' mother, Mary Swartz, is the only income beneficiary of the trust.- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - -Plaintiffs, however, contend that they nevertheless have a right to an accounting under Illinois common law. n2 They cite several Illinois decisions for the proposition that a contingent beneficiary has a common law right to seek an accounting from a trustee that has breached a fiduciary duty. See, e.g., Burrows v. Palmer, 5 Ill. 2d 434, 125 N.E.2d 484, 487 (Ill. 1955); Giagnorio v. Emmett Torkelson Trust, 292 Ill. App. 3d 318, 686 N.E.2d 42, 45-46, 226 Ill. Dec. 693 (Ill. App. Ct. 1997); [*6] Barnhart v. Barnhart, 415 Ill. 303, 114 N.E.2d 378, 388 (1953). Defendants respond that the plaintiffs have sued former trustees, and the cases cited are thus inapplicable because they all involved current trustees. Generally the claims in those cases alleged that current trustees were unable or unwilling to protect the assets of the trusts. Instead of a claim against the current trustees, the plaintiffs' case is against third parties, the former trustees. Any right for an accounting would have to be against the current trustees.- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -2Plaintiffs also assert that equitable estoppel requires the defendants to provide an accounting, since the defendants promised, and provided, the desired financial information in the past. This argument does not merit much discussion. Among other things, the plaintiffs have not shown a prejudicial change in position in reliance on the defendants' promises. See, e.g., Levenfeld v. Clinton, 1986 U.S. Dist. LEXIS 27109, 1986 WL 4425, *10 (N.D. Ill. 1986). We conclude that equitable estoppel does not apply here.- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - - [*7] The problem with suing former trustees does not end there. On Counts II through IV, the district court granted the defendants' motion for judgment on the pleadings, concluding the plaintiffs lacked standing to sue under Illinois trust law because they brought a derivative suit on behalf of the trust against former trustees. The initial question, accordingly, is whether the district court was correct in labeling the plaintiffs' suit as a derivative suit. The plaintiffs claim they have brought a direct suit against the former trustees. A review of Counts II, III, and IV of their complaint, however, indicates that all of the damages sought are for harm to trust property. As the defendants note, in light of the plaintiffs' status as contingent remainder beneficiaries, any award of damages would necessarily be awarded to the trust. Until the events occur upon which the plaintiffs' benefits are contingent, they can receive no distribution from the trust. It follows that their claims, although styled direct actions, are actually brought on behalf of the trust. Cf. Axelrod v. Giambalvo, 129 Ill. App. 3d 512, 472 N.E.2d 840, 845, 84 Ill. Dec. 703 (Ill. App. Ct. 1984) ("[Plaintiffs] [*8] have no direct title to any trust property. Their interest in the Trust, therefore, is purely derivative."). Accordingly, we affirm the district court's holding that the plaintiffs' claims for compensation are derivative claims.The next question is whether the plaintiffs can bring this derivative suit against former trustees. n3 While there is no Illinois Supreme Court opinion which addresses the issue of a beneficiary's standing to sue a former trustee on behalf of the trust, Axelrod is directly on point. In Axelrod, the plaintiff trust beneficiaries brought a derivative action against the trust's former managing trustees, who had been replaced after a new board was elected. The Axelrod court held the plaintiffs lacked standing to bring a derivative suit against the former trustees because the former trustees were third parties and the current trustees had decided not to pursue an action against them. As the court explained:An analogy may be drawn to the rights of disinterested directors of a corporation to determine the best interests of the corporation in derivative litigation, where the decision that it is not in the corporations' best interests to maintain [*9] the suit has been upheld as sufficient grounds for terminating the litigation. 472 N.E.2d at 846.- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -3With respect to defendant Jenner & Block, plaintiffs claim the law firm acted as a de facto trustee. Defendants claim this argument was never raised before the district court, and was accordingly waived. A review of the record indicates that the claim was indeed raised below, although after regular briefing was completed. In any event, plaintiffs make no suggestion that Jenner & Block is currently a de facto trustee, or that Jenner & Block would not be a third party if the other former trustees are third parties.- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - -In so holding, Axelrod relied in part on the Restatement (Second) of Trusts (1959). The Axelrod court looked to Section 282 of the Restatement, which states that a beneficiary may not bring suits in equity except where the "trustee improperly refuses or neglects to bring an action against the third person," or where "the trustee cannot be subjected to the jurisdiction of the court or . . [*10] . there is no trustee." As the Axelrod court noted, comment (e) to Section 282 states that "if the trustee does not commit a breach of trust in failing to bring an action against the third person . . . the beneficiary cannot maintain a suit against the trustee and the third person." Since the former trustees no longer held office, the Axelrod court determined they were third persons in their relationship to the trust. See Axelrod, 472 N.E.2d at 846. The court then concluded that the current trustees were exercising prudent business judgment in their decision not to pursue an action against the former trustees, and accordingly a derivative suit on behalf of the trust was unavailable to the beneficiary. See id. n4- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -4The court recognized an exception to this rule, not applicable here, where the plaintiffs claim a breach of fiduciary duty by the current trustees for failing to bring suit against the former trustees. See 472 N.E.2d at 845 ("In the absence of any claim in the record that the successor managing trustees acted other than in absolute good faith, their determination to conclude the litigation is binding on plaintiffs.").- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - - [*11] Plaintiffs seek to diminish the import of Axelrod because it is an intermediate appellate court opinion. However, this decision is persuasive evidence regarding the Illinois law of trusts:Where an intermediate appellate state court rests its considered judgment upon the rule of law which it announces, that is datum for ascertaining state law which is not to be disregarded by a federal court unless it is convinced by other persuasive data that the highest court of the state would decide otherwise. Hicks v. Feiock, 485 U.S. 624, 630 n.3, 99 L. Ed. 2d 721,XXXXX 1423 (1988) (quoting West v. American Telephone and Telegraph Co., 311 U.S. 223, 237-38, 85 L. Ed. 139,XXXXX 179 (1940)). In this case, after consideration of the Axelrod court's reasoning, we are not convinced that the Illinois Supreme Court would rule otherwise. Therefore, we accept Axelrod as the correct statement of Illinois trust law.Although plaintiffs argue strenuously against the Axelrod rule, they do not explain why a former trustee is not a third party. Instead, they argue that "no rational reason suggests that a beneficiary should lose standing [*12] solely because the trustee resigns." This argument is really an attack on a particular application of the rule against suing third parties, and not an argument that a former trustee is not a third party. Moreover, there is a rational reason why the Illinois courts would treat differently a derivative suit against a trustee who has resigned -- namely, the interest of the successor trustee in determining the best interests of the trust. n5- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -5Plaintiffs also offer policy arguments against the Axelrod holding. These are readily countered by contrary policy arguments provided by the defendants. We express no opinion as to which, if any, of these policy considerations might be persuasive to the Illinois Supreme Court.- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - -Plaintiffs claim that Axelrod conflicts with comment (e) to Section 199 of the Restatement (entitled "Equitable Remedies of Beneficiary"), which states that where a trustee has been removed by a court and replaced with a new trustee, "the new trustee can maintain a suit against the old trustee [*13] for the breach of trust, or such suit can be maintained by the beneficiary." We note that the Illinois courts may interpret Illinois law differently from the Restatement, which is not Illinois law unless the Illinois courts so determine. In addition, although comment (e) to Section 199 could be read to conflict with Axelrod, it is also possible to harmonize the commentary with the Illinois Appellate Court's understanding. It is probable that the limitations which can be found in Sections 282, noted above, would also limit the reach of the broad statement that "a suit can be maintained by a beneficiary" contained in comment (e) to section 199: i.e., the trustee must commit a breach of fiduciary duty in failing to bring an action against the third person before a beneficiary can maintain such a suit. Moreover, the actual text of Section 199 is concerned with a beneficiary's right to seek equitable relief against a current trustee, such as removal of the trustee; it does not discuss under what conditions derivative suits for damages may be brought against third parties.Plaintiffs seek to characterize Axelrod as relying entirely on the Restatement, but part of the Axelrod [*14] court's reasoning was its analogy to corporate derivative suits. In fact, the Axelrod court's analogy to corporate derivative suits is in keeping with principles set forth in decisions of the Illinois Supreme Court regarding derivative suits. See, e.g., Metropolitan Sanitary Dist. ex rel. O'Keeffe v. Ingram Corp., 85 Ill. 2d 458, 426 N.E.2d 860, 868, 55 Ill. Dec. 535 (Ill. 1981) ("In shareholder derivative actions there must be a wrongful refusal [by the corporation] of the shareholder's demand to take action."). If the Illinois Supreme Court were to find a derivative beneficiary suit analogous to a derivative shareholder suit, a perfectly reasonable conclusion, its precedent in the corporate context would support the Axelrod decision.In light of the Illinois Appellate Court's holding in Axelrod, the plaintiffs lacked standing under Illinois law to bring their derivative actions against the defendants, who were third parties in their relationship to the trust. The current trustees declined to bring suit against the former trustees, and plaintiffs do not allege that this was a breach of fiduciary duty. For similar reasons, their claim of an accounting [*15] cannot succeed under Illinois common law, nor is an accounting available under Illinois statute. The district court is AFFIRMED.
