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The Chicago Bar Association Presents:
PROBATE: More Than Forms And Funeral Bills
Friday, September 30, 2011 2:00-5:00 p.m The Chicago Bar Association 321 S. Plymouth Court Level of Instruction: Intermediate Presented by: CBA CLE Committee Also Available: DVD Rental, Written Materials Learn About Setting Up The Court File; The Notice Requirements Specific To Probate; Attorneys Fees, Value Added and Who May Object; Wrongful Death Considerations; The Rule About Confidentiality in Estate Planning and the Litigation Exception Posthumously; Hear What’s New in the Clerk’s Office and How with the Click of a Magic Wand or Mouse You Can See Images of Probate Files. SPEAKERS: Pauline G. Dembicki, Law Offices of Pauline G. Dembicki (Moderator) Jay S. Berlin, Jaffe & Berlin, L.L.C. Louis S. Harrison, Harrison Held, LLP Robert S. Held, Harrison & Held, LLP Jennifer M. Smith, Chief Deputy Clerk of the Probate Division, Cook County
TABLE OF CONTENTS PROBATE: More Thank Forms and Funeral Bills
September 30, 2011 Estate Administration Pauline G. Dembicki ............................................................................................................... CBA3 Now That You Have Done The Work, How Are You Going To Get Paid Louis S. Harrison .................................................................................................................. CBA65 Personal Injury Practice: How Does It Relate To Probate? Jay S. Berlin .......................................................................................................................... CBA89 The Rule About Confidentiality in Estate Planning and the Litigation Exception Posthumously Robert S. Held ..................................................................................................................... CBA105 What’s New in the Probate Division: E-Court Initiatives and Technology for Court Services and Customers Jennifer M. Smith. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . CBA113
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Chicago Bar Association
Probate: More Than Forms and Funeral Bills
Estate Administration
Pauline G. Dembicki Attorney at Law 847.563.8044 [email protected]
© Pauline G. Dembicki 2011
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Chicago Bar Association
Probate: More than Forms and Funeral Bills
September 30, 2011
Pauline G. Dembicki
Table of Contents
Introduction ................................................................................................. 6
The Law ................................................................................................. 6
The Court ............................................................................................... 7
Settlement Calendar ................................................................................ 7
Cases Filed in Cook County ....................................................................... 8
Preprinted Court Forms ............................................................................ 8
Docket in Cook County – Old Cases ........................................................... 8
Lake County, Illinois ................................................................................ 8
Cases filed in Lake County ........................................................................ 9
Estate Planning Considerations ....................................................................... 9
Nominating an Executor ......................................................................... 10
Funeral Issues ...................................................................................... 11
Anatomical Gifts in the Illinois Health Care Power of Attorney ...................... 12
The probate act and burial considerations ................................................. 13
Funeral Issues and Minor Guardianships ................................................... 14
Posthumous Considerations .......................................................................... 14
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Administrators to Collect ........................................................................ 14
Locating the Original Will ........................................................................ 15
Known Will Missing. ............................................................................... 17
Opening Safe Deposit Boxes ................................................................... 17
Duty to File Will .................................................................................... 19
Filing the Will .......................................................................................... 20
Requests for “The Will” .......................................................................... 22
Executors, Administrators and Declinations ............................................... 23
The Surety Bond ................................................................................... 25
Intestate Estates ................................................................................... 25
Inter Vivos Trusts .................................................................................. 26
Affidavits of Heirship .............................................................................. 27
Protecting the Estate ............................................................................. 28
Banking ............................................................................................... 30
Identifying Assets and Debts ................................................................... 30
Powers of Attorney ................................................................................ 33
Cars .................................................................................................... 33
Joint Tenancies ..................................................................................... 34
Illinois Convenience Accounts ................................................................. 34
Personal Property at a Residential Facility ................................................. 35
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Canceling of the decedent’s credit cards ................................................... 35
Personal Property .................................................................................. 35
Debts and Claims against the estate ........................................................ 36
Real estate ........................................................................................... 38
Minors as Heirs or Legatees .................................................................... 40
Guardianship Issues in Decedent’s Estates ................................................ 40
Missing Heirs and Legatees ..................................................................... 42
Probate Light ............................................................................................. 43
Illinois Small Estates Affidavit ................................................................. 43
Spread of Record .................................................................................. 44
Costs of Administration ................................................................................ 45
Attorneys Fees ........................................................................................ 45
Supervised Administration and Attorneys Fees .......................................... 48
Executor’s Fees ....................................................................................... 49
Taxes .................................................................................................. 50
Conclusion ........................................................................................... 52
My Favorite Cook County Probate Forms (There are many more) ................................. 53
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Introduction
In a colloquial sense, probate is the wrapping up of all the loose financial ends of
the decedent (business and personal).
More specifically, probate covers the collection, protection and identification of
assets, payment of costs of administration, taxes, claims and final distribution of
remaining assets to heirs and/or legatees. Probate can include other areas of law,
for instance, domestic relations, wrongful death and contract issues. Taxes are a
guaranteed issue in every estate.
The Law
Local rules assign the probate court authority to hear controversies involving
claims, citations (by and against the estate) will contests and related matters,
(Rules of the Circuit Court, Part 12, Probate Proceedings). See rules for more
specific information on deposition of a witness to a will, inventories, claims, current
accounts and more. Follow the template for accounts exactly.
The Illinois Probate Act is at 755 ILCS 5/1-1 et. seq. One of the often overlooked
aspects of probate practice is the specific notice requirements for opening and
closing the estate, notice to heirs, notice to creditors, notice to unknown heirs,
notice of inventories, accounts and the final report. Probate notice requirements
differ from requirements from the code of civil procedure as to motion practice. If
you plan on making probate a part of your practice, owning a copy of the code is
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very helpful. In addition, the annotated code can be purchased by the volume for a
fairly reasonable fee.
The Court
In Cook County, all decedent’s matters are heard in the First District at the Richard
J. Daley Center, 50 W. Washington Street, on the eighteenth floor. There are four
decedent’s calendars; one settlement calendar, five adult guardianship calendars
and two minor’s calendars.
Settlement Calendar
A separate settlement calendar is available to settle disputes (decedent’s, adult or
minor guardianships) with the agreement of all parties. In adult guardianship
proceedings, adjudication of disability is determined prior to transferring the matter
to the settlement calendar.
To take a case to the settlement calendar, present an oral or written motion to the
calendar judge. If all parties agree, the court has a preprinted transfer order
(available in the court room) that is signed by the calendar judge so that the matter
is transferred to the presiding judge for reassignment to the settlement calendar.
You will need to meet with Judge Perivolidis to set a date. There is a form pleading
required for the settlement calendar due two weeks prior to the court date(s). That
pleading is a summary of the matter and identification of issues. Discovery in
progress should be completed prior to settlement unless sufficient information is
available. This calendar should not be used as an alternative to regular discovery.
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Cases Filed in Cook County
In 2008, 4,515 decedents cases were filed in Cook County; 2009 had about 4200
cases and 2010 had about 4200 cases.
Preprinted Court Forms
The probate division has a large amount of preprinted forms. Reviewing the forms
available before drafting a motion saves your time and saves time in the court
room.
Many of the forms are available online at cookcountyclerkofcourt.org and all of the
forms are available on the 12th floor of the Daley Center on paper. For a full set,
request them from the clerk at the “no fee” counter and pick them up a few days
later.
Docket in Cook County – Old Cases
The docket for probate is available online. Actual files of any cases more than ten
years old are stored at the famous warehouse. If you need to order a file, leave
plenty of time for it to arrive at Daley center.
Lake County, Illinois
The probate court sits at the Waukegan Courthouse in Lake County on Monday,
Thursday and Friday. One judge hears all of the probate matters including
decedent’s, adult and minor guardianships.
Many Lake County probate forms are available online, additional forms are available
at the probate clerk’s office, but the docket is not.
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Cases filed in Lake County
In 2008 and 2009 about 1100 cases were filed in Lake County, including
decedent’s, minor and adult guardianship.
Estate Planning Considerations
The probate process can start as early as the estate plan. There are at least seven
major areas to consider.
One. Keep a note either on the client file or in your general client database on
where the client intends to store the original will, trust and any amendments.
Impress your clients with the importance of the original documents and safe
storage.
Two. Encourage your clients to maintain a current list of assets. Advances on
inheritance should have writings since memories fade.
Three. Collect information for a pre-affidavit of heirship at the estate planning
stage. Although heirship is not determined until the testator becomes the
decedent, the basic information is very easily collected from the testator.
Four. Encourage the client to express or identify funeral plans or preferences in
writing, with a copy in the client file and one to the executor. Include information
about burial plots, deeds, insurance policies (a.k.a. prepaid burial plans). Note that
some policies do not cover all costs of burial. Coordinate authority to make final
arrangements with the powers granted in powers of attorney (both health care and
property) and those in standard wills. Note that the next of kin generally have the
right to make disposition of remains decisions absent a qualified writing. That
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applies even if the next of kin are not legatees or are estranged from the decedent.
Prepaid funerals may take the issue out of the list of things to litigate. See Fisher’s
Estate v. Fisher, 117 N.E. 2nd 85 (1st District 1954) discussed supra.
Five. Collect information for the testator’s death certificate since few heirs know
their grandmother’s maiden name.
Six. Draft a provision in the will or trust about division of personal property. One
option to consider is to give the legatees a very short time (thirty to forty days after
the death of the testator or trustee) to decide about the division of personal
property. The short time is intended to run before or simultaneous with the start of
administration so that the battle over the Himmel figurines is shorter.
Seven. Discuss revisions and updates to wills, trusts and powers of attorney with
the client to keep their estate plan current.
Nominating an Executor
The requirements for an executor are as follows: a person who has attained the
age of 18 (eighteen) years and is a resident of the United States, is not of unsound
mind, is not an adjudged disabled person as defined in this Act, and has not been
convicted of a felony, is qualified to act as executor, 755 ILCS 5/6-13(a).
While inquiries into the criminal background of a nominated executor may not be
part of the initial office interview, if the nominated executor has one, the loving
family will raise the issue. However, see Estate of Georgia A. Muldrow, deceased,
(Court of Appeals of Illinois, 6th division). In that interlocutory appeal, the testator
nominated her two sons as co-executors. The non-felon filed a petition to disqualify
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his (felon) brother based on a murder conviction. The trial court declined to hear
the petition and the appellate court reversed and remanded the matter for further
proceedings. See also the Estate of Roy, 637 NE 2nd 1228 (3rd District 1994) and
Estate of Reginald S. Green, Jr., a minor, (No., 1-04-0944, 1st District 2005). Roy
and Green are guardianship cases. The statutory requirements for guardians are
similar to those for executors. Both cases involved felons and distinguish
guardianship from probate due to the common law roots of guardianship and the
statutory origin of probate.
Funeral Issues
Although the attorney is usually not contacted until after the burial, there are
occasional disagreements that will reach your office.
Where there is no qualified writing as to the dispositions of remains, the general
rule is that the “next of kin” have the right to make disposition of the remains of
the decedent, Estate of Medlen, 286 IL AP 3rd 860 (1997), Porter v. Klein
Construction Co, 515 NE 2nd 821 (1st District 1987) and Maga v. Motorola Inc, 526
NE 2nd 771 (1st District 1987) and Rallo v Crossroads Clinic, 565 NE 2nd 15 (1st
District 1990) cert. denied 1991. The phrase ‘next of kin’ is also defined in the
Crematory Regulation Act, at 410 ILCS 28/20(a)(1), with the surviving spouse at
level one, unless the decedent authorized their own cremation or the executor is
acting under the decedent’s written instructions.
The second level of next of kin are the decedent’s surviving adult children. In the
event of disagreement, no dispute resolution, such as majority rule is set out.
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However if your client discloses poor family relations, and where the next of kin will
not inherit, funeral directions should be in writing with at least one witness.
The third level in next of kin are the decedent’s surviving parents, followed by the
parties as set out thereafter in the descent and distribution section of the probate
code.
Some practitioners put the funeral information in the will, although that document
is often not located soon enough after the decedent’s death. Written directions
about the funeral should be readily available or at least in a sealed envelope with
the executor or other party likely to make those arrangements. See 410 ILCS
18/20(A)(1), and the Dispositions of Remains Act.
The 2011 Power of Attorney Act has a provision to authorize the health care agent
to make the disposition of remains, autopsy and anatomical gifts. This allows the
agency to continue beyond the death of the principal until the acts authorized are
complete. Consider parallel authority for the property agent to make financial
arrangements for the disposition.
Overall, the issue should be coordinated so there is no over lapping authority.
When the spouse of the principal is not the designated agent, that fact should also
be taken into consideration.
Anatomical Gifts in the Illinois Health Care Power of Attorney
Powers of attorney are part of almost every estate plan. In the health care power,
the principal can direct the issue of anatomical remains and disposition of remains.
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Under those facts, the health care power of attorney ends beyond death. Ask
whether your client has marked anatomical gifts on her Illinois drivers license to
stay consistent.
The probate act and burial considerations
The named executor is authorized to make burial arrangements and payment of
expenses before issuance of letters of office, 755 ILCS 5/6-14. However this right
is not greater than the next of kin authority. When the nominated executor is
signing for the expenses, it should be as the nominated executor and not
personally.
Once in a while, a third party or family member will agree to advance funeral costs.
Because of the emotional nature care should be taken to avoid further
disagreements. If these funds are anticipated to come from a joint tenancy
account held with the decedent, do not rely on a promise. In an unreported case, a
man died leaving one adult daughter as his only heir. The decedent shared an
apartment and joint tenancy bank account with a woman. When he died, the
surviving joint tenant agreed to pay for the funeral, the daughter made the
arrangements (and signed as the responsible party). After the funeral the
“roommate” and the accounts were gone. Note that joint tenancy accounts are by
design the property of the surviving tenant and generally cannot be accessed to pay
for funeral costs.
In Rekosh v Parks, 735 NE 2nd 765 (2nd District 2000), the ex-spouse was the
executor under a will executed after the divorce and was the sole legatee under the
terms of the will. The next of kin were the decedent’s two adult sons. When the
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ex-spouse made funeral arrangements that were not to the liking of the decedent’s
sons, they sued for intentional infliction of emotional distress over where the ashes
were scattered.
Funeral Issues and Minor Guardianships
When the only heirs of an unmarried decedent are minors with known beneficial
designation on assets like life insurance and where probate assets are
undetermined, payment of burial expenses may be a problem.
If no family member is able to advance costs, funeral directors may be unwilling to
go forward with funeral plans without some guarantee of payment. Under these
facts you may consider opening minor guardianship(s) of the person and estate
simultaneous with a petition to the court to approve payment of the funeral costs
from the minor’s estate. Despite the emergent nature, notice requirements are still
in place. Consider consents or even appearance in court of interested parties.
Remember that the court will expect the attorney to pare down the costs of the
funeral with the assumption that the estates of the minors should be preserved.
Later, if probate assets in the name of the parent are identified, the minor’s estate
can file a claim for reimbursement of funeral costs as well as for the Child’s Award.
