Illinois Estate Guardians Receive a New Job: Guardianship Estate Planning No Longer Optional?

When guardianship estate planning entered Illinois law in 1996, it was viewed as an optional benefit available to guardians to give disabled adults the tax savings available to abled people. That may be changing.

In In re Estate of Rivera, the Appellate Court of Illinois addressed the process as part of a duty possessed by guardians of the estate of disabled adults. Estate guardians may now be required to petition the court to enact new estate plans – or modify existing plans – on behalf of their wards to include only those individuals whom the estate guardian has reason to believe the ward would choose to include if the ward was not under disability. The “best interests” standard that governs 755 ILCS 5/11a-18(a-5), has been interpreted in Rivera as not only allowing deviation from intestacy in such plans, but perhaps even requiring it where the facts are compelling. Compelling facts likely include cutting out intestate heirs with no relationship or poor relationships with the disabled person. Compliance with this duty appears to impose a substantial burden on estate guardians.

IN DEPTH

Background

The Illinois guardianship estate planning statute, 755 ILCS 5/11a-18(a-5), allows the guardian of the estate of a disabled adult to establish estate plans for their ward on petition to the court. Historically, most estate guardians followed the rules of intestacy in implementing these estate plans. However, in 2015, the Appellate Court of Illinois, First District held Section 5/11-18 statutorily empowers an estate guardian to petition a court to enact an estate plan that deviates from the rules of intestacy. Estate of Howell v. Howell, 2015 IL App (1st) 133247, ¶ 41, 36 N.E.3d 293.

The court in Howell held that an estate guardian may petition the court to enact an estate plan that includes only those persons whom the guardian believes the ward would choose to include as beneficiaries because Section 11a-18(a) provides that the estate guardian shall apply the income and principal of the estate “for any other purpose which the court deems to be for the best interests of the ward, and the court may approve the making on behalf of the ward of such agreements as the court determines to be for the ward’s best interests.” The court in Howell concluded that it is in a ward’s best interests for the estate guardian to petition the court to enact an estate plan that disinherits a ward’s family members if the estate guardian has reason to believe that the ward would not wish for those family members to benefit from his or her death. The court in Howell also found that, in the event an estate guardian files such a petition, the court should conduct an evidentiary hearing to determine the ward’s “best interests” before granting the petition and enacting the plan.

The Rivera Decision

While Howell provided an estate guardian with the ability to take such action, the recent decision in Rivera has turned that ability into an obligation to consider taking such actions, particularly where heirship exclusions seem justified. In re Estate of Rivera, 2018 IL App (1st) 171214.

The ward in Rivera, Inez Rivera, had never had testamentary capacity. In 2015, Inez’s estate guardian petitioned for and received authority to enact an estate plan for Inez. Since Howell was pending at this time, the guardian’s proposed estate plan followed the rules of intestacy.

After Howell was decided, the estate guardian petitioned the court to amend Inez’s estate plan to benefit only Inez’s mother, who was the guardian of her person; Inez’s full sister; and Inez’s three half-sisters who lived with Inez. The estate guardian, after consulting with Inez’s mother, had reason to believe that Inez would only choose to benefit those individuals. Other facts about Inez’s relationship to her father suggested that she would have cut him out if she could.

After conducting an evidentiary hearing on Inez’s best interests, the court granted the estate guardian’s petition over the objection of Inez’s father and eight of Inez’s other half-siblings. In particular, the court found that Inez’s mother cared for Inez exclusively from the time of Inez’s birth. Conversely, Inez’s father had never lived with Inez, had never cared for Inez, had been violent to Inez’s mother, and had fathered eight other children with other women besides Inez’s mother. Inez’s half-siblings who were children of her father did not have any relationship with Inez either.
On appeal, the Court held that:

“A ward’s best interests are not fixed and it would be unsound to conclude that a ward’s estate plan should be unmodifiable, particularly in this case where the ward is a young adult and her best interests may change over her lifetime. We find that an estate guardian is empowered and obligated by the Probate Act to amend a disabled ward’s estate plan when material circumstances change and an existing plan, whether it be an original or amended version, is no longer in the ward’s bests interests due to a change in circumstances.”

