Rush University Medical Center v. Sessions
980 N.E.2d 45
Ill.2012Background
- Rush University Medical Center sued trustees of two Sessions trusts for $1.5 million pledged by Robert W. Sessions.
- Sessions created the Sessions Family Trust (Feb. 1, 1994), governed by Cook Islands law, self-settled with spendthrift clause.
- Sessions was settlor, lifetime beneficiary, and Trust Protector; could appoint/remove trustees and veto discretionary actions.
- Plaintiff relied on pledges made in 1995–1996; Sessions later revoked wills and created a revocable living trust, reducing potential recovery.
- Trial court granted summary judgment on count III; appellate court reversed, finding the Fraudulent Transfer Act displaced the common-law rule; Illinois Supreme Court granted review.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Uniform Fraudulent Transfer Act displaces the common law rule. | Rush argues Act abrogates the self-settled spendthrift rule. | Trustees/Attorney General contend Act and common law can coexist. | Act does not displace the common law rule. |
| Whether Rush is a creditor of Sessions and can reach trust assets. | Rush is a creditor of Sessions and may reach trust assets. | Trust assets are protected from Sessions' creditors by spendthrift provision. | Rush is a creditor and may reach the trust assets. |
| Whether creditor rights extend to assets after Sessions’ death. | Rights arise from the voiding of the transfer; death does not extinguish them. | Once settlor dies, creditor rights under the trust end. | Creditor rights extend post-death; assets remain reach-able. |
Key Cases Cited
- BFP v. Resolution Trust Corp., 511 U.S. 531 (U.S. 1994) (fraudulent conveyances; origins of modern doctrine)
- Nagel v. Nagel, 580 N.W.2d 810 (Iowa 1998) (trusts; creditor reach even where settlors die)
- Deposit Guaranty Nat’l Bank v. Walter E. Heller & Co., 204 So.2d 856 (Miss. 1967) (creditor reach in self-settled trusts; death not fatal to claim)
- Johnson v. Commercial Bank, 588 P.2d 1096 (Or. 1978) (creditor reach where settlor dies; trust void as to creditors)
- Greenwich Trust Co. v. Tyson, 27 A.2d 166 (Conn. 1942) (life-interest/estate distinctions in self-settled trusts)