Posthumous Considerations
Administrators to Collect
When there is a delay in appointment of a representative of the estate, (whether
administrator or executor) an administrator to collect may be appointed. This is an
emergency procedure to protect the assets from disappearing. The statutory
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requirement for an administrator to collect is that there is a significant chance that
the estate will be lost or embezzled if an administrator is not appointed.
Later, when the nominated executor or administrator is appointed, the
administrator to collect must file an accounting of the actions taken. See 755 ILCS
5/10-1 et. seq. Use the court form (CCP-301) to petition for appointment of an
administrator to collect.
An administrator to collect may be applicable when the testator is missing but has
not been missing long enough to be presumed dead. This allows a preservation of
assets until the party can be judicially determined to be presumed dead.
Locating the Original Will
In some cases, your client (the nominated executor) will have the original will. In
other cases, the attorney will be expected to supply educated guesses to help
locate the original document even if they didn’t represent the decedent. Consider
safe deposit boxes, the decedent’s attorney, and third parties for prime storage
locations.
Take the new Wills Depository Law into account, (Public Act 096-0137, amending
ILCS 305/5.15). Effective January 1, 2010, the Secretary of State maintains an
index and stores original wills, trusts and amendments deposited by attorneys who
are unable to locate the testator after a diligent search. Documents are placed in a
sealed envelope. Information listed on the envelope includes: the date of birth,
the last four numbers of the social security number, a description of the document
and date of execution. The index is designed to be a public record, the contents of
the documents are not. The testator can retrieve the document and upon
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presentation of a certified death certificate, the Secretary of State’s office has the
responsibility to file the original will with the appropriate clerk’s office.
As of June of 2010, the Wills Index is available at the Secretary of State’s Office in
Springfield, Illinois.
When the search for the will appears fruitless, keep in mind that some people talk
about having a will but do not really have one. Occasionally you will run across
copies of a will that was never signed.
A safe deposit box in the decedent’s name alone must be drilled open. To locate
the box, examine the decedent’s check book registers and key ring. There is at
least one safe deposit box search company in Illinois.
If the decedent lived in a retirement community or other residential facility, the
original will may be in their safe deposit box. If the will that you locate is
somewhat dated, contact the attorney who wrote the will to see whether or not a
later will was prepared. Calls can be made to the banks adjacent to the decedent’s
home or where they maintained other accounts to locate the safe deposit box.
Banks near the decedent’s workplace are another location to check.
If the family searches the decedent’s home for the will, remind them to look for
fireproof boxes, wall or floor safes, in the desk drawers with bank statements, in
rafters in the basement, stashed in zip lock bags in the freezer, taped in drawer
wells or in other unlikely places. The decedent may have information on their
computer or on their current asset list if they maintain one. Review incoming mail
for safe deposit box rental notices. In 2005, an ad appeared in the classified
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section of a free local newspaper, circulated mainly on the north side of Chicago
looking for information about the will of one particular decedent.
The decedent’s income tax return may list a deduction for a safe deposit box and
hopefully the name of the bank.
You may need to contact third parties in an extended will search. Consider agents
under powers of attorney (or names of the preparer of the document), trustees,
relatives, neighbors, housekeepers, caregivers, business associates and clergy.
In a number of cases the original will disappears after the testator becomes the
decedent because someone with access to the document is afraid that an evil
person will get their hands on the will. Ask the people with access to the house
about the location of important documents. Sometimes you need to ask twice. You
can provide persons suspected of having the original with information on how to file
the will if they are particularly obstinate or suspicious of who should have the
original.
Check the files of the clerk of the county court where the decedent lived or owned
real estate just in case the will was filed.
Consider that your client may not appreciate the importance of their original will.
Attaching bluebacks to wills may assist in their location. A jingle bell is another
idea.
Opening Safe Deposit Boxes
If the decedent was the sole signatory of a safe deposit box, prepare an affidavit to
have the contents examined to search for the will. See 755 ILCS 15/1. Banks differ
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wildly on policies to open the box as to procedure and cost. If the original will is
found in the safe deposit box, the bank can file the will with the clerk. Otherwise,
make a receipt (and copy) for the original and get it on file with the clerk of the
court. Under the small estate affidavit to access the safe deposit box, the only
items that can be removed from the safe deposit box at this point are the burial
documents and the original will. All other items should be inventoried with a
representative of the bank present. After letters of office are issued the executor
should have access to the contents, but this may require the box to be drilled open.
Having a bank officer present during the Inventory of the safe deposit box is a good
precaution.
Known Will Missing
When the executor was known to have possession of the original copy of the will
and it cannot be located after his death, there is a presumption that the testator
destroyed the document. This is a rebuttable presumption. If the executor
believes that it was inadvertently destroyed or is unavailable for any other good
reason, you can petition the court to admit a copy.
To admit a copy of the will, a copy should be filed with the clerk on the 12th floor of
the Richard J. Daley Center. Modify the preprinted petition for probate of a will
form (CCP-315) to a Petition for Probate of Missing Will and attach an affidavit
setting out the circumstances in support of it. See In the Estate of Phillips, 844 NE
2nd 895 (1st District 1995), there, the original will of an attorney could not be
located after his death and on appeal the court discussed the admissibility of
evidence to prove up a lost will in light of the Dead Man’s Act. See also Estate of
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Strayer, 282 NE 2nd 21 (3rd District 1966). In Strayer, after the death of the
testator, the original will could not be located. At trial, a witness testified that he
saw the original will of the testator with the word “Cancel” written across the
document by the testator. The same witness said that the will was stored with
obsolete insurance policies and that the testator had asked him to destroy the
document.
See also, Estate of Bessie Strong, 550 NE 2nd 1201 (1st District 1990) on lost
original wills. This issue makes it important that someone other than the testator
know the whereabouts of the original document. The burden of proof is on the
party seeking to probate the will. The nominated executor is often the moving
party. Factors that the court considered in Strayer were the relationship between
the testator and other individuals (legatees and heirs) the access of other
individuals to the testators home where the will was stored, and whether or not the
testator contacted her attorneys regarding a revised will or a revocation.
Duty to File Will
If you have the original will and learn of the testator’s death, you should file the will
with the Clerk of the Court of the county where the decedent lived or owned real
estate and keep a certified copy for your file. You can notify the executor.
Delivering the will to a third party does not discharge the duty set out in the statue.
If you are hired to represent the executor and learn that another attorney has the
will, call to advise her of the date of death and request that the will be filed.
Similarly if an individual is holding the will, ask that it be filed. Many individuals will
file the will promptly (if asked) in the suburban districts rather than in downtown
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Chicago. Request that they purchase a certified copy for safekeeping and notify
you after it is filed. Ask for a copy.
The will should be filed within 30 days of the testator’s death, whether or not
probate is necessary. If it is not located until a later date, file it then.
Holding the will creates a duty that is discharged by filing the will with the clerk of
the court. Delivering the original document to a third party does not discharge the
duty.
755 ILCS 5/6-1. Duty to file will – altering, destroying or secreting
Section 6-1. Duty to file will – altering, destroying or secreting. (a)
Immediately upon the death of the testator any person who has the testator’s will
in his possession shall file it with the clerk of the court of the proper county and
upon failure or refusal to do so, the court on its motion or on the petition of any
interested person may issue an attachment and compel the production of the will.
Filing the Will
Generally the will is filed in the county where the decedent lived. In Cook County,
wills can be filed at the probate clerk’s office in the Daley Center on the 12th floor or
in any of the suburban districts (Second District – Skokie; Third District – Rolling
Meadows; Fourth District – Maywood; Fifth District – Bridgeview; Sixth District –
Markham). The clerk will give you an index card to complete with the date of
death, date of the will and of any codicils and number of pages. This card serves as
your receipt and is stamped with the date and time of filing.
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You may purchase a certified copy of the will at the time of filing at the suburban
districts. After that the wills are transferred to the Daley Center and are not
available in the suburbs. You may purchase a certified copy of the will upon filing
at the Daley Center or at a later date.
On the Petition for Probate of a Will (CCP 315 and 316) there is a box to list the
date when the will was filed. Then, the will magically arrives in the court room on
your prove up date. The prove up date may not be scheduled less than five days
after the will is filed. Allow a few more days if the will was filed in a district
courthouse. As a practical matter, court dates are usually not available for at least
two weeks or more from the request date.
In Lake County, wills are filed in the basement of the Waukegan Courthouse at the
probate clerk’s counter.
Once you have the will, make sure that the following components are in it:
Wills checklist:
1. Is the client the first nominated executor? If they are not, you will need a
declination of office or death certificates for earlier nominated persons. Are
they aware of the amount of work and ready, willing and able to comply with
the court requirements? Would the second named executor be a better
choice because of time considerations or because they live in Illinois and the
first named executor lives in California?
2. Does the will waive surety for your client? If it does not or if your client will
serve as an administrator, a surety bond will be required.
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3. Does the will direct independent administration? If it does, good cause is
needed to change to supervised administration.
4. Does the attestation clause comply with 755 ILCS 5/6-4? If it does not and
you can locate the witnesses, they can sign a full attestation form.
5. Does the will have a residual clause? If it does not the residue of the estate
is divided according to intestate succession.
A word of caution: if you need to borrow chairs to seat all the people who come to
the first probate appointment, get the will at the top of the interview and identify if
the first nominated executor is in the room. Determine if another person is trying
to make the decisions. You don’t want to represent a committee.
Requests for “The Will”
If you store the original wills for clients, you will most likely issue a receipt for that
document. Later, if you find the storage has become unworkable, you should
prepare a receipt for the client to sign when you return the will. If you lose track of
the client, you can file the will with the Secretary of State of Illinois.
When you, the attorney store original client wills, you will likely receive calls from
third parties insisting that they want to pick up the original will. They will allege
that they are acting at the request and direction of the testator. They may go as
far as suggesting that the testator has mere days or hours to live. Don’t believe
them.
Often the testator is alive, well and oblivious of these requests.
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If you hold original wills for your clients, your receipt should state that upon a
request from the testator you will return the original document to the testator. It
should state that upon notice of the testator’s death, you will file the will with the
clerk of the court.
If your client asks for the return of the will, you should deliver it to them personally
if they are unable to meet at your office. If it is a third party request, you do not
have the right to deliver the will to them.
Executors, Administrators and Declinations
If all nominated executors are unable or unqualified to serve, another person may
serve as “administrator’ for the estate. This is accomplished through nomination of
that person with respect to the priority of appointment for administrators as set out
at 755 ILCS 5/9-3. This most often occurs when the named executors predecease
the testator or move out of state. Note that living out of state does not preclude
serving as executor but it makes it less practical. Still, well organized executors
can accomplish the job. Any nominated executor that does not want to serve
should sign a Declination of Office form (CCP 309). A nominated executor has
thirty days from the date of notice that the decedent has died to act or decline.
The declination form is filed at the return date for appointment of a representative.
An executor or administrator who is a not a resident of Illinois must appoint a
resident agent for purposes of service of process in relation to the probate matter.
This person is usually the attorney. Draft a one sentence affidavit that the out of
state resident appoints you as the resident agent for service of process regarding
the estate. The order appointing this person should state that the assets are not to
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be removed from the State of Illinois. Therefore all bank accounts must be in
Illinois. Bank accounts must be opened in person. You will need certified letters of
office and a certified death certificate to open the account. If your client will leave
Illinois a week after the funeral, set up the bank account as far as they can with the
client present. Then after letters of office and the EIN are in hand, the attorney can
complete the account opening.
If the will nominates a spouse as executor and the parties divorce after the date of
the will, the spouse is treated as though they predeceased the testator. The same
principle applies when a will names a spouse as a beneficiary and the parties
divorce after the will is executed.
Watch for wills executed after a divorce that include the former spouse.
If the surviving spouse or other nominated executor appears unable to serve as
executor and refuses to decline, you may need to determine if a guardianship
proceeding is necessary. That would disqualify the person from serving as executor
and protect their interests. If the person objects to appointment of a guardian, you
may need an administrator to collect to protect the decedent’s assets until the
guardianship matter reaches adjudication.
When nominating a person to serve as administrator, note that parties with an
equal or higher priority to the nominated administrator may waive the notice
requirement, see 755 ILCS 5/9-5. Otherwise they are entitled to thirty (30) days
written notice.
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The Surety Bond
Only the testator can waive the surety requirement for a nominated executor in the
will. An individual serving as administrator (compared to a corporate fiduciary) will
need to purchase a bond.
In Cook County, the bondsmen are on the 12th floor and will often notarize
documents and give you a complimentary calendar.
If the decedent died testate (with a will) and an administrator is appointed, they
are called the administrator with the will annexed (w/w/a). A bond is required.
Intestate Estates
Intestate means that the decedent died without a valid will. In these cases, the
administrator is nominated under 755 ILCS 5/9-3. Try to avoid co-administrators
since they usually complicate matters. Also if two people insist on working
together, it usually means that neither one trusts the other. Some judges decline
to appoint co-executors or co-administrators.
Some wills lack a residuary clause and have a bequest that fails. The result is that
a portion of the estate will be divided by intestate succession, (755 ILCS 5/4-14).
This flaw does not invalidate the entire will. The descent and distribution of the
probate code (to determine who the residuary takers are) is at 755 ILCS 5/2-1.
The issue of what is the residual portion of the estate is discussed in Estate of
Walter V. Brannan, 569 NE 2nd 104 (3rd District 1991).
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Inter Vivos Trusts
The sustained popularity of inter vivos trusts has not put the probate court out of
business but has created two lurking malpractice issues.
First, some estate plans include an inter vivos trust but not a pour over will. In this
case if the decedent had assets in her name alone, they will pass not to the trust
but by intestate succession. If these assets include real estate or exceed the
jurisdictional amount of the small estates affidavit, probate will be necessary,
including an administrator and a surety bond.
The second lurking danger for the practitioner is that some estate plans contain an
inter vivos trust and a pour over will but the trusts are only partially funded. That
means that there are assets remaining in the name of the decedent alone.
Depending on the nature (personal or real) and the aggregate value of the assets,
this may require a probate administration. Although the assets will pour over into
the trust, two administrations (the trust and the probate estate) are necessary.
There are different reasons why assets are not re-titled into a trust. Perhaps the
client intended to sell or transfer an asset or simply forgot. The key factor from the
practitioner’s standpoint is clearly setting out the responsibility of who will change
title to particular assets. Usually, the attorney makes the deed transferring real
estate into the trust and the client handles everything else. This may be set out in
the fee agreement when preparing the estate plan so that later allegations do not
come to your door. Make a writing, signed by the client that sets out the transfer
responsibilities as to the client and as to the attorney to keep things clear.
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Affidavits of Heirship
Cook County judges identify the affidavits of heirship as the most problematic area
of probate. The table is set out at 755 ILCS 5/2-1 and can be followed in a step by
step fashion. Having a probate oriented friend look over the complex affidavits is
often helpful.
Heirs are measured as of the date of death of the decedent. Therefore, if an heir
dies before you file the probate case, (but after the decedent) they remain an heir.
If the probate estate is not filed for years, an heir retains their status.
Information for affidavits of heirship can be collected from many sources, including
family bibles, birth, baptismal, marriage and death certificates, computer family
tree programs, or even guests at the funeral who sign the guest book.
