McCarthy v. Taylor
17 N.E.3d 807
Ill. App. Ct.2014Background
- Settlor Abraham L. Reynolds III executed a 2006 living trust naming Cherie Coles as successor trustee and providing that if Coles could not act and no alternate was named, Gerald McCarthy would be second successor trustee; trust also directed confidentiality during Reynolds’ life.
- Coles died in 2007; plaintiff McCarthy contends that, as a result, he became successor trustee under the succession clause.
- Reynolds executed a notarized 2010 amendment (formal, typewritten).
- On December 15, 2012 Reynolds died by suicide; his attorney produced a handwritten 2012 revision of the trust (cross-outs and handwritten replacements) that replaced Coles with Rozlyn Taylor as successor trustee and reallocated percentages of the residuary estate.
- McCarthy sued for declaratory relief and injunctive relief, claiming the 2012 handwritten amendment is invalid because it did not comply with the trust’s amendment clause or Illinois law; the trial court found the 2012 handwritten amendment valid and named Taylor successor trustee.
- On appeal the court reviewed trust construction de novo, deferred to trial-court fact/credibility findings where applicable, and affirmed the trial court.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether McCarthy became successor trustee upon Coles’ 2007 death | Coles’ death activated the succession clause so McCarthy became successor trustee | The clause required both notice of successor’s inability and that Reynolds be unable to appoint another; Reynolds later executed an amendment naming Taylor | Held: McCarthy did not become successor trustee because both conditions in the succession clause did not occur before Reynolds’ death; validity of 2012 amendment is dispositive |
| Whether the amendment clause required delivery of any amendment to the successor trustee | McCarthy: amendment must be delivered to successor trustee as stated in clause | Taylor: delivery provision applies only to removal of successor trustee; confidentiality clause shows settlor did not intend delivery of all amendments | Held: Clause is ambiguous; trial court permissibly considered extrinsic evidence and its finding that delivery was not required is not against the manifest weight of the evidence |
| Whether a valid amendment must be a separate formal legal document, signed, or expressly labeled an amendment | McCarthy: amendment must be a separate formal document with an original signature and explicit expression of intent to amend | Taylor: settlor’s handwritten changes suffice as a writing reflecting settlor intent; no clause requires formalities | Held: For this trust, only requirement is that amendment be "in writing." It need not be a separate formal document, notarized, newly signed, or explicitly labeled as an amendment |
| Whether prior amendments (2010 formal amendment) set binding formalities for later amendments | McCarthy: prior formal amendment establishes the standard for subsequent amendments | Taylor: prior formal amendment is not binding on later amendments absent express requirement | Held: Prior amendment’s formalities are not dispositive; trial court correctly declined to impose the 2010 formalities on the 2012 handwritten amendment |
Key Cases Cited
- Eychaner v. Gross, 202 Ill. 2d 228 (1998) (standard of review for trust construction and deference to trial-court fact findings)
- Citizens Nat’l Bank of Paris v. Kids Hope United, Inc., 235 Ill. 2d 565 (2010) (trusts construed to effectuate settlor intent consistent with law)
- Whittaker v. Stables, 339 Ill. App. 3d 943 (2003) (if trust prescribes a method to modify, the power ordinarily must be exercised in that manner)
- Northwestern Univ. v. McLoraine, 108 Ill. App. 3d 310 (1982) (court may consider decedent’s prior amendments and conduct to determine what phrase like “instrument in writing” meant to settlor)
- Barber v. Barber, 368 Ill. 215 (1938) (informal writings may satisfy testamentary intent; no specific words required)
- Storkan v. Ziska, 406 Ill. 259 (1950) (general rules of construction for written instruments apply to trusts)
- Quake Constr., Inc. v. Am. Airlines, Inc., 141 Ill. 2d 281 (1990) (whether a contract is ambiguous is a question of law)