JOIN US ON THURSDAY, JULY 16TH AT 12PM FOR OUR LATEST REMOTE LUNCHEON. The zoom link is available at:https://www.lakeilepc.org/events/event/19033
Speaking remotely via Zoom will be Carey J. Schiever and Michael L. Ralph, Jr. of Ralph, Schwab and Schiever, Chartered
Business Succession – Use Stockholder Agreements to Make Transfers a Sure Bet
CASE UPDATE:
Ashby v. Pinnow, 2020 IL App (2d) 190765 (2nd Dist. 2020)
The parties—three siblings—were co-trustees and equal beneficiaries of their late parents’ trust. The trust called for the trust assets to be divided and distributed in equal shares among the beneficiary brothers upon the last of their parents to die. At the time of the last parent’s death, the trust held a five-acre parcel of land, a portion of which was improved property containing the family home, and a portion of which was unimproved vacant land. Two of the three brothers—constituting a majority of the co-trustees—executed a trustee’s deed conveying the improved portion of the land to themselves, and as separate deed conveying the vacant (and less valuable) land to their brother, the third minority co-trustee. The majority brothers provided no written notice of this action to their brother, but they did record the deeds in 2010.
The minority brother, who was homeless, eventually learned of the conveyance and filed suit in 2018, alleging: (1) an action to quiet title; (2) an action for partition; and (3) an action for breach of fiduciary duty. The lower court dismissed the minority brother’s pleading with prejudice, finding that his first two counts failed to state a claim, and that his third count was untimely.
On appeal, the reviewing court affirmed that the third count—for breach of fiduciary duty—was time barred by the applicable five-year limitations period. The reviewing court determined that the recording of the deeds in 2010, as public records, prevented the minority brother from tolling the limitations period on the basis of fraudulent concealment.
However, the reviewing court reversed the dismissal of the first two counts, finding that factual issues prevented dismissal. In reaching this conclusion, the reviewing court noted that the trust instrument, by its terms, required compliance with the Illinois Trusts and Trustees Act. Section 10 of that Act stated, in relevant part, that “. . . a majority of trustees are competent to act in all cases after prior written notice to, or written waiver of notice by, each other trustee . . . .” The reviewing court concluded that, in the absence of such written notice to the minority brother co-trustee, the minority brother’s claims were viable, and dismissal was not warranted. The court further noted that any purported neglect on the part of the minority brother to perform his role as co-trustee, at best, was a disputed factual issue that did not warrant dismissal.
Jeffrey O’Kelley
Vice President, Lake County Estate Planning Council
Lesser Lutrey Pasquesi & Howe, LLP
191 E. Deerpath Suite 300, Lake Forest, IL 60045
Email: okelley@llphlegal.com
Phone: 847-295-8800