When taking information for this affidavit from the client, ask the questions in the
order of the statue. For example, ask ‘Was the decedent married at the time of
their death? Ask how that marriage ended. Ask if there were any other marriages.
Did the decedent have children from any marriage or other relationship?
The degree of kinship is the measuring stick and not love and harmony. Asking
the client who the family members are often receives a subjective response.
Heirships are proved up through an affidavit. They can also be accomplished by
deposition or through testimony in court although both of these routes increase the
costs dramatically.
An affidavit of heirship is required in both testate and intestate cases.
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Protecting the Estate
Many assets in probate estates are subject to loss, particularly with valuable
personal property (e.g. jewelry). If the decedent owned real estate that is vacant,
the locks should be changed as soon as possible after their death. This foils the
attempts of any party with access to the premises from helping to distribute the
estate. Often there are alleged death bed gifts made out of the earshot of anyone
but the purported recipient. Just say no. If parties remove items without authority
under the estate plan, invite them to return the property so that the police are not
involved. An inventory should be taken as soon as possible. Initially pictures can
record the contents. There are many instances of family returning to the
decedent’s home seeing other relatives or neighbors carting out furniture and the
like.
House insurance has to be reviewed immediately to protect the estate as well as
the representative and the attorney. If the real estate insured by the decedent is
not sold before the policy renewal date, the cost of insurance often quadruples for
vacant property and the premium must be paid one full year at a time. Added to
that, many insurance companies will not write “empty house’ insurance. Shopping
for continuing coverage may be a priority for the executor.
If there is no insurance on the real estate, it needs to be purchased.
In many cases, some kind soul will demand or offer to live in the real estate until it
is sold. Few to none of these arrangements work to the advantage of the estate
and are best avoided. In some instances, a person lived with the decedent
(generally at no cost) and decides unilaterally to remain in the house after the
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death. At other times, the person will insist that the decedent promised them a
place to live. Just say no if the estate plan does not support their position.
Unless the person living in the real estate will inherit the property and no sale is
anticipated, making the estate a landlord is usually a bad idea. There are at least
two reasons for this position. First, if the property will be sold, occupancy will often
threaten the closing date. Second, any personal property at the real estate is
subject to elopement. Cook County has a preprinted form for possession of real
estate of the decedent. Think about it.
Inspections and or repairs to the real estate should be made to protect the asset,
e.g. furnace inspection, and at least regular checks on the property by the
executor. Turning the heat off in the middle of a Chicago winter is not a cost
saving measure. If the real estate is vacant the mail should be forwarded and
newspaper subscriptions canceled. The house should be checked regularly in case
the mail is inadvertently delivered after the forwarding request is on file. Timers
and other tricks to fool dumb burglars need to be employed. In some of the
suburban jurisdictions, the police will do a safety inspection to point out weak
points for easy entry. Note that removal of window air conditioners is
recommended because they are popular means of access. You may notify
suburban police departments of an empty house. Contact information should be
posted inside of the house in case of emergency.
Extreme valuables like jewelry and art may be stored in a more secure environment
than an empty house. Appraisals and insurance should be considered for all
Monets. It is often difficult for the executor to determine what has more than
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garage sale value. This is why asset lists and values are important for the testator
to compile and update. Even wicker furniture sets could require appraisals. When
house sale companies are employed, they often have the skill to recognize the
more valuable items.
Banking
After the representative (executor or administrator) is appointed by the court,
complete an IRS SS-4 online or on paper and have the representative call it in (or
go online) to the IRS. This number should be placed on all assets that generate
income. It should also be used to open an operating account for the estate, for
fiduciary tax returns and for the sale of real estate.
Note that increased limits on FDIC insurance make it easier for trusts and estates to
operate with fewer banks while adhering to the rules.
If the estate has cash accounts, the executor can pay recurring bills. The
decedent’s smaller bank accounts are generally aggregated to the estate operating
account provided that they are within FDIC limits. Encourage the executor to
discuss the expenses with you so that they don’t spend three thousand dollars
setting up an “office” with all new furniture in the decedent’s home that will be used
for 5 weeks before the executor leaves town.
Identifying Assets and Debts
If the decedent didn’t leave a current list of assets, incoming mail can provide a
tremendous source of information, especially in the first quarter of the year when
tax information is mailed.
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Otherwise, the decedent’s checkbook register is a good source of information along
with old tax returns and paperwork in the house. Contacting the insurance agent
may reveal other policies that have refundable premiums in light of the death of the
decedent. If the decedent had a disability insurance plan there may be payments
due that were not collected. Examine the riders on the homeowners policy to
identify valuable art or jewelry. Determine if the decedent was the life insurance
beneficiary on a third party.
If the decedent was working at the time of their death, contact the employer for
benefit information as well as credit union, final paycheck and unused vacation pay.
Check for financial documents or mail received by the decedent at their workplace.
Have the executor or administrator collect personal items from the office.
Check the garage, in case the decedent stored old financial documents there. Also
consider storage facilities.
Review the decedent’s computer and contact any financial planners. Watch for
online bank accounts or brokerage accounts that may have book entry stock.
When corporate stock is involved, examine the dividends corresponding to any
paper stock, or book entries. Stock companies often have an election for the
shareholder to receive fractional book shares of stock instead of cash in dividends.
Paper stocks are on the way out. A decedent may have certificates for stock that
has later dated book entries representing stock splits.
Review credit card and mortgage documents to determine if the decedent bought
pay off, or other insurance in the event of death. These policies can cover the
balance or only a month or two following the death. On credit card statements, pay
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off insurance appears as small, recurring charges for a few dollars a month. Credit
cards sometimes have life insurance policies. Some bank accounts have life
insurance that have monthly premiums deducted on the statement. These assets
usually have really poor description on the statements and the estate
representative has to make calls, write letters and ask questions.
If income tax returns are not located, use the IRS power of attorney (form 2828)
form along with the fiduciary relationship form (IRS 56) and call the practitioner
line and ask if the returns were filed. Often the IRS will provide information to the
attorney on 1099 and W-2s. The executor needs to catch up on returns that were
not filed.
Many probate estates have real estate as the sole asset. This results in a severe
cash flow and makes payment of utilities, mortgage and real estate taxes an
emergency. Heirs or legatees may be willing to advance funds to protect their
interests. If costs are not advanced, the residuary takers are paying late fees and
this may sway them to contribute cash until the estate liquidates real estate. With
real estate carrying mortgages, it may cause foreclosure costs.
Many potential purchasers of real estate in probate assume that it is a fire sale and
that the property will be at a bargain price. In many cases, as soon as you publish
the notice to creditors, you will receive offers to purchase the real estate, sight
unseen, with smaller print that requires an inspection.
Prenuptial and divorce decrees of the decedent with continuing liability should be
reviewed. Prenuptials generally alter the right of the surviving spouse as to
inheritance.
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Assets of the estate in the possession or control of a third party should be
investigated and recovered where appropriate through a citation process if not a
voluntary one, 755 ILCS 5/16-1. Read the probate code to understand the
difference between a discovery and a recovery citation before you file one.
Powers of Attorney
Under the Power of Attorney Act as amended in 2011, there is a penalty against an
agent who causes harm to the estate of a principal. After the death of the
principal, the personal representative or successors in interest can request records
(all receipts, disbursements and significant actions taken on behalf of the principal)
from the agent.
The guidelines applicable to elder care agencies investigating abuse should be
considered when looking into the agents action under a property power of attorney.
The process may be started with a request for records. If they are not provided, a
citation can be considered. If the agent violated their fiduciary duty, the damages
are the amount to restore the value to the principal’s property to where it would be
if the violation had not occurred. While attorneys fees are available as part of the
damage issue for provider agencies, private actions do not have a parallel
provision. Nor is there a prohibition.
Cars
Cars should be garaged, sold or distributed (with refunding bonds if done before the
six month claims period) as soon as practicable. After sale or transfer, a rebate of
the unused insurance is often due the estate. Cars with loans outstanding are
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subject to repossession if payments are not current. Storing cars on the street can
result in towing and/or tickets for street cleaning and snow plowing.
Cars in the name of the decedent are often driven away by adult children claiming
ownership by promise. If the child is in an accident in a car technically owned by
the estate, the estate may bear liability.
Joint Tenancies
When there are joint tenancies between the decedent and third parties, tread
carefully before attempting to pull those assets into the estate. Case law is in favor
of the surviving joint tenant. See Estate of Flecken, 640 NE 2nd 1329 (1st District
1994) and Vitacco v. Eckenberg, 648 NE 2nd 1010 (1st District 1995).
Illinois Convenience Accounts
Beware of the new Illinois Convenience account law, (Public Act 96-0123, effective
January 1, 2010). This state law creates a new type of bank account that allows a
predesignated third party to make deposits and withdrawals from and into the
account holders account.
Although the third party is without survivorship rights in this account, the bank is
released from liability if the account is delivered to the third party after the account
owner dies but prior to the bank being advised of the death.
The issue of posthumous withdrawals is addressed in the law as far as liability of
the bank. Most banks already have bank poa (power of attorney) accounts and
Illinois has a property power of attorney. Look for this account to appear in future
citation proceedings on behalf of the estate.
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If any banks have adopted this type of account, it has not been publicized.
Personal Property at a Residential Facility
If the decedent was hospitalized or in a nursing or other residential facility prior to
death, the executor should collect the personal property (e.g. wallet, jewelry, mail).
Also inquire about any of the decedent’s property held in the vault of the facility.
The facility may require some documentation before it will release valuables. This
is a priority issue for the executor’s attention so that other parties do not help in
the distribution of assets.
Canceling of the decedent’s credit cards
Some parties collect the decedent’s wallet and then shop for clothes with the
decedent’s credit card (alleging a need for the funeral).
When credit card companies file a claim with the court against a decedent’s estate,
they do not always cancel the card automatically. Often when copies of statements
are requested, they will request a death certificate to act. If a claim is filed, contact
the attorney and request the last two statements to look for unauthorized charges.
Send a certified (and faxed) letter canceling the cards of the decedent.
Personal Property
Items of personal property that are not specifically bequeathed can be appraised
where appropriate and sold. Insurance riders will often provide clues to the
untrained eye as to value. Appraisals need to be conducted with caution. In Estate
of Nelson v Rice, 12 P 3rd 238 (10/2000), the executor relied on the opinion of an
appraiser who was not qualified to evaluate “fine art.” Two paintings were sold for
less than $100 (at the estate garage sale) and later resold for more than a million
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dollars. The executor sued the buyer to rescind the sale but the trial and appellate
courts did not agree. This is another reason to ask clients to maintain current lists
of all assets as well as values.
Determine whether the decedent is an heir or legatee in another pending probate
estate. Ask if other family or friends passed away in the last few years. A review
of financial and legal papers found at the residence of the decedent usually reveals
these gems. The Illinois probate estate may need to remain open to receive this
inheritance.
If the decedent is the second spouse to die, ask about any assets remaining in the
sole name of the first spouse to die. This is done with the presumption that the
estate you are handling is likely a beneficiary of the predeceased spouse.
Keep in mind that some members of the decedent’s family may remove paperwork
to conceal estate assets from the executor and the attorney. This is foolish and will
waste time and money. It is another reason to have the executor have immediate
control of the home and incoming mail of the decedent.
Never assume that the family understands that assets in the name of the decedent
alone need to go through the probate court.
Debts and Claims against the estate
Debts are usually easier to identify than assets since the claimants usually
approach the estate by mail, e-mail, lawsuit or telephone. Decedents who suffered
a lengthy illness may be behind on many of their bills. A tract search of the real
estate may disclose liens or other surprises.
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Business income tax returns should be examined in the hunt for assets and debts.
The State of Illinois (and many others) have unclaimed property divisions. The
decedent may have an asset they forgot or lost track of, always check for vacation
property states. If the decedent moved to Illinois in the last several years, you may
want to check unclaimed property for the last state of residence. This information
is available on the internet.
Claims against the estate are divided into classes with priorities, 755 ILCS 5/18-10.
The distinctions are important in insolvent estates. First class claims include
attorneys fees, executor’s fees and funeral expenses.
When the estate cannot pay all bills at the close of administration, first determine
whether or not all first class claims can be paid in full. If there is enough to pay
them, you continue down the line until you reach a class where there is not enough
to pay them in full. Then, the claims in that class will be prorated. Notice of
attorneys and executor fees must be given to classes where claims are prorated.
Claims Notice
Immediately after letters of office issue, you will place the claims notice for
publication in a local newspaper to run for three consecutive weeks. That tells the
creditors about the death of the decedent and the time period to file claims. It also
identifies the name and address of the executor or administrator and the attorney.
Strict compliance with the notice to creditors law is required for the claims period to
attach. See Tulsa Professional Collection Services v Pope, 485 US 478 (1988). The
key Illinois cases that address creditors include: Estate of Beider, 645 NE 2nd 553
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(1st District 1984); Matter of the Estate of Anderson, 615 NE 2nd 1197 (4th District
1993) and Estate of Winters, 607 NE 2nd 370 (5th District 1993). Mailing copies of
the publication notice to known or reasonably ascertainable creditors is one method
to meet the notice requirement.
Jaason v. Barbara J. Sullivan and B. J. Sullivan & Associates, 1-08-1254, Second
Division, 3-31-09, involved a malpractice action by the executor/legatee against the
attorney who drafted the will after the claims period had run. A filling of a set of
claims notices, more than six months after the publication date extended the claims
period. This is an opinion to read. This is in contrast to Winters, where the claim of
the decedent’s wife was denied by the probate court as untimely filed.
Also see Estate of Grace Ellis, Supreme Court Docket 106461, filed 10-2009. In
that case the court held that an action for intentional interference with an
expectancy survived the claims statue in the probate code.
Review any applicable divorce documents for continuing liability.
Real estate
Most probate estates contain real estate. Ordering a copy of the last real estate tax
bill may reveal unpaid or real estate taxes that were sold. Before the executor pays
the real estate taxes directly, determine whether or not they are paid from the
mortgage escrow. While double payment can be recovered through a certificate of
error, it can take up to a year before the refund is issued.
Townhouses and condominiums have monthly or quarterly assessments and
sometimes special assessments.
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Often the real estate will be filled with years of accumulation (e.g. furniture,
paperwork, collections). The executor who is not self motivated may need a
schedule to sort through the paperwork and sell or dispose of all furnishings. After
making arrangements for pets, plants and disposal of any food in the house, the
removal of personal papers and photographs is the next step. Keep an eye on the
homeowners insurance policy for a timetable for sale of real estate and uninhabited
house insurance. Avoid making the estate a landlord. The executor needs to keep
an eye out for hidden valuables.
Note that intestate estates in supervised administration require a great deal of
paperwork to sell real estate (including summons). The paperwork should be
coordinated with the sale so that it does not delay closing. Consider waivers and
consents to avoid the lengthy notice and service of process periods wherever
possible.
Build in the time period necessary for court approval for contracts for the sale of
real estate, particularly in intestate, supervised estates. Do not depend on the
heirs to be reasonable. This can be an additional provision in the listing contract.
The price on real estate should be supported by at least two appraisals or market
analysis.
