Fischel & Kahn, Ltd. successfully litigated a recent Appellate Court case that addressed who may challenge a request by a guardian of the estate of a disabled adult to engage in estate planning and when such challenges may occur.  The ruling from In re Estate of Richard V. Henry, 2009 WL 3351230 (Ill.App. 1 Dist.) is a landmark decision that has been featured in the Chicago Daily Law Bulletin and answers important estate planning questions in guardianship cases and raises other issues that have never been previously addressed by Illinois courts. 

The Facts

Richard V. Henry executed a will in 2004 which gave nearly $5 million to his caretaker and his deceased wife’s nephew (“nephew”).  In 2006 Henry was adjudicated disabled and the Court named JPMorgan Chase Bank as the plenary guardian of his sizeable estate, and his niece as the plenary guardian of his person.  Henry’s estate, represented by Fischel & Kahn, Ltd., brought an action against the caretaker for abusing his fiduciary relationship after it was discovered that he had misappropriated over $1.3 million of assets from Henry.  The Court found that Henry lacked decisional capacity since the end of 2003 and that such transfers to his caretaker were in fact fraudulent. 

After a successful citation action to recover these assets, the estate petitioned the Court under the Illinois Probate Act of 1975 (755 ILCS 5/11a-18(a-5)) to execute new estate planning documents on behalf of Henry that most accurately reflected his final wishes.  The guardian alleged that Henry’s 2004 will did not reflect these wishes based on the large amount bequeathed to his exploitative caretaker and his lack of decisional capacity at the time.  The 2004 will split the majority of Henry’s sizeable estate between his nephew and caretaker and also left one of Henry’s homes to his caretaker.  This arrangement was a far departure from his 1999 will which distributed his estate to his niece and other family members, together with several charitable, educational, and medical institutions that Henry had been affiliated with throughout the course of his lifetime.  

Both the caretaker and nephew opposed the substance of the estate planning documents proposed by JPMorgan Chase Bank and further challenged the Court’s authority to allow a guardian to execute a new will for a ward under the Probate Act under 755 ILCS 5/11a-18(a-5).  The trial court held that the caretaker and nephew did not have standing to challenge the new estate planning documents, thus ruling for JPMorgan Chase Bank. The caretaker and nephew appealed. 

The decision

The estate, represented by Fischel & Kahn, Ltd., argued that the appeal should be dismissed because the caretaker and nephew lacked standing not only as they are not Henry’s guardians but also because any rights provided to them under the 2004 will (which was no longer valid) do not vest until Henry’s death.  The Appellate Court ruled in favor of the estate, holding that the caretaker and nephew currently hold only a “mere expectancy” interest in the estate that does not vest until Henry’s death, whereupon they may file a will contest.  The court makes an important distinction between a legacy that has only a future interest versus one that has an actual present interest.  Those legatees with only a “mere expectancy” interest have no standing to oppose a will while the testator is still alive, namely because the testator has the power to revoke a will at any time before his/her death and thus there was no actual injury.  This holding that a will provides no right to a legatee until the death of the testator is consistent with decisions in other states as well. 

The Appellate Court also rejected the caretaker and nephew’s argument that their receipt of notice of the proceeding as “interested persons” constituted grounds for standing.  This notice requirement, however, does not establish a “present vested” interest and therefore they must wait to file a will contest after Henry’s death.

The Court discounted the argument of the caretaker and nephew that fraudulent interference with an inheritance expectancy is a cognizable cause of action that gives a legatee a property right during the testator’s lifetime.  Instead, the Appellate Court noted that this cause of action also accrues after death, even though the conduct for the cause of action could be based on fraudulent conduct during the decedent's lifetime. 

The Implications

The Henry decision affects standing to challenge a guardian’s petition to execute estate planning documents. Any legatee or interested party that may be affected by the guardian’s changes to the estate plan does not have the right to challenge the guardianship court’s authority to engage in such estate planning. 

This holding also raises the issue of what notice a guardian has to provide to potentially affected parties when proposing estate planning documents.  Such notice will be crucial to those parties interested in filing a will contest.  What, if any, grounds for bringing a will contest after the testator’s death is another question that was not addressed and is currently being litigated by Fischel & Kahn, Ltd. in the Winter of 2010.