In re Estate of Rivera, 2018 IL App (1st) 171214, ¶ 55 (emphasis added).

The Result

As a result of this holding in Rivera, guardians of the estate in Illinois should consider, in each case, whether compelling facts about family relationships dictate a need to compose a plan and offer it to the court for a hearing. If an estate guardian has reason to believe the ward’s plan should be implemented or modified to exclude any family members, the estate guardian should petition the court to establish or amend the plan.

Full Article & Source:
Illinois Estate Guardians Receive a New Job: Guardianship Estate Planning No Longer Optional?

Attorney alleges ‘pattern & practice’ of fraud in Winston-Salem clerk’s office

The attorney suing the Forsyth County Clerk of Superior Court Office, an estate guardian, and others over alleged “acts of fraud” involving the loss of over $1.4 million in assets belonging to a now deceased African-American retired nurse, claimed in court papers a year ago that he has evidence that this wasn’t just a one-time occurrence, but rather, “a pattern and practice of fraudulent activity by the Clerk’s Office…,” and that specific guardian.

Even though The Chronicle is focusing on allegations centered at the Forsyth County Clerk’s Office, the allegations of fraud in the quasi-judicial process of determining legal guardians for incapacitated individuals could have statewide implications if they’re being replicated in other counties without investigation.

Reginald D. Alston, the attorney representing the estate of the late Mary Ellen Brannon Thompson (legally known as the “ward”), made the allegation in the lawsuit he filed last week (as exclusively reported by The Chronicle) against the Forsyth County Clerk of Superior Court Office, which administers guardianships; and attorney Bryan Thompson (no relation to Mary Thompson), the estate guardian alleged to have had an official in the Forsyth County Clerk’s Office on May 1, 2007, “… sign a guardianship appointment in his favor…. without giving notice to Mary Thompson [while she was living] and her next of kin…” as required by state statute.

Alston also made the allegation in several motions he filed in the case dating back to March 2014.

As the Clerk appointed estate guardian, attorney Thompson was responsible for managing the ward’s over $1.4 million in liquid and real estate assets. But in the Oct. 20 lawsuit, attorney Alston, representing Calvin Brannon – Mary Thompson’s brother and the estate administrator representing next of kin – maintained that attorney Thompson had no legal right to oversee the estate because there was never any evidence of the ward’s incompetence presented (which is required in order for an estate guardian to be appointed by the Clerk in North Carolina), a key element in determining the legal reason for a guardian.

Without that evidence, attorney Thompson should never have been appointed, the lawsuit contends. But in addition, the orders issued by the Clerk’s Office declaring Mary Thompson as incompetent, and attorney Thompson as her legal estate guardian, were never officially filed into the court record via time stamp, as legally required.

“The order is devoid of any stamp-file or other marking necessary to indicate a filing date, and therefore it was not entered,” ruled the N.C. Court of Appeals in a February 4, 2014, decision.

And in addition, as attorney Alston contends in the lawsuit, attorney Thompson’s May 1, 2007, appointment as estate guardian came before the Clerk’s May 3, 2007, Order of Incompetence, which could not stand given that the ward had to be legally determined incompetent first before any guardian could be assigned.

Forsyth County Clerk of Superior Court Susan Frye apparently took that February 2014 appellate court ruling to heart. On April 9, 2014, she issued a “Findings of Fact” in the Mary Ellen Thompson case, acknowledging per the appellate decision that “… the orders were not properly entered…,” thus creating “… an inadvertent defect…”

However Frye, who was re-elected to her second-term in November 2014, decided she could deal with that 7-year-old “inadvertent defect” by simply declaring that the orders could be belatedly entered per the legal principle of nunc pro tunc, which is Latin for “now for then,” meaning that if a court makes a mistake in a previous order, it can correct it subsequently.