Do not assume that your executor will understand the options or know how to sell
the real estate. Counsel them about sales without a broker and what is necessary if
that is their choice. Advise the executor about preparing the real estate for sale
and making it look pretty. If they are determined to work without a broker, talk to
them about an open house. Do not let the executor make this a lifetime venture.
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If the real estate is specifically bequeathed, a recording is required with the
recorder of deeds, see 755 ILCS 5/20-24(a).
As a rule of thumb attorneys bill on an hourly basis for probate work, but clients
expect a rock bottom flat fee on the real estate closing. The attorney needs to find
a way to reconcile this issue.
Minors as Heirs or Legatees
If the decedent leaves minor heirs or legatees, minor guardianships may be
necessary to protect the inheritance. If no parent survives to make the personal
decisions for the child, a minor guardianship of the person is necessary.
Wills usually have provisions for shares of the estate passing to a minor to be
covered under the UTMA, the Uniform Transfer to Minors Act, 760 ILCS 20/1 et.
seq. If no provision is made, appointment of a personal fiduciary will satisfy the
notice requirement.
Guardianship Issues in Decedent’s Estates
There are at least four fact patterns where adult guardianships cross paths with a
decedent’s estate: where the decedent was under an adult guardianship at the
time of their death; where the decedent was the guardian for an adult (or minor);
where the nominated executor needs a guardian and where the decedent was the
caregiver, informally or under powers of attorney or trust for another adult.
A. The Decedent was Disabled
When the decedent was under an estate guardianship at the time of her death, a
final accounting from the guardian of the estate is required. In sequence, this must
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occur before monies can be collected by the executor. The probate case needs to
be open in order for the executor to receipt for the funds when the accounting
process is complete in guardianship court as well as to provide certified letters of
office to the guardianship court. The guardian’s representative will also file a
Petition to Suggest Death (with a certified death certificate).
B. The Decedent Was Serving as a Guardian
The first step if the decedent was a court appointed guardian is to determine what
needs to be put into place to protect the care plan of the disabled adult. The
executor will have the responsibility to file a final account of the financial actions of
the decedent in his capacity as guardian to obtain an order of discharge from the
guardianship court.
If the decedent was the guardian for a disabled adult, and the adult lives in a
residential facility provide notice to that facility, along with notice to all interested
parties is necessary to get another person in place.
If the decedent was serving as the guardian of the person and/or estate of a minor,
the same principles apply.
C. When the Nominated Executor Needs a Guardian
If the nominated executor appears to be unable to perform the tasks of an executor
and may be in need of a guardian, they may decline to act as executor. Often this
fact pattern emerges when the decedent was the primary caregiver for their
spouse. If a court has not declared the person to be disabled, they may sign a
declination form. If the arrangement was informal, a guardianship may not be
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necessary if no other plan is in place. A guardianship proceeding (with adjudication)
will disqualify a nominated executor who is not capable of serving as an executor.
If powers of attorney or a trust are in place, they may take the place of a
guardianship.
If a contested guardianship is imminent, consider petitioning the decedent’s court
for an administrator to collect until the contested matters are resolved.
D. The Decedent served as caregiver/money manager, agent or trustee
If the decedent was managing any other person’s care, a new plan needs to be put
in place to protect that third party as to their person. If the decedent was
managing any money, informally, under a property power of attorney or under a
trust, the executor of his estate needs to make a final accounting of the monies
handled by the decedent. If the third party adult has no advance plans for
disability, an adult guardianship proceeding may be warranted to protect them.
Note that the provisions of the 2011 Power of Attorney Act could create a cause of
action against the estate of an agent who violates his duty to the principal and
causes a loss to the estate.
Missing Heirs and Legatees
In some cases you know the heir or legatee is missing up front. Miraculously some
learn of the death and will be at your office before the funeral. In other cases you
will conduct a fruitless search. If their share of the estate is large, you may want to
contact a private eye or heir search company. The fee for this service comes from
the heir/legatee. It is probably worth a little time on the internet to look around
and send a few letters or make calls. The executor can do this or if there is a
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family member who is technically oriented (on the internet), they may do the
search. You can also consider searching court records that are available online to
locate an heir or legatee.
If all of your efforts fail, at the conclusion of administration, you can prepare a
Motion to Deposit the Missing Heir or Legatees Share with the County Treasurer.
The order approving the motion is usually certified and you deliver the order with
the check to the County Treasurer. As a rule it’s a good idea to file a Notice of
Filing of Receipt with the probate clerk.
Probate Light
Illinois Small Estates Affidavit
The Illinois Small Estates Affidavit (755 ILCS 5/25-1) is usually prepared with the
assistance of an attorney although attorney certification of the document is no
longer required. This affidavit may be used when the assets in the name of the
decedent alone do not exceed $100,000.00 and do not contain any interest in real
estate. The limit applies regardless of when the decedent died.
This $100,000.00 limit is an aggregate of personal property and is signed under
penalty of perjury. Signing the affidavit also subjects the affiant to jurisdiction of
the Illinois courts. If the affiant is not a resident of the State of Illinois they need to
designate a resident agent.
If the decedent died testate, you should file the will with the clerk of the court, buy
a certified copy of the will and attach it with a certified copy of the death certificate
to the small estates affidavit.
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The affidavit can also be used to appoint one or more of the heirs or legatees as
agent to gain access, sell and distribute the property of the decedent for the benefit
of persons (heirs or legatees whichever is applicable) named in the affidavit, see
755 ILCS 5/25/-1-c. This section includes access to a safe deposit box but is
distinguishable from the affidavit that only opens a safe deposit box to search for a
will or burial documents.
The completed affidavit is delivered to the bank or other financial institution(s)
holding personal property of the decedent.
Sadly, there is no provision on the affidavit for payment of attorneys fees. Your fee
comes directly from the client. Unless all heirs and legatees agree, the party that
retained counsel is 100% liable for the fee.
The Small Estates Affidavit does not include the protection of the six month claims
period that is offered by a full probate proceeding.
Spread of Record
When a party is intestate, an asset holder may request an order declaring heirship
in addition to a small estate’s affidavit. That is obtained by filing a petition for
spread of record along with an affidavit of heirship. This is an abbreviated probate
proceeding. It does not include notice to the creditors or the protection of the six
month time period.
There is no preprinted court form for this petition, giving notice to interested parties
(heirs).
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After you have the Order Declaring Heirship (that may be certified), prepare the
Small Estates Affidavit to be delivered to the asset holder(s) along with a certified
copy of the death certificate.
Note that the small estates affidavit is without an attorney fee clause. The heirs
may join in an attorney fee agreement. Otherwise the person who hired counsel is
responsible for attorneys fees.
Costs of Administration
Attorneys Fees
Always get a written fee agreement with the executor or petitioner before starting
work. Make that agreement clear about the scope of representation. Any issues
outside of the probate matter should not be part of the attorney workload under
this agreement. For example, if the executor wants a new will or the grandson is
indicted on racketeering charges, you need a separate agreement with them. Your
fee agreement should also contain a timetable for how often fee statements will be
issued.
Attorneys are entitled to reasonable compensation for their services, Kirkland & Ellis
v. Halas, 512 NE 2nd 1276 (1st District 1987) and 755 ILCS 5/27-2 and Rule 1.5 of
the Illinois Rules of Professional conduct. The new rules of professional conduct
effective January 2010 stress the importance of a written agreement and informed
consent to major decisions by the client.
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A few of the other famous attorney fee cases include: Goodman v. Berger, 520 NE
2nd 690 (1st District 1987), where the courts look at the facts in the individual
cases; Estate of Donald Stuffing, 572 NE 2nd 458 (4th District 1991), where the fees
were not approved by the court and the successor administrator filed citation
proceedings to recover ‘excessive attorneys fees.’
A lack of good faith is discussed in the Halas case supra. That case included the
attorney paying himself without approval of the executor or trustee, violating a
court order, delaying the transfer of files to the attorney for the successor co-
executor, conflicting interests and poor work descriptions.
Always detail your work on your timesheets. Use a timekeeping program or learn
to use a spreadsheet program to greatly simply matters and reduce math errors.
Describe your work succinctly, do not list for “attention to file” or “telephone call” or
“work on estate.”
Instead use “telephone to executor regarding incoming mail and bills for purposes
of notice to creditors” or “preparing documents to open estate, including petition to
admit will and appoint executor, affidavit of heirship, order appointing
representative, order declaring heirship, bond no surety.”
Your time entries should be contemporaneously maintained with the work done,
Northern Trust Co. v. Elliot, 374 NE 2nd 699 (1st District 1978). Different hourly
rates of attorneys, or paralegals should be reflected.
Although it is not a probate case, Kaiser v. MEPC American Properties, Inc, 518 NE
2nd 424 (1st District 1987), is well known and followed in the probate division. This
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case details what is overhead and what is not. For example, postage, facsimile,
overnight delivery and copying charges are overhead. Research time is usually not
approved by the court unless the matter is highly peculiar.
See also Estate of Earl Eugene Bitoy, 1-07-3258 (1st District 2009), where Kaiser’s
applicability to probate fee cases was challenged. In Bitoy, the reconstruction of
attorney time records was deemed less weighty in evidentiary matters than
contemporaneously created records, confirming Halas on attorney fee matters.
The conundrum with attorneys fees is twofold. Generally the attorney sends the
fee statement to the executor. However, the executor is only the first layer of
approval. Since the share of the residual takers is decreased by the attorney fee,
you may decide to send the fee statements to them in each billing period. If the
estate will require administration in excess of a year, an interim fee should be
approved by interested parties or filed with the court. In the end, the residual
takers will have to consent to your fee or file objections. Objections can be settled
informally, before the settlement calendar judge or at trial. Note that in an
insolvent estate, creditors who are paid on a prorated basis and any that are not
paid are interested persons as to attorneys fees.
Often it is the heir or legatee who repeatedly calls the attorney with minor matters
who objects to paying for the time. Adding to this situation, all of the residual
takers bear their share of the fees escalated by one “often calling” heir.
You may encounter heirs/legatees who conceal estate documents or bills and then
complain when the attorney and executor spend time tracking down the missing
information. These parties are also likely objectors to attorneys fees.
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Supervised Administration and Attorneys Fees
In supervised administration where the estate administration will take longer than a
year, file an interim fee petition, Estate of Breault, 211 NE 2nd 424 (1st District
1965). Protect your work.
Heirs and legatees should be made aware that the attorney charges for telephone
time even if small matters are at issue. They should be aware that the attorney
represents the estate and will not be handling landlord tenant issues, divorce
matters or DUIs for the heirs and legatees. Representing individual heirs or
legatees during the estate administration may create a conflict.
It is very difficult and probably foolish to try to represent yourself at a fee petition
hearing. At trial, the attorney presents his credentials and timesheets. An opinion
witness is not required in attorney petition fee hearings, Estate of Saperstein, 321
NE 2nd 328 (1st District 1974).
The attorney can testify about their experience in the practice of law, including
publications and lectures, the method of recording their time, the financial benefit
to the estate of their services and the difficulties encountered in the administration.
Attorneys are not entitled to be paid for the time to prepare or defend their fee
petitions, Estate of Halas.
An oral fee agreement is discussed in Wildman, Harold, Allen and Dixon v. Gaylord,
740 NE 2nd 501 (1st District 2000). This case has a solid analysis of the different
basis for attorneys fees including quantum meruit, fee petitions and contract
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agreements. It is not a probate case but worth reading. It also emphasizes the
drawbacks of no written fee agreement.
Beneficiaries to the estate pay their own attorney if they elect to hire one.
Executor’s Fees
The executor or administrator is also entitled to be paid for their services, 755 ILCS
5/27-1. The services include whatever time was reasonably necessary to
accomplish the administration of the estate. Examples include banking, bill
payment, meeting with the attorney, collection of assets, sorting through
documents from the house, preparation of the real estate for sale, attending the
real estate closing and more.
The largest time matter in a probate estate is usually the real estate, especially
where the house is subject to forty years of accumulations that must be sorted
through and disposed, sold or donated.
This is often the contentious matter of executor fee petitions especially where the
executor does the heavy lifting, like repairing the roof, pulling down horrible wall
paper or conducting the estate sale of personal property. Any repairs made at the
recommendation of the realtor to prepare the real estate to sell at the highest price
should be in writing. Another alternative is to hire out repair and estate sale jobs
to third parties. While the cost is always greater, the complaints are dramatically
less.
The executor should be advised to keep track of their time even though most of
them are feeling particularly generous at the start of administration. Out of pocket
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costs, even for funeral arrangements can be challenged, which makes detailed
receipts vital. If a local funeral parlor and cemetery are involved, receipts may be
straightforward to collect after the fact if necessary. However, when the remains
are sent back home for burial, several transportation legs may be required and the
receipts may not be retrievable after the fact. Do not expect the heirs/legatees to
appreciate the work enough to treat the executor fairly.
Almost everyone has a computer or access to one. The executor can easily learn a
time keeping program (spreadsheet) so that their timesheets can be transferred to
the attorney via e-mail or disk. Although the executor is not bound by strict time
keeping requirements, the attorney may elect to review the records after a few
weeks to see that the executor or administrator is being sufficiently detailed. See
Estate of Cora E. Brown, 374 NE 2nd 699 (1st District 1967) and Estate of Edwards,
39 NE 2nd 92.
Taxes
Taxes are a part of life and a part of death and therefore a part of probate. The
estate representative is responsible to file the individual tax returns of the decedent
due after the date of death. Keep in mind that if the decedent dies on March 1,
2009, not only is the representative responsible for filing the 2008 individual return,
but he is also responsible for the January 1, 2009 – March 1, 2009 return.
If the representative learns that the decedent did not file tax returns for prior
years, the representative needs to clean this up, meaning to file the returns. To do
this, compete the IRS power of attorney form 2848 with an IRS form 56 (fiduciary
relationship) and then call the IRS practitioner number to determine which returns
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were not filed and what 1099 and w-2 information the IRS has. They will provide
you with copies of the information.
If the decedent had any business interest, such as a corporation, partnership or
even household help, and filed for example, IRS form 941, the final returns need to
be prepared. If there was a one-person corporation that has ceased to function, it
should be appropriately dissolved and recorded where required. Be certain that the
date of death and final return are marked prominently on the tax return.
The federal estate tax for decedent's dying in 2011 is $5 million dollars. The State
of Illinois estate and transfer tax has a 2 million dollar exclusion if no marital gift is
planned. Even if the 706 is not required, you will need to prepare it as an
attachment to the Illinois form 700. (Thanks to Lou Harrison for succinctly stating
this issue.)
As of the date of death of the decedent, their social security number should not be
used. Complete IRS form SS4 and have the estate representative go online or call
the IRS to establish the tax identification number after letters of office are issued.
After the new EIN is available the accounts should be changed so that interest and
other taxable income is charged to the appropriate entity. For income accruing
during administration of the estate, it will be reported on IRS and IDR (Illinois
Department of Revenue) forms 1041. Keep in mind that attorneys and executors
fees paid are deductible and that in the final year of administration, the IRS does
not allow the $300 standard deduction.
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To keep costs lower, some estates have the tax matters handled by accountants
instead of by the law office. Most law offices however, prepare the estate tax
return when it is required.
