In re Estate of Lee
2017 IL App (3d) 150651
| Ill. App. Ct. | 2017Background
- Sandra K. Lee died in 2005 leaving a will that created a testamentary trust for her three children, named Kathleen Line as trustee and Jennifer Mansberger as executor; trust income/principal was for the children and at age 25 each child was to receive one-third of remaining assets.
- Executor filed probate and over time distributed $190,000 to Kathleen (as trustee) and the trust additionally received about $158,000 in Social Security; beneficiaries lived with Kathleen for years.
- Beneficiaries sought accountings (2014 petition); Jennifer produced an estate accounting but Kathleen failed to timely provide a trust accounting; a rule to show cause was filed and Kathleen was found in contempt for not supplying the accounting.
- Kathleen later filed an amended accounting (using USDA estimates, few receipts) claiming substantial out-of-pocket expenditures and a shortfall; beneficiaries objected and sought Kathleen’s removal as trustee.
- Trial court ordered Kathleen to produce an accounting, directed the executor to pay $20,000 each to two children who had reached 25 (total $40,000) rather than to the trust, found Kathleen in contempt and imposed attorney-fee sanction, and ultimately removed Kathleen as trustee.
- On appeal the court affirmed the accounting order, the $40,000 distribution, and removal; it reversed and vacated the contempt order (procedural defects) and remanded for further proceedings limited as to fees.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether trustee must provide a yearly accounting to beneficiaries | Beneficiaries: statute and trust terms entitle them to yearly accountings | Kathleen: no statutory or trust duty to provide accounting (raised late) | Court: Affirmed — beneficiaries entitled under 760 ILCS 5/11; Kathleen forfeited challenge by consenting to the order |
| Whether executor may distribute $40,000 directly to two beneficiaries instead of to trustee | Beneficiaries: distribution effectuates settlor’s intent (each child’s 1/3 at 25) and protects assets given trustee misconduct | Kathleen: order alters will, she is entitled to reimbursement for out-of-pocket support | Court: Affirmed — remedy was within trial court’s discretion to effectuate trust/will given commingling and trustee problems |
| Whether contempt finding for failing to file accounting was proper | Beneficiaries: contempt was warranted for failure to obey court order; sanction of attorney fees appropriate | Kathleen: contempt order defective (no purge provision, unclear payment method, improper procedures) | Court: Reversed contempt finding — proceeding procedurally flawed (unclear civil vs. criminal contempt); vacated sanction; remanded for proper limited contempt proceedings if pursued |
| Whether removal of Kathleen as trustee was error | Beneficiaries: removal warranted due to commingling, inadequate records, breach of fiduciary duty | Kathleen: argued entitlement to reimbursement and challenged removal (but did not brief issue on appeal) | Court: Affirmed removal — Kathleen forfeited appellate challenge; trial court’s factual findings unrebutted |
Key Cases Cited
- Wallace v. Malooly, 4 Ill.2d 86 (recognizes beneficiary’s right to inspection and information reasonably necessary to enforce trust rights)
- Goodpasteur v. Fried, 183 Ill. App.3d 491 (beneficiary eligible for trust income is entitled to an accounting)
- In re Trusts of Strange, 324 Ill. App.3d 37 (administration issues in trust matters may be immediately appealable under Rule 304(b)(1))
- In re Marriage of Logston, 103 Ill.2d 266 (contempt findings are fact questions reviewed for manifest weight/abuse of discretion)
- Blum v. Koster, 235 Ill.2d 21 (standard for abuse of discretion)
- Pancotto v. Mayes, 304 Ill. App.3d 108 (civil indirect contempt requires written order specifying purge conditions)