There are a lot of variables.Your original suggestion,what if I revoke my trust,Would I be a vested benificiary? and then this which I just received
Seems to me that if you respond to the judgment on the pleadings with a countermotion, stating that the motion should be denied, except as to you personally during the period when you were not a direct beneficiary, on grounds that you are requesting leave to add the children as plaintiffs, and thus the remainder of the motion is moot.
Re restraining all the assets, you can file the motion for a preliminary injunction.
Last night I was sitting up trying to figure out how a contingent benificiary is legally entitled to an accounting.I went to trust law and there it was.
A. Is my mother the grantor and sole benificiary and the opposition is right about you cant get an accounting unless you are an income benificiary.
B. however is where they fall flat on their face.B is the definitiation of a contingent benificiary.When the sole benificiary dies the contingent benificiary automatically becomes a benificiary.The only other prerequisite is they are awarded with part of the trust estate.
(a) Every trustee at least annually shall furnish to the beneficiaries then entitled to receive or receiving the income from the trust estate, or if none, then those beneficiaries eligible to have the benefit of the income from the trust estate a current account showing the receipts, disbursements and inventory of the trust estate. A current account shall be binding on the beneficiaries receiving the account and on such beneficiaries' heirs and assigns unless an action against the trustee is instituted by the beneficiary or such beneficiary's heirs and assigns within 3 years from the date the current account is furnished. Paragraph B refers to contingent benificiaries "Then entitled to distribution"
(b) Every trustee shall on termination of the trust furnish to the beneficiaries then entitled to distribution of the trust estate a final account for the period from the date of the last current account to the date of distribution showing the inventory of the trust estate, the receipts, disbursements and distributions and shall make available to such beneficiaries copies of prior accounts not theretofore furnished. Such final accounting shall be binding on the beneficiaries receiving the same and all persons claiming by or through them, unless an action against the trustee is instituted by the beneficiary or person claiming by or through him or her within 3 years from the date the final account is furnished.
DISCLAIMER: Answers from Experts on JustAnswer are not substitutes for the advice of an attorney. JustAnswer is a public forum and questions and responses are not private or confidential or protected by the attorney-client privilege. The Expert above is not your attorney, and the response above is not legal advice. You should not read this response to propose specific action or address specific circumstances, but only to give you a sense of general principles of law that might affect the situation you describe. Application of these general principles to particular circumstances must be done by a lawyer who has spoken with you in confidence, learned all relevant information, and explored various options. Before acting on these general principles, you should hire a lawyer licensed to practice law in the jurisdiction to which your question pertains.
The responses above are from individual Experts, not JustAnswer. The site and services are provided “as is”. To view the verified credential of an Expert, click on the “Verified” symbol in the Expert’s profile. This site is not for emergency questions which should be directed immediately by telephone or in-person to qualified professionals. Please carefully read the Terms of Service (last updated February 8, 2012).