Conclusion
The probate process can start as early as the estate planning stage although there
is no guarantee that you will be retained to represent the executor. Probate covers
a myriad of areas of law including tax, divorce, contract and more.
There are plenty of preprinted forms that you should be vaguely familiar with so
that you don’t have to reinvent the wheel. There are many layers of notice that go
beyond the code of civil procedure. Not applying these correctly could cause
months of delay. Opening the estate always includes an affidavit of heirship
whether your estate is intestate or testate or merely a spread of record. Although
taxes may be avoided in some areas of law, they run through the veins of probate.
Making a calendar of due dates will help.
In the words of the famous philosopher, Hon. Benjamin Franklin Novoselsky, “if you
want to learn probate, read the code.”
Thank you.
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My Favorite Cook County Probate Forms (There are many more)
Adult Guardianship
CCP 200 Petition for Appointment of Guardian For Disabled Person
CCP 201 Summons for Appointment of Guardian - Disabled Person
CCP 201A Notice of Rights of Respondent
CCP 202 Petition for Temporary Guardian
CCP 203 Order Appointing Temporary Guardian
CCP 204 Order Appointing Plenary Guardian
CCP 207 Order Appointing Limited Guardian
CCP 209 Order Appointing Guardian ad Litem
CCP 211 Report of Physician
CCP 214 Right to Discharge Guardian or Modify Guardianship Order
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Decedent’s
CCP 301 Petition for Letters of Administration to Collect
CCP 302 Petition for Letters of Administration
CCP 303 Waiver of Notice
CCP 305 Order Declaring Heirship
CCP 308 Acceptance of Office – Corporation
CCP 309 Declination of Office
CCP 312 Oath and Bond of Representative – Surety
CCP 313 Oath and Bond of Representative - No Surety
CCP 314 Order Appointing Representative of Decedent's Estate –
Intestate
CCP 315 Petition for Probate of Will and For Letters Testamentary
CCP 316 Petition for Probate of Will and for Letters Administration WWA
CCP 317 Copy of Will
CCP 319 Order Admitting Will to Probate and Appointing Representative
CCP 320 Order Denying Will to Probate
CCP 323 Petition for Deposition of Witness to Will
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CCP 324 Commission for Deposition of Witness to Will
CCP 325 Deposition of Witness to Will
CCP 327 Petition to Admit Will as to Omitted or Unnotified Person
CCP 331 Application and Order for Transfer of Will
CCP 334 Inventory
CCP 337 Application and Order for Award
CCP 339 Bond Additional Surety
CCP 340 Bond Additional No Surety
CCP 345 Claim
CCP 353 Petition to Settle Cause of Action - Wrongful Death
CCP 354 Order to Settle Cause of Action - Wrongful Death
CCP 356 Petition to Sell Personal Property
CCP 357 Order to Sell Personal Property
CCP 360 Petition to Grant Possession of Real Estate
CCP 360A Order Granting Possession of Real Estate
CCP 361 Bond for Sale or Mortgage of Real Estate – Surety
CCP 362 Bond for Sale or Mortgage of Real Estate - No Surety
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CCP 366 Oath of Real Estate Appraiser and Report
CCP 368 Citation
CCP 378 Notice of Account - Current or Final
CCP 379 Receipt on Distribution
CCP 380 Appearance on Account
CCP 381 Order of Discharge
CCP 382 Status Report - Supervised Administration
CCP 383 Certificate re Vouchers - Decedent's Estate
CCP 385 Petition by Representative of Foreign Country to Receive Distribution
CCP 386 Order of Distribution to Representative of Foreign Country
CCP 387 Report of Attorney-in-Fact or Consul
CCP 388 Receipt of Distributee to Attorney-in-Fact or Consul
CCP 389 Bond- Refunding
CCP 393 Petition for Guardian of Minor
CCP 394 Order Appointing Guardian of Minor
CCP 395 Petition to Settle Cause of Action - Minor's estate
CCP 396 Order to Settle Cause of Action - Minor's Estate
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CCP 500 Petition for Summary Administration (intestate)
CCP 501 Order for Summary Administration (intestate)
CCP 502 Petition for Admission of Will and Summary Administration
CCP 503 Order for Admission of Will and Summary Administration
CCP 504 Bond of Distributee - Summary Administration
CCP 505 Notice Of Disallowance of Claim
CCP 1000 Proof of Mailing and Publication
CCP 1001 Notice to Heirs and Legatees - Will Admitted
CCP 1003 Petition to Terminate Independent Administration
CCP 1004 Notice To Heirs - Petition for Letters Administration
CCP 1007 Notice of Termination of Independent Administration
CCP 1008 Notice of Final Report - Independent Administration
CCP 1011 Final Report of Independent Representative
CCP 1012 Order of Discharge - Independent Administration
CCP 1013 Petition to Convert to Independent Administration
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CCP 1014 Order Converting to Independent Administration for the
Purpose of Closing the Estate
CCP 1015 Order Converting to Independent Administration
CCP 1016 Release of estate's Interest in Real Estate
CCP 1017 Receipt and Approval of Final Report of Independent Representative
CCG 1 Summons
CCG 1A Summons Alias
CCG 2 Order
CCG 3A Notice of Motion
CCG 6 Subpoena -Duces Tecum
CCG 6A Subpoena - Duces Tecum Alias
CCG 9 Appearance
CCG 13 Affidavit for Service by Publication
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Pauline G. Dembicki Attorney at Law Evanston, Illinois 60201 847-563-8044 PaulineLaw.Com Legal Experience Solo practitioner in general civil practice, concentrating on probate (decedent’s estates and adult guardianships), estate planning and related contested matters. 1985 - present Admitted to United States Supreme Court Bar, June 1995. Guardian ad Litem - Circuit Court of Cook County, Illinois; County Department, County Division; Mental Health Court - July 1991 to present; Probate Division (Decedent’s estates and adult guardianships) March 1992 to present; Domestic Relations Division (Adults) February 1993 to present. A Guardian ad Litem appointment is made by the court to represent minors or alleged disabled adults in certain court proceedings. Arbitrator - Circuit Court of Cook County, Mandatory Arbitration, Chicago, Illinois. Chair qualified. August 1990 to 2000 and 2006 - present. General Counsel, Polish American Historical Association, 1992 to 2004. Professional Associations Illinois Institute for Continuing Legal Education: 2011 Most Valuable Volunteer Award for Publications; Guardianship Course book: Chapter Author on Guardianship Estates; Co-Author Restorations in Guardianship, 2011 edition; Webinar: New Year New Law: The 2011 Power of Attorney, 2010; Speaker: Mini Course: The Power of Attorney in 2011, Springfield, Illinois, 2011; Webinar: Count Down to the 2011 Power of Attorney (2011); Webinar Speaker: Six Things to Know about Powers of Attorney for 2012 (scheduled November of 2011); Chapter Author, "The Court Agency Relationship, Durable Health Care Powers of Attorney, Living Wills and the Surrogate Health Care Act" in Advising Elderly Clients and Their Families, Illinois Institute of Continuing Legal Education, 1991, 2000, 2005, 2006 and 2008; Editor. Quick guide to Guardianships. Chicago Bar Association: Committees: Legislative Sub-Committee on Uniform Health Care Act; Mental Health, Probate, Elder Law and Speakers Bureau. Seminar, Introduction to Decedent’s Estates, Gathering Assets and Identifying Debts, (Speaker and Moderator) 1997, 1998, 1999, 2001, 2002, 2004, 2005, 2006,
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2007, 2008, 2009, 2010; The New Power of Attorney Act: Property Power: Panel Speaker, CBA Trust Committee, 2011 (Scheduled); Seminar: Selecting the Right Court Seminar, Topic Adult Guardianship, 2010; Publication: ‘Probate’ Chicago Bar Association Record, Vol. 21, No. 4, May 2007. Women's Bar Association of Illinois: Member 1999 to 2001; Probate, Membership and Newsletter Committees; New Member Award 2000; Publications: Casenotes, In Re Burgess, and In Re Estate of Kelly, WBAI Newsletter 2000. North Suburban Bar Association: President 1994-1995; Committees: Co-Chair Continuing Legal Education (1993-1995); Judge’s Night (Chair 1993); People’s Law School (Dean 1992 and 1994); Moderator, Elder Law Seminar 1993; Representative for Future of the Courts in Illinois Conference (1992); Service Awards (1992, 1993, 1994, 1995); Circuit Court of Cook County, Committee on Expanded Jurisdiction 1995; Real Estate Issues in Guardianship Court, “Really Real Estate Seminar” March 1995; Health Care Powers of Attorney in Relation to Guardianship Court, Seminar “Elder Law” (Moderator and Speaker), 1993; Newsletter Casenotes: In Re the Estate of Flecken, 1995; In re the Estate of Mocny, 1994; “Fern Barred”, 1994 and In re the Estate of Vogt, and Illinois Standby Guardianship Legislation, 1994. Illinois State Bar Association: Member 1984-present; 1992 Community Service Award, Speakers Committee; Minority Workshop, Topic, Adult Guardianships, May 2001; Adult Guardianships and the Role of the Guardian ad Litem in Section Newsletter, Individual’s Rights, Illinois State Bar Association, February 1995; Practice Outline - Attorneys and Guardianship Court. “Of Counsel” Section Newsletter. ISBA. Authored with the suggestions of Judge Miriam Harrison, Judge Probate Division, Circuit Court, March 1994; The Illinois Surrogate Health Care Act, “Of Counsel” Section Newsletter of the Illinois State Bar Association, 1992. American Bar Association, General Practice Section, Annual Meeting, August 1995, Seminar, Elder Law Primer, Topic - Adult Guardianships, Chicago, Illinois; Annual Meeting, August 1996, Seminar, Advanced Elder Law Issues, Topic - The Court Agency Relationship; Orlando, Florida; “Adult Guardianships” in American Bar Association’s Practical Lawyer, September 1996. Chicago Volunteer Legal Services. Volunteer attorney for adult guardianships 1989 to 2010; 1991 Distinguished Service Award for Disability and Elder Law Program, Speakers Panel (1995 and 2001 Volunteer, Crusade of Mercy Lecture Program); 1995 Seminar Adult Guardianships; Seminar, Adult Guardianships, 1995; Guardianships in About an Hour, 1996; Living Wills and Durable Powers of Attorney after Cruzan and Greenspan, 1993; Chapter Author, Living Wills, Durable Health Care Powers of Attorney, Illinois Surrogate Health Care Act and Adult Guardianship, Training Manual, 2004.
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Advocates Society, Historian 1992, Treasurer 1993, Dean of People’s Law School: Speaker Adult Guardianships, Contributor Newsletter: International Wills, Grace Under Pressure, Notice and Facsimile Transmission, Board Member. Constitutionality of the Right to Die, DePaul College of Law, 1992. Networking through Bar Organizations. John Marshall Law School Seminar 1994. Law Day Seminars Law Day Moot Court, Anixter Center, Chicago, Illinois; 2003, 2004, 2005, Author and Judge 2006, 2007, 2008, 2011 Moot Court; Seminar: Powers of Attorney at Independent Living Facility; Seminar, Adult Guardianships for Social Workers 2006 and Contested Estates for Social Workers, Case managers and Victims Rights Advocates, 2009 and 2010. Illinois State Bar Association: Numerous Law Day Activities. Lectures: North Shore Hotel; Wilmette Senior Center, Evanston, Levy Senior Center, United Airlines, R.R. Donnelly, Double Hitters Club, Premium Years, Premium Times, Japanese American Service Center, Copernicus Center, Wilmette Public Library, North Town Public Library, Niles Public Library, First Presbyterian Church of Wilmette, Continuity of Care Presbyterian Home, Wilmette Public Library, Evanston Library, Morton Grove Library, Charter One Bank. Columnist Polonia Today 1992-1993. Mentor/Mentee Program: Chicago Kent College of Law, 2009 and 2010. Author: “Wills and Powers and Trusts, Oh My! A book for people and dogs about options in estate planning and holding title to property, 2009.
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HHCW #187967_3
NOW THAT YOU HAVE DONE THE WORK, HOW ARE YOU
GOING TO GET PAID
presented as Part of the
CHICAGO BAR ASSOCIATION’S PROBATE PRIMER SEMINAR
September 30, 2011
MONTY NEWLIN LOUIS S. HARRISON
Harrison Held Carroll & Wall, LLP 333 W. Wacker Drive, Suite 1700
Chicago, IL 60606 (312) 332 1111
[email protected] [email protected]
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HHCW #187967_3
NOTICE THE NOTICE ON PROBATE
There are quite a few administration events that are of importance in probate, tax filings, tax planning, marshalling of assets, payment of expenses, investments, and other items. Among the most important in probate is ensuring that proper notice to creditors is provided after the estate is opened. Proper notice will limit the exposure of probate assets to only claims filed within six months after the estate is opened (and Letters of Office issued). Section 5/18-12. If a creditor has not filed a claim against the estate or executor within this time, then the claim is barred by the estate limitation period. Even if the claim were valid, it cannot be filed after the expiration of this time. But proper notice must be provided in order for the six month period to apply. Under section 5/18-3, that means two requirements must be met:
1. The representative must publish notice once each week for 3 successive weeks (the Law Bulletin can be contacted for this publishing); and,
2. Each creditor of the decedent whose name and post office address are known to or are reasonably ascertainable by the representative must receive notice (that is, the representative must mail notice to known creditors).
The notice must be in the prescribed form, providing information regarding the death of
the decedent, name and address of the representative and attorney, and the due date by which claims must be filed.
If notice is not so provided, creditors can have up to two years from date of death to file
claims. If the executor fails to provide notice as required in either 1 or 2 above, and if a creditor
who would have been proscribed from pursuing the creditor's claim is allowed to make that claim (e.g., after the 6 month mark and before the 2 year mark), the executor may be personally liable to the claimant, ILCS section 5/18-12 (d), or to the beneficiaries (for malpractice). And an attorney who fails to supervise the representative, or advise the representative of these duties, may be equally culpable.
This is just one of myriad administration activities in which the attorney has substantial
exposure if the proper administration steps are not taken. And it is with this exposure in mind that an attorney should formula a strategy to receive reasonable compensation, and understand the roadblocks and requirements necessary for this reasonable compensation to be awarded.
"You mean even though I put it on the time sheet, I may not get paid for it?"
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HHCW #187967_3
Yes, that is what we mean. To be more erudite about the process, let's consider the fee constraints and rules.
FEEL ON FEES: FROM START TO FINISH IN THE ADMINISTRATION PROCESS
Engagement Letters: Why?
Will disputes be easier with: Implied contract Express verbal contract Express written contract
An engagement letter between the attorney and the executor is recommended, though not required. The right to compensation “must rest on the terms of an express or implied contract of employment,” and when the agreement with the executor is not in writing, the terms of the attorney’s compensation could be more susceptible to dispute at the hearing on the attorney’s fee petition. In re Estate of Healy, 137 Ill.App.3d 406, 484 N.E.2d 890, 892, 92 Ill.Dec. 159 (2d Dist. 1985).