She ordered all of the orders to be re-entered under their original dates nunc pro tunc, except the order authorizing attorney Thompson to become the ward’s estate guardian. On that one, realizing the conflict of dates, she had that changed from May 1, 2007 to May 3, 2007, to match the original date of the incompetency order.

But the ward’s estate attorney, Reginald Alston, apparently already aware that Clerk Frye would attempt to dodge the appellate court findings, opposed Frye’s coming order in his April 1, 2014, motion to Superior Court, writing, “Counsel objects to the nunc pro tunc filing of the May 3, 2007 Order of Incompetence in this matter as an attempt to legitimize the fraudulent actions of Bryan Thompson and [former assistant Clerk] Theresa Hinshaw, and protects the interests of the Court as opposed to those of Mary Ellen Brannon Thompson.”

Hinshaw is the official in the Clerk’s Office in 2007 who attorney Alston alleges “colluded” with attorney Thompson in the issuing both defective orders in the Mary Thompson case.

Clerk Frye’s order was eventually appealed and subsequently found to be procedurally improper by a Superior Court judge. It was sent back for a hearing in the Clerk’s office.

In that same April 1, 2014, motion by Alston, he stated that, “… counsel has previously raised the issue of fraud and collusion by Clerk Theresa Hinshaw and Bryan Thompson in regards to this special proceeding and estate and other similar cases in Forsyth County.”

Alston further said in his motion that Clerk Frye “refused to accept the documents marked for trial as Exhibit H and consisting of a listing of [over 40] Estate matters in which Bryan Thompson was handling the estate.”

Attorney Alston went on to state that “… as part of my investigation of the alleged fraud, I pulled the Estate files for several individuals whose estates had been handled by Bryan Thompson…” Each case had a special proceeding regarding an estate where Bryan Thompson was appointed, Alston continued, and, “That none of the cases had a filed-stamped order of incompetence nor filed-stamped order appointing anyone guardian of the Estate or Person.”

Alston went on to list four cases by file numbers that he personally reviewed to document his allegation, and then stated a reason he believed the pattern even existed.

“…[C]ounsel believes the failure to file stamp the Orders was utilized as a means to prevent removal of the guardians and facilitate Bryan Thompson … to fraudulently maintain the position of guardian without properly filed Orders authorizing [his] actions.”

In a previous motion before the court dated March 31, 2014, attorney Alston was blunt, stating, “That the issuance of letters to Brian Thompson by [Clerk] Theresa Hinshaw without a properly filed Order of Incompetence was not an error or unique circumstance, but an act of fraud that has been repeated in other special proceedings in Forsyth County and evidences a pattern and practice of fraudulent activity by the Clerk’s Office.”

Months later, in October 2014, Mary Ellen Thompson, who had been in ill health, died. But even though it had been clearly established before her death that Bryan Thompson’s estate guardianship was in controversy, no relief was forthcoming.

“Between May 1, 2007 and October 2, 2014, Bryan Thompson did not return the assets that he took by fraud from Mary Thompson valued at $1, 486, 415.49,” attorney Alston alleges in the estate’s Oct. 20 lawsuit. The suit seeks compensatory and punitive damages from, “… the Clerk’s bond in the amount of all property value that [the ward] lost due to Bryan Thompson’s acts and the regulatory failures of the Clerk of Courts in an amount that exceeds $25,000.”

The lawsuit also seeks compensatory and punitive damages from two insurance companies on the bond issued to protect Mary Thompson’s assets as required by law; and two other attorneys for their alleged roles in what the suit maintains was a case of fraud.

Finally, the suit seeks all of Mary Thompson’s assets returned to the estate, and to hold attorney Bryan Thompson liable.

Defendants had not responded to the Mary Thompson estate lawsuit by press time.

Full Article & Source:
Attorney alleges ‘pattern & practice’ of fraud in Winston-Salem clerk’s office