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HHCW #187967_3
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Engagement Letters: Content
Professionals who will bill to the project: attorneys, paralegals, clerks
Hourly rates for each professional (and estimated hours, if possible)
Costs that are reimbursable by the client:e.g., copies, faxes, electronic database charges, courier fees, postage, parking at courthouse, filing fees
Engagement Letters: Content (cont’d)
Flat fee deals: define scope of project in detail Payment terms (e.g., 30 days) and billing cycle Termination: at-will for client; RPC for attorney Disclosures re: joint client issues for the fiduciary
and beneficiaries (e.g., conflicting interests)
The Court will not be held to the terms of the engagement letter in awarding attorney's fees from the estate. See In re Estate of Bitoy, 395 Ill.App.3d 262, 917 N.E.2d 74, 86-87, 334 Ill.Dec. 477 (1st Dist. 2009)
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HHCW #187967_3
Engagement Letters: Content (cont’d)
Personal guarantees as to fees: From fiduciary as to disapproved fees (e.g.,
time incurred to clean up fiduciary’s oversights)
Personally interested parties (e.g., fiduciary in individual capacity)
Because fees can be reduced by the courts, the attorney may wish to consider whether the executor would agree to pay, individually, the differential between fees allowed by the court and those incurred by the attorney. Most executors, however, would not agree to this type of arrangement. Further, this type of arrangement must be pursuant to an express written contract. Rubinkam v. MacArthur, 302 Ill.App. 71, 23 N.E.2d 348, 351 (1st Dist. 1939) (“where an attorney intends to hold an executor . . . personally responsible for his fee, good faith toward the client would seem to dictate that the attorney should so inform the client at the time the latter seeks his services”).
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HHCW #187967_3
Engagement Letters: Pre-Approval
Fiduciary: definitely Guardianship courts: possibly. Petition for
approval of hourly rates, range of hours, and scope of work to increase chance of recovery.
Beneficiaries: case-by-case
Note that in the guardianship context, court approval ex ante of an engagement letter could be difficult to obtain. However, the courts will sometimes preapprove a range of fees and attorney hours as reasonable for specific projects (such as estate planning) with the final fee amount still subject to court approval.
Payment: Independent Administration
Payment without fee petition: Never in guardianships Considerations for independent fiduciaries in
probate and trustees:Will the beneficiaries object?Matching deductions with income Liquidity planning
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HHCW #187967_3
In independent administration, the attorney may send the invoice directly to the executor. If the executor believes that the beneficiaries will agree to the fees, the executor can pay the invoice currently out of estate funds. Alternatively, the independent executor can wait until formal (i.e., at the time of the filing of the annual account or final report) or informal (i.e., upon receipt of the beneficiaries’ consent) approval of the invoice to pay it.
Payment: Supervised Administration
Payment upon Court Order Petition for Attorneys’ Fees Notice to all parties of record Evidentiary hearing if Court requests or if a party
objects Payment without Court Order: fiduciary liability to
reimburse estate for disapproved fees Line item in fiduciary’s account Final fees in guardianship estate become claim in
ward’s probate estate
In supervised administration, the court always becomes involved in determining the reasonableness of the attorneys’ fees. Therefore, it is prudent, though not always followed in practice, to procure payment of fees via the filing of a fee petition. See, e.g., In re Estate of Thomson, 139 Ill.App.3d 930, 487 N.E.2d 1193, 1200, 94 Ill.Dec. 316 (4th Dist. 1986) (remanding appellant’s objections to accounting for reconsideration based in part on payment of attorneys’ fees without fee petition when “the statute clearly contemplates that the representative will seek court approval,” but implying that fees could still be approved on remand).
In supervised administration, interim fees can be allowed upon petition. See In re Estate of Marks, 74 Ill.App.3d 599, 393 N.E.2d 538, 542, 30 Ill.Dec. 502 (1st Dist. 1979) (denying challenge to interim fees based solely on desire to save time and efficiency); In re Estate of Breault, 63 Ill.App.2d 246, 211 N.E.2d 424, 429, 432 (1st Dist. 1965) (holding that attorney was entitled to reasonable compensation on petition for partial fees even though outcome of litigation was still in question).
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HHCW #187967_3
Fee Petitions: Statutory Standard
Probate Act allows “reasonable compensation”
Court may override terms of engagement as to payment from Estate
Guarantees from other parties are governed by contract law
Fee Petitions: Factors Examined
The size of the estate The work done The skill evidenced by the work The time expended The success of the efforts involved The degree of good faith The efficiency with which the work was done
Under the Probate Act, the "attorney for a representative is entitled to reasonable compensation for his services." 755 ILCS 5/27‑2. The commonly cited factors impacting the size of the attorney's fees award in estate matters include:
1. the size of the estate;
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HHCW #187967_3
2. the work done;
3. the skill evidenced by the work;
4. the time expended;
5. the success of the efforts involved;
6. the degree of good faith; and
7. the efficiency with which the work was done. See, e.g., In re Estate of Coleman, 262 Ill.App.3d 297, 634 N.E.2d 314, 316, 199 Ill.Dec. 475 (2d Dist. 1994); In re Estate of Shull, 295 Ill.App.3d 687, 693 N.E.2d 489, 492, 230 Ill.Dec. 360 (4th Dist. 1998); Estate of Venturelli v. Granville National Bank, 54 Ill.App.3d 997, 370 N.E.2d 290, 295, 12 Ill.Dec. 667 (3d Dist. 1977).
The court may also consider the existence of a contingent fee arrangement with the client in determining a reasonable level of fees, but the contingent fee will not necessarily act as a floor or ceiling on the award. See Rath v. Carbondale Nursing & Rehabilitation Center, Inc., 374 Ill.App.3d 536, 871 N.E.2d 122, 129 – 130, 312 Ill.Dec. 722 (5th Dist. 2007).
Cf. Limitations of RPC 1.5(a)
“A lawyer’s fee shall be reasonable.” Factors to be considered: time and labor required, novelty and difficulty of work, skill
requisite to perform the legal service properly likelihood, if apparent to client, that acceptance of project will
preclude acceptance of other employment by lawyer fee customarily charged in the locality for similar legal services; amount involved and the results obtained time limitations imposed by client or by circumstances nature and length of professional relationship with client experience, reputation, and ability of the lawyer whether fee is fixed or contingent
Note that the Illinois Rules of Professional Conduct (RPC) impose separate limitations on what can be charged to clients, citing the following criteria:
(1) the time and labor required, the novelty and difficulty of the questions involved, and the skill requisite to perform the legal service properly;
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(2) the likelihood, if apparent to the client, that the acceptance of the particular employment will preclude other employment by the lawyer;
(3) the fee customarily charged in the locality for similar legal services;
(4) the amount involved and the results obtained;
(5) the time limitations imposed by the client or by the circumstances;
(6) the nature and length of the professional relationship with the client;
(7) the experience, reputation, and ability of the lawyer or lawyers performing the services; and
(8) whether the fee is fixed or contingent. RPC 1.5(a).
The RPC standard is more relevant to a breach of contract action to recover fees under an engagement letter (or under an express oral contract), as opposed to the typical petition for attorney's fees filed in an estate. See, e.g., Wildman, Harrold, Allen & Dixon v. Gaylord, 317 Ill.App.3d 590, 740 N.E.2d 501, 251 Ill.Dec. 420 (1st Dist. 2000).
Fee Petitions: Pitfalls
Justify Time Spent Amount of hours spent is easiest factor
for Court to review and criticize Size of a particular entry should match
the type of work done Size of a particular entry should also
match the description of work
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Fee Petitions: Pitfalls (cont’d)
Use Detailed Time Descriptions (cont'd) Research: sources reviewed, issues
researched Drafting: pleadings involved, portions written Court Appearances: matters raised, Order
issued
Attorneys’ fees will not be payable out of the estate if the work is not in the interest of or of benefit to the estate. See In re Estate of Minsky, 59 Ill.App.3d 974, 376 N.E.2d 647, 651, 17 Ill.Dec. 501 (1st Dist. 1978).
The assessment of the benefit to the estate may be determined by the outcome of litigation. For example, a failed attempt to remove trustees does not benefit the trust, and the petitioner cannot have attorney's fees reimbursed by the trust estate. See Laubner v. JP Morgan Chase Bank, N.A., 386 Ill.App.3d 457, 468, 898 N.E.2d 744, 325 Ill.Dec. 697 (4th Dist. 2008).
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Fee Petitions: Pitfalls (cont’d)
Hourly Rates Awards constrained by local rates Justify any premium billed above local rates:
Complexity of work: demonstrate niche market for type of work done and higher rates within niche market
Results: demonstrate value added to Estate (e.g., unique tax savings achieved)
Some courts will limit an attorney to the standard rate in the relevant jurisdiction. In re Estate of Coleman, 262 Ill.App.3d 297, 634 N.E.2d 314, 317, 199 Ill.Dec. 475 (2d Dist. 1994) (reducing hourly rate from $200 to $150, even though $200 rate requested was lower than petitioner’s normal hourly fee, because $150 was standard rate in jurisdiction, while not reducing hourly fee further for petitioner’s inexperience in probate matters).
If an attorney’s services have provided unique value to the estate, one argument that can be raised to obtain a premium rate is that “[t]he hourly rate should be commensurate with the undertaking and should not be so low as to discourage participation in such cases by highly qualified counsel.” Leader v. Cullerton, 62 Ill.2d 483, 343 N.E.2d 897, 901 – 902 (1976), abrogated on other grounds by Brundidge v. Glendale Federal Bank, F.S.B., 168 Ill.2d 235, 659 N.E.2d 909, 914, 213 Ill.Dec. 563 (1995).
The hourly rate may be deemed to include certain costs, such as computer research, photocopying, phone, and delivery charges, unless the engagement letter explicitly lists them as reimbursable costs. Accordingly, a reasonable practice is to itemize in the engagement letter each cost that is not to be included in overhead but rather to be billed separately. Guerrant v. Roth, 334 Ill.App.3d 259, 777 N.E.2d 499, 267 Ill.Dec. 696 (1st Dist. 2002). See also Kaiser v. MEPC American Properties, Inc., 164 Ill.App.3d 978, 518 N.E.2d 424, 115 Ill.Dec. 899 (1st Dist. 1987) (describing certain costs that should be included in overhead).
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Fee Petitions: Pitfalls (cont’d)
Justify Time Spent (cont’d)
Overall hours should be proportionate to size of estate 2% as typical ceiling 2.5% - 10% is a possible range for
demonstrated complexity (e.g., sale of business, contest litigation, audit) or value added (e.g., increased earnings or gains)
The size of the estate often functions as a baseline for the reasonable level of fees, and, all other factors being equal, it may serve as a ceiling on fees. This concept was demonstrated in the past by the courts’ reliance on fee schedules, which are no longer accepted by the courts. See In re Estate of Brown, 58 Ill.App.3d 697, 374 N.E.2d 699, 709, 15 Ill.Dec. 916 (1st Dist. 1978) (approving use of fee schedule based on percentage of estate’s gross value as starting point and reference point for appropriate level of fees).
However, courts often still use the fee schedule concept implicitly by using a percentage of the estate as a ceiling. In this regard, attorneys’ fees equal to 2 percent of the gross probate estate value have a superficial appearance of reasonableness, although a court may permit higher percentages based on other factors under consideration. See, e.g., Estate of Brown, supra, 374 N.E.2d at 708 – 710 (sustaining fees of $33,800 in $1.6 million estate, or approximately 2 percent); In re Estate of Enos, 69 Ill.App.3d 129, 386 N.E.2d 1147, 1149 – 1150, 25 Ill.Dec. 483 (5th Dist. 1979) (reducing requested fee from 6 percent to 2 percent when fee petition lacked itemized statement of services and no extraordinary services were required); In re Estate of Grabow, 74 Ill.App.3d 336, 392 N.E.2d 980, 984 – 985, 30 Ill.Dec. 215 (3d Dist. 1979) (allowing 3.8-percent attorney fee when results obtained were particularly advantageous to estate).
In order to obtain substantial attorneys’ fees in relation to the size of the estate, attorneys must show the economic value provided to the estate. For example, in In re Estate of Saperstein, 24 Ill.App.3d 763, 321 N.E.2d 328 (1st Dist. 1974), the court upheld an award of attorneys’ fees of approximately 13 percent based on the results obtained for the estate. 321 N.E.2d at 336 – 337. In that case, the attorney had incorporated, managed, and brokered the sale of a basketball team and demonstrated to the court that through the coordinated efforts of the attorney and
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coexecutors (one of whom was the attorney, who took no separate fee as coexecutor) the value of the estate’s primary asset was almost doubled within one year of the date of death. The attorney introduced further evidence that earnings had increased tenfold. 321 N.E.2d at 336.
In deciding on attorneys’ fees, the courts also will consider the complexity of the estate. It is essential that the practitioner bring this complexity to the court’s attention. For example, in In re Estate of Marshall, 167 Ill.App.3d 549, 521 N.E.2d 637, 639 – 640, 118 Ill.Dec. 355 (4th Dist. 1988), the court reduced the attorneys’ fees from 2.8 percent to 1.7 percent because the estate was not complex enough to justify the hours expended, based on the court’s review of the attorneys’ time records. Similarly, in In re Estate of Weber, 59 Ill.App.3d 274, 375 N.E.2d 569, 572, 16 Ill.Dec. 696 (3d Dist. 1978), the court reversed a fee award approximating nearly 10 percent of the estate when the record did not reveal any complex transactions. Cf. In re Estate of Hall, 127 Ill.App.3d 1031, 469 N.E.2d 378, 380 – 381, 82 Ill.Dec. 844 (4th Dist. 1984) (upholding fee of 4.6 percent of gross estate value when bankruptcy of tenant farmer on estate’s real property and two years of will construction litigation complicated administrative duties).
Fee Petitions: Pitfalls (cont’d)
Use Detailed Time Descriptions
Keep contemporaneous records; reconstructed narratives have less weight
Break out entries by task Calls/Meetings: persons present, topics
covered, decisions made
An attorney must submit “detailed time records . . . to support the hours claimed” on a fee petition. In re Estate of Healy, 137 Ill.App.3d 406, 484 N.E.2d 890, 893, 92 Ill.Dec. 159 (2d Dist. 1985).
The widely cited case of Kaiser v. MEPC American Properties, Inc., 164 Ill.App.3d 978, 518 N.E.2d 424, 430, 115 Ill.Dec. 899 (1st Dist. 1987), endorses a line-by-line review of an attorney’s time records. The court denied fees that it concluded were related to the “review and
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organization of file documents . . . office conferences and memoranda . . . redrafts, revisions and corrections.” 518 N.E.2d at 430 – 431. Furthermore, although the lack of detail in time records did not forfeit fees, the court expressed disapproval of the aggregation of all time on a given day into a single time entry in lieu of the breakdown of each task performed by the attorney and noted that the lack of detail made review difficult. Id.
Practitioners have attempted to distinguish the Kaiser standards on the grounds that Kaiser involved the application of a fee clause in a lease against the party filing the action. In other words, they have argued that a higher level of scrutiny and detail is appropriate when the attorney’s incentives run against the payor’s interests, but that such a close examination is not necessary when the attorney’s and the payor’s interests run more in tandem. See, e.g., Wildman, Harrold, Allen & Dixon v. Gaylord, 317 Ill.App.3d 590, 740 N.E.2d 501, 508, 251 Ill.Dec. 420 (1st Dist. 2000) (noting in dicta, with regard to Kaiser, “[A]n additional policy consideration in cases involving ‘fee-shifting’ provisions is that the attorney for the successful litigant has no individual right to seek payment from the losing party. Stricter scrutiny by the trial court is warranted in these circumstances because the attorney submitting billing statements for approval by the trial court has no fiduciary relationship with the party ultimately liable for payment of the fees.”).
However, this argument has been rejected in recent years, and Kaiser continues to be cited by the courts with great favor. See In re Estate of Bitoy, 395 Ill.App.3d 262, 917 N.E.2d 74, 84-85, 334 Ill.Dec. 477 (1st Dist. 2009).
A case decided around the same time as Kaiser, In re Estate of Halas, 159 Ill.App.3d 818, 512 N.E.2d 1276, 1285, 111 Ill.Dec. 639 (1st Dist. 1987), held that a reduction in fees for inefficiency was proper in “the absence of sufficiently detailed descriptions in the time records.” However, the court did not mention or insist on the high standard of task-by-task time entries within a single day. Rather, the court indicated that details such as “the identification of persons attending, topics discussed, or conclusions reached” would be useful in evaluating conference time. Id.
The court might also consider:
a. correspondence exhibits (In re Estate of Healy, 137 Ill.App.3d 406, 484 N.E.2d 890, 893, 92 Ill.Dec. 159 (2d Dist. 1985);
b. summaries of the types of estate assets requiring valuation and collection and the difficulty of the tasks undertaken (In re Estate of Enos, 69 Ill.App.3d 129, 386 N.E.2d 1147, 1149 – 1150, 25 Ill.Dec. 483 (5th Dist. 1979));
c. credentials of the attorneys whose time was incurred, results achieved by each project undertaken, and tax benefits to the estate from the work done (In re Estate of Marks, 74 Ill.App.3d 599, 393 N.E.2d 538, 542 – 543, 30 Ill.Dec. 502 (1st Dist. 1979)).
d. expert testimony on “the reasonable worth and value of the services rendered.” Healy, supra, 484 N.E.2d at 893. However, the court is not governed entirely by the
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opinion of expert witnesses as to the value of services provided. See In re Estate of Brown, 58 Ill.App.3d 697, 374 N.E.2d 699, 707, 15 Ill.Dec. 916 (1st Dist. 1978).
Fee Petitions: Pitfalls (cont’d)
Exclude Unrecoverable Time File organization Fee issues: recovering your own fees and
monitoring other attorneys' fees (e.g., negotiations, fee litigation, fee petition preparation, billing letters, objecting to fees)
CYA memoranda for the file Research in the nature of CLE
Fee Petitions: Pitfalls (cont’d)
Minimize or Justify Duplication Multiple attorneys for same client at single
Court appearance: explain why other attorneys were beneficial to Estate
“Educating” younger attorneys: explain efficiency and overall savings gained by use of lower billing rate despite higher hourss
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Fee Petitions: Pitfalls (cont’d)
Sample NarrativeCall from Dow Jones regarding questions on computation of residue; prepare letter to insurance company regarding claim forms for death benefit; prepare initial draft of settlement agreement among all beneficiaries regarding titling of residential real estate; research regarding apportionment of death taxes.
The current view is that to the extent the services rendered are duplicative, either no fees will be allowed, or fees will be adjusted to reflect the duplication of effort. See Leader v. Cullerton, 62 Ill.2d 483, 343 N.E.2d 897, 900 – 901 (1976) (reducing fee award for duplicative time incurred by three different law firms representing same class of plaintiffs, e.g., multiple appearances at routine hearings), abrogated on other grounds by Brundidge v. Glendale Federal Bank, F.S.B., 168 Ill.2d 235, 659 N.E.2d 909, 913 – 914, 213 Ill.Dec. 563 (1995); Continental Illinois National Bank & Trust Co. v. Llewellyn, 86 Ill.App.2d 1, 229 N.E.2d 334, 339 – 340 (1st Dist. 1967) (disallowing fees for attorneys of beneficiary’s assignee when assigning beneficiary also had counsel in will construction litigation and interests were aligned, but allowing such fees on matters in which they were not duplicative because assigning beneficiary’s interests were adverse to assignee’s interests); In re Estate of Brown, 58 Ill.App.3d 697, 374 N.E.2d 699, 708, 15 Ill.Dec. 916 (1st Dist. 1978) (stating that “a charge may not be made for duplicated work” as between executor and its attorney).
In In re Estate of Halas, 159 Ill.App.3d 818, 512 N.E.2d 1276, 1284, 111 Ill.Dec. 639 (1st Dist. 1987), the court reduced fees for “over-conferencing” caused by having 41 attorneys involved in the estate and noted that conference time should be accompanied by entries showing the persons attending, the topics discussed, and the conclusions reached. The court also reduced fees for unnecessary research time. 512 N.E.2d at 1285 (contrasting research time on matters of general knowledge to experienced attorneys, which cannot be billed, against research about complex or novel matters). Similarly, in Kaiser v. MEPC American Properties, Inc., 164 Ill.App.3d 978, 518 N.E.2d 424, 115 Ill.Dec. 899 (1st Dist. 1987), the court reduced attorneys’ fees by over 51 percent, in part because the time records showed that 70 of the 330 total hours billed were for interoffice conferences and memoranda. 518 N.E.2d at 426 – 427.
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Fee Petitions: Pitfalls (cont’d)
Minimize or Justify Duplication (cont’d) Interoffice conferences: explain strategy
requiring debate Review time by supervising attorney: explain
savings from initial drafting at lower rate Separate counsel where interests of
beneficiaries and fiduciary (or co-fiduciaries) are aligned: explain unique portions of work done by each
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Construction Cases
Ambiguity?
Yes No
No fees for partycreating dispute,even if it is the
respondent
Fees recoverableby other party,even if it is the
petitioner
Good faithdifference of
opinion?
Yes No
Did party haveinterest?
No fees forloser
Fees for winner
Yes No
Fees recoverable,win or lose
No fees
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CONSTRUCTION CASES
In Orme v. Northern Trust Co., 25 Ill.2d 151, 183 N.E.2d 505, 513 (1962), the Illinois Supreme Court set forth the general rule for payment of attorneys’ fees in contested estates as follows:
In will construction cases the costs of litigation are borne by the estate on the theory that the testator expressed his intention so ambiguously as to necessitate construction of the instrument in order to resolve adverse claims to the property. . . . Legal fees are allowed to a party even though the construction adopted is adverse to his claim. . . . However, such fees should not be authorized where such construction is unnecessary. [Citations omitted.]
The determination of whether there is an ambiguity is based in part on “whether or not there is an honest difference of opinion.” Ingalsbe v. Gough, 2 Ill.App.3d 681, 277 N.E.2d 149, 150 (4th Dist. 1971), quoting Orme, supra. When the representative “did not feel that he could safely proceed with the administration without a judicial construction of the will” and the heir presented an opposing interpretation in good faith, the heir’s attorney could recover fees from the estate even though the heir’s position did not prevail. Ingalsbe, supra, 277 N.E.2d at 150. Accord Northern Trust Co. v. Tarre, 83 Ill.App.3d 684, 404 N.E.2d 882, 889, 39 Ill.Dec. 291 (1st Dist. 1980) (upholding award of all parties’ attorneys’ fees from estate when litigation was result of honest differences of opinion), rev’d on other grounds, 86 Ill.2d 441 (1981); Strauss v. Strauss, 293 Ill.App. 364, 12 N.E.2d 701, 703 (3d Dist. 1938) (accepting “well settled rule of law” that “where the will of a deceased testator must be judicially construed, reasonable solicitors’ fees of necessary parties may be allowed by the court”).
1. Winning.
Being successful typically allows the attorney to recover fees. See, e.g., In re Estate of Roberts, 99 Ill.App.3d 993, 426 N.E.2d 269, 272 – 273, 55 Ill.Dec. 294 (5th Dist. 1981) (awarding attorneys’ fees to counsel for guardian of estate when guardian prevailed in suit to require trustee to pay trust income to guardian following settlor-beneficiary’s incompetency).
2. Losing.
Provided the litigation emanated from the standard noted above — an honest attempt to resolve an ambiguity — all parties who have an interest and a reasonable involvement in the case are entitled to attorneys’ fees.
The court considered the issue of whether a party has an “interest” in Hinckley v. Beardsley, 28 Ill.App.2d 379, 171 N.E.2d 401 (2d Dist. 1961), which involved the circuit court’s allowance of attorneys’ fees to unsuccessful litigants. The unsuccessful litigants were charities seeking distribution of estate funds under the cy pres doctrine. One of the charities was a residuary legatee, while the other was a voluntary intervenor. The lower court allowed the petition to intervene but distributed the funds to a third charity; nevertheless, it awarded attorneys’ fees to the two unsuccessful charities. 171 N.E.2d at 402 – 403. The appellate court
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upheld the fee award to the residuary legatee but reversed the fee award to the intervenor, reasoning that the residuary legatee had no choice about becoming involved in the construction suit and had a sufficient interest in the funds to justify its claim. By contrast, the court found no authority “which authorizes the payment of attorney fees and expenses to an unsuccessful voluntary intervenor.” 171 N.E.2d at 404 – 405.
When a suit is groundless, legal fees and trustee expenses in defense of the suit “are to be paid out of the share of the complainant in the trust estate and not charged against the estate generally nor a general fund by which co-beneficiaries would have to contribute.” Patterson v. Northern Trust Co., 286 Ill. 564, 122 N.E. 55, 56 (1919). Accord Webbe v. First National Bank & Trust Company of Barrington, 139 Ill.App.3d 806, 487 N.E.2d 711, 715, 93 Ill.Dec 886 (2d Dist. 1985) (holding that legal fees and costs incurred by trustee and other beneficiaries in defending suit were fully chargeable to unsuccessful plaintiff-beneficiary’s share of trust but, in absence of statutory authority, not to such person individually); Stein v. Scott, 252 Ill.App.3d 611, 625 N.E.2d 713, 718, 192 Ill.Dec. 558 (1st Dist. 1993).
Attorneys’ fees can be awarded to both sides in a construction suit if the litigation is the result of an honest difference of opinion between the parties that results in a deadlock. Northern Trust Co. v. Continental Illinois National Bank & Trust Company of Chicago, 43 Ill.App.3d 169, 356 N.E.2d 1049, 1072, 1 Ill.Dec. 767 (1st Dist. 1976) (holding individual cotrustees were entitled to litigation expenses and fees because of irreconcilable conflict between corporate and individual trustees), rev’d in part on other grounds sub nom. Stuart v. Continental Illinois National Bank & Trust Company of Chicago, 68 Ill.2d 502 (1977). See also In re Estate of Hall, 127 Ill.App.3d 1031, 469 N.E.2d 378, 381, 82 Ill.Dec. 844 (4th Dist. 1984) (upholding attorneys’ fees for remainder beneficiary’s separate counsel when construction of will was primary issue underlying theory of litigation).
3. Ambiguity.
If there is little or no dispute, ambiguity, or question, no fees will be granted to the party creating the disagreement, whether it was the petitioner or respondent. See McCabe v. Hebner, 410 Ill. 557, 102 N.E.2d 794, 799 (1951); Continental Illinois National Bank & Trust Company of Chicago v. Bailey, 104 Ill.App.3d 1131, 433 N.E.2d 1098, 1104, 60 Ill.Dec. 860 (1st Dist. 1982) (disallowing fees to counsel for beneficiaries-respondents, even though trustee was party bringing construction suit, when trustee was forced to bring suit by reason of beneficiaries’ claims against trust funds in case when trust was unambiguous).
Courts will pay attention to whether the ambiguity is genuine or fallacious. Veiled attempts to generate an ambiguity for the sole purpose of instituting a construction suit will result in nonpayment of attorneys’ fees to the unsuccessful litigant. For example, Ingalsbe v. Gough, 2 Ill.App.3d 681, 277 N.E.2d 149 (4th Dist. 1971), involved an heir of the decedent asserting the lapse of bequests under the will in order to take an interest by intestacy. The court noted that the will was not ambiguous on its face but found that a latent ambiguity arose from the prior deaths of five of the nine residuary legatees with no contingent gift provision. The court then applied an antilapse statute to the disposition rather than allowing partial intestacy. 277 N.E.2d at 149 – 150.
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The court applied a two-part test: (a) whether an ambiguity exists in the document; and (b) whether there is an honest difference of opinion between the parties as to the application of the statutes to this ambiguity. In awarding fees to the heir’s attorney, the court seemed to be persuaded on the sincerity prong by the fact that the heir became a party to the executor’s construction suit involuntarily. 277 N.E.2d at 149.
4. Fees for Defending Challenges to Documents.
The general rule is that a fiduciary’s defense of a will or trust document, absent undue influence by the fiduciary in the first place to procure the document, entitles the fiduciary to recover attorneys’ fees from the estate. “It is the duty of the representative to defend a proceeding to contest the validity of the will.” 755 ILCS 5/8-1(e). Moreover, because “[t]he employment of counsel is considered indispensable to the reasonable discharge of [a fiduciary’s] duty . . . the court may authorize attorney’s fees to be paid from the assets of the estate.” [Citations omitted.] In re Estate of Lipchik, 27 Ill.App.3d 331, 326 N.E.2d 464, 468 (1st Dist. 1975). See also In re Estate of Breault, 63 Ill.App.2d 246, 211 N.E.2d 424, 430 – 431 (1st Dist. 1965) (noting in absence of executor’s bad faith, attorneys’ fees for defense of will are recoverable regardless of outcome).
However, the executor may be excused from defending a document when he or she “has reasonable grounds to believe the will is invalid.” Lipchik, supra. Accord In re Estate of Minsky, 59 Ill.App.3d 974, 376 N.E.2d 647, 650, 17 Ill.Dec. 501 (1st Dist. 1978).
5. Appeals.
Similarly, courts will not allow fees for appeals of construction cases to be borne by the estate as to the unsuccessful appellant. See Rosenthal v. First National Bank of Chicago, 127 Ill.App.2d 371, 262 N.E.2d 262, 264 – 265 (1st Dist. 1970) (reversing fee award to counsel for party prosecuting unsuccessful appeals from both trial court and appellate court rulings as to hours incurred in preparation of appeals). Cf. Estate of Knight v. Knight, 202 Ill.App.3d 258, 559 N.E.2d 891, 894, 147 Ill.Dec. 551 (1st Dist. 1990) (denying attorneys’ fees for unsuccessful appeal from trial court’s finding that will was unambiguous and holding that “[e]ven where construction of a will is necessary . . . the losing party who decides to appeal litigates at his or her own risk and is not entitled to attorney fees and costs”). See also NC Illinois Trust Co. v. Madigan, 351 Ill.App.3d 311, 812 N.E.2d 1038, 1042, 286 Ill.Dec. 23 (4th Dist. 2004) (trustee bringing “reasonable but unsuccessful appeal” is not allowed reimbursement for attorneys’ fees).
The general rule as to appeals is implied by the Illinois Supreme Court’s holding in Glaser v. Chicago Title & Trust Co., 401 Ill. 387, 82 N.E.2d 446, 448 – 449 (1948), as follows:
When the will has been construed by a court having jurisdiction of the subject matter and the parties, its decree affords authority to all interested persons for the administration thereunder according to its terms unless it be modified or set aside by a court of superior jurisdiction. The construction placed upon a will by the lower court may not be satisfactory to some of the parties and they may be able to have it changed on appeal, but, should they feel disposed to litigate beyond the court of original jurisdiction, this they must do at their own risk and costs.
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However, a successful appellant may generally recover fees. See Landmark Trust Co. v. Aitken, 224 Ill.App.3d 843, 587 N.E.2d 1076, 1086, 167 Ill.Dec. 461 (5th Dist. 1992). Likewise, if the fiduciary is obligated to defend an appeal, fees may be awarded even if the challenger is successful on appeal. See id.
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PROBATE: MORE THAN FORMS AND FUNERAL BILLS
The Rule About Confidentiality in Estate Planning and the Litigation Exception Posthumously
The Chicago Bar Association
Robert S. Held
Harrison and Held, LLP 333 West Wacker Drive Chicago, Illinois 60606
312-332-5530 www.harrisonheld.com
September 30, 2011
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INTRODUCTION
These materials outline an exception to the Attorney-Client privilege, known as the
“Testamentary Exception.” In most areas of the law, the attorney-client privilege survives the
death of a client; keeping confidential communications between an attorney and his or her client
confidential. The testamentary exception however, allows privileged attorney-client
communications to be discoverable to parties claiming under a deceased client. The attorney-
client privilege still applies to communications for claims by outsiders, but the testamentary
exception allows for heirs, legatees, and other devisees, either by intestate or testate succession,
to discover privileged communications. Provided in the following document are interpretations
of case law defining the “testamentary exception” and its evolution in the United States and
England over the past century.
A. THE ATTORNEY CLIENT PRIVILEGE GENERALLY
(1) The elements of the attorney-client privilege are well established:
Where legal advice of any kind is sought from a professional legal
adviser in his capacity as such, the communications relating to that
purpose, made in confidence by the client, are at his instance
permanently protected from disclosure by himself or by the legal
advisor, except if the protection be waived. United States v. White,
950 F.2d 426, 430 (7th Cir.1991) (internal citations omitted).
(2) The privilege is intended to encourage full and frank communication
between attorneys and their clients and thereby promote broader public
interests in the observance of law and the administration of justice.
Swidler & Berlin v. United States, 524 U.S. 399, 403, 141 L.Ed.2d
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379, 118 S.Ct. 2081, 2084 (1998) (presidential Independent Counsel’s
efforts to obtain notes of Vince Foster’s communication to his attorney
days before his suicide were rejected. Post death survival of the
attorney client privilege applies where the “testamentary exception”
does not; interest in determining whether a crime has been committed
does not trump client confidentiality).
(3) As a general matter, the attorney-client privilege survives the death of the
client. Swidler & Berlin, 524 U.S at 406; Hitt v. Stephens, 285 Ill.App.3d 713,
675 N.E.2d 275, 221 Ill.Dec. 368 (4th Dist. 1997) (estate planning files were
protected by attorney-client privilege, and decedents' heirs were not entitled to
them, where estates to which files related were closed, and, therefore
“testamentary exception” to privilege could not be invoked)
B. THE TESTAMENTARY EXCEPTION TO THE ATTORNEY CLIENT PRIVILEGE
(1) A clear exception to the attorney client privilege exists, often called the
"testamentary exception." See Edna Selan Epstein, The Attorney Client
Privilege and the Work Product Doctrine, p. 392 (4th ed. 2001). Epstein
writes:
Although the privilege attaches to communications between a testator and the testator’s counsel, the privilege may be breached upon the testator’s death if litigation ensues between the testator’s heirs, legatees, devisees, or any other parties claiming under the deceased client (emphasis supplied).
(2) The attorney-client privilege survives the death of the client in regard to
claims by outsiders against the estate; but it does not apply to a
communication relevant to an issue between parties who claim through the
same deceased client, regardless of whether the claims are by testate or
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intestate succession or by inter vivos transaction. Lamb v. Lamb, 124
Ill.App.3d 687, 464 N.E.2d 873, 80 Ill.Dec. 8 (4th dist. 1984) (Where all
parties to suit were devisees of decedent, attorney-client privilege was not
applicable to prevent decedent’s attorney from testifying as to his
conversations with his client.)
(3) This testamentary exception to the attorney client privilege has been the law in
Illinois for well over a century and has been the law in England dating further
back in time. See Norton v. Clark, 97 N.E. 1079, (1912) (testatrix's attorney in
a will contest held competent to testify to conversations with her as to
testamentary dispositions, over objection that they were privileged
communications); See also, Scott v. Harris, 113 Ill. 447, 1885 WL 8204
(1885) (communications or statements of a client to his attorney are not
privileged, after the client's death, when making an inquiry as to what was
intended by the deed of the client).
(4) The purpose of the common-law rule declaring that communications between
attorney and client are privileged is to protect the client. The rule is so
ingrained in American jurisprudence that a citation is unnecessary. Outsiders
are not at liberty to invoke this rule on the client’s behalf. But in a suit by
heirs, the rule does not apply. Accordingly, the English rule is: "In a suit by
next of kin of a testator, challenging a residuary gift made by his will to the
executors, on the ground that it was made on a secret trust for an illegal
purpose, . . communications had between the testator and the solicitor
employed by him to prepare the will, with reference to the will and the trusts
thereof, were not privileged." Russell v. Jackson, 8 Eng. L. & Eq. 89, 15 Jur.
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1117, 9 Hare 387. This position was recognized by the U.S. Supreme Court.
Blackburn v. Crawfords, 70 U.S. 175, 1865 WL 10735, 3 Wall. 175, 18 L. Ed.
186 (1865).
(5) This testamentary exception, initially established in Britain, has become firmly
adopted by many states in this country. Graham vs. O'Fallon, 4 Mo. 338, 1836
WL 2298 (1836); Layman's Will, 40 Minn. 371, 42 N.W. 286 (1889);
McMaster vs. Scriven, 85 Wis. 162, 55 N.W. 149, 39 Am.St.Rep. 828 (1893);
Scott vs. Harris, 113 Ill. 447, 1885 WL 8204 (1885); Doherty vs. O'Callaghan,
17 L.R.A. 188, 157 Mass. 90, 31 N.E. 726, 34 Am.St.Rep. 258 (1892)
("undoubtedly, while the testator lives, the attorney drawing his will would not
be allowed, without the consent of the testator, to testify to communications
made to him concerning it, or to the contents of the will itself; but after his
death, and when the will is presented for probate, we see no reason why, as
matter of public policy, the attorney should not be allowed to testify as to
directions given to him by the testator, so that it may appear whether the
instrument presented for probate is or is not the will of the alleged testator.")
(6) The rationale for the testamentary exception lies in the assumption that the
only way to protect the intention of the deceased is to permit the attorney to
testify as to the wishes communicated by the deceased. Only by revealing
confidential communications can the testator’s intent be fulfilled. The law
assumes that were the testator alive, the testator would speak. Because the
testator’s mouth is forever sealed, that of the testator’s agent — the attorney
— will be unsealed. Epstein, pp. 234 – 235.
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(7) The U.S. Supreme Court in Swidler touched on the testamentary exception:
"The general rule with respect to confidential communications . . . is that such
communications are privileged during the testator’s lifetime and, also, after the
testator’s death unless sought to be disclosed in litigation between the
testator’s heirs." Swidler, 118 S.Ct. at 2085, quoting United States v.
Osborn, 561 F.2d 1334, 1340 (9th Cir. 1977). [Emphasis added.]
(8) Illinois courts have adopted and sustained this testamentary exception. See
Hitt v. Stephens, 285 Ill.App.3d 713, 675 N.E.2d 275, 221 Ill.Dec. 368 (4th
Dist. 1996); Lamb v. Lamb, 124 Ill.App.3d 687, 464 N.E.2d 873, 80 Ill.Dec. 8
(4th Dist. 1984); Wilkinson v. Service, 249 Ill. 146, 94 N.E. 50, 52 (1911)
("While such [attorney-client] communications might be privileged if offered
by third persons to establish claims against the estate, when the contest is
between the heirs or next of kin of the testator the rule is otherwise."). See also
Michael H. Graham, Cleary & Graham’s Handbook of Illinois Evidence
§505.7 (8th ed. 2004) ("while upon the death of the client, the privilege
survives . . . it does not apply to a communication relevant to an issue between
parties who claim through the same deceased client.")
CONCLUSION
As evidenced by the above cases and history, the “testamentary exception” to the
attorney-client privilege is an important vehicle for litigating probate claims. It is necessary to
have an attorney testify to the wishes of the decedent when heirs, legatees or devisees bring
estate challenges. The “testamentary exception” allows for more robust litigation by allowing a
decedent’s attorney to attest to the validity of a deed or the intentions of a decedent. Although
the testamentary exception does not apply to challenges by outside parties, and thus does not
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apply to all challenges to the privilege, without the testamentary exception it would be nearly
impossible to represent and determine a decedent’s wishes.
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Dorothy BrownClerk of the Circuit Court of Cook County
Chicago Bar Association’s
Probate Practice
Committee Meeting
www.cookcountyclerkofcourt.org
Committee MeetingSeptember 20, 2011
CLERK OF THE CIRCUIT COURT
• The Office is a non-judicial constitutional office of the State of IllinoisIllinois
• First African-American elected to the Office of the Clerk of the Circuit Court
• The Clerk is the official keeper of the record of the Cook County Circuit Court
• Collects court fines and fees and disburses money to governmental entities throughout the state
• Provides official court information and statistics to the public, media, and academia
Dorothy BrownClerk of the Circuit Court of Cook County
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COOK COUNTY CIRCUIT COURT
The Cook County Circuit Court is one of the largest court
systems in the world. There are 359 courtroom locations:– Richard J. Daley Center– Five Municipal Courthouses– Juvenile Center– Expedited Child Support – New Domestic Violence Court
(October 2005)– Branch Courts– Mental Health Courts– 26th & California
www.cookcountyclerkofcourt.org
COOK COUNTY MUNICIPAL DISTRICTS
District 1 Daley Center 50 W. Washington, Chicago, IL 60602 312/ 603-5030 District 2 - Skokie 5600 Old Orchard Road, Skokie, IL 60077 847/ 470-7250 District 3 - Rolling Meadows 2121 Euclid Avenue Rolling Meadows, IL 60008 847/ 818-3000 District 4 - Maywood 1500 Maybrook Drive
Maywood IL 60153
www.cookcountyclerkofcourt.org
Maywood, IL 60153 708/ 865-6040 District 5 - Bridgeview 10220 South 76th Avenue Bridgeview, IL 60455 708/ 974-6500 District 6 - Markham 16501 South Kedzie Parkway Markham, IL 60426 708/ 210-4551
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CLERK’S OFFICE INFORMATION
• Cook County is one of the largest Counties in the U.S. (larger than 36 states)
• The Clerk’s Office has a workforce of 2,100 employees of which 1,644 belong to a union
• Clerk Brown has 19 attorneys in management positions.
• The Clerk’s Office provides support toThe Clerk s Office provides support to approximately 400 judges in 17 different locations throughout Cook County
www.cookcountyclerkofcourt.org
New Case or document filed with the Cle rk of theCircu it Court Off ice .
Original documentsfiled in the case file
jacket.
Case file pulled forCourt Date.
Re-file case filejacket, original
document storage.
Case Activities One case or document filed with the Office of the Clerk of the Circuit Court sets in motion a wide array of court activity. Variations on these basic activities occur in all divisions each day, everyday.
Documentscoded for
computer entry.
Documentsentered into
the computer.
Daily Court Callgenera ted by the
compute r.
Accounting offees and fines
received.
D A I LY C O U R T C A L L … …
Microfilm / GraphicImage document
storage.
Verification of the CourtRecord
Court Hearing.Pay-Out ofrevenue to
Local, County &State agencies.
Court Clerk prepares thefiles and works in
conjunction with theJudge on the Court Ca ll.
D A I LY C O U R T C A L L … …
Record.
Data entry ofthe CourtRecord.
Public Informationavailable.
D A IL Y C OU R T C A LL … …
D A IL Y C OU R T C A LL … …
Dorothy Brown Clerk of the Circuit Court of Cook County
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21st Century Technology Comes of Age in the Clerk’s Office
• Under Clerk Brown’s administration severalUnder Clerk Brown s administration, several important technological initiatives that impact recordkeeping, document management and storage, and document filing with civil case types have been implemented:
• Imaging and Document Management System or IDMSIDMS
• E-Filing
www.cookcountyclerkofcourt.org
21st Century Technology Accomplishments
in the Probate Division
2000-2002 Complete Probate Calendar
Automation/Elimination of Manual Docketing
2005- Integrated Cashiering
2009 Sh iff’ S PBSS2009-Sheriff’s Summons PBSS
2011-IDMS
www.cookcountyclerkofcourt.org
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Number of Cases Filed in Probate Division in 2009 (1/1/09-12/31/09)
• 2009 DECEDENT 4258 CASES• 2009 – DECEDENT - 4258 CASES• 2009 - DISABLED - 1614 CASES• 2009 - MINORS - 2540 CASES• 2009 - “OTHER” - 45 CASES
• TOTAL 2009 CASES - 8457
www.cookcountyclerkofcourt.org
Number of Cases Filed in Probate Division in 2010 (1/1/10-12/31/10)
• 2010 DECEDENT 4195 CASES• 2010- DECEDENT - 4195 CASES• 2010- DISABLED - 642 CASES• 2010- MINORS - 2093 CASES• 2010- “OTHER” - 24 CASES
TOTAL 2010 CASES 7954• TOTAL 2010 CASES - 7954
www.cookcountyclerkofcourt.org
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Number of Cases Filed in Probate Division 2011 (1/1/2011-8/19/2011)
• 2011 DECEDENT 2755 CASES• 2011- DECEDENT - 2755 CASES• 2011- DISABLED - 1035 CASES• 2011- MINORS - 1259 CASES• 2011- “OTHER” - 13 CASES
TOTAL 2011 CASES 5062• TOTAL 2011 CASES - 5062
www.cookcountyclerkofcourt.org
Pre-IDMS File System
How do you know what is in a case jacket today? Or what SHOULD be in a case jacket?
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IDMS is a Filing System
Integration with the case docket allows us to know what documents are in an electronic case jacket…
and what SHOULD be.
IDMS
• Integrated with your electronic docket.• The integration allows for a nearly one for one audit of your• The integration allows for a nearly one for one audit of your
docket. • IDMS Reports give a near real-time indication of what
documents are in an electronic case jacket…or what documents SHOULD be.
www.cookcountyclerkofcourt.org
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IDMS
• Is driven by data entry occurrences• Court Clerk or Data Entry Clerk receives document over the y
counter or in the courtroom.• Document is coded.• Clerk performs data entry.• Data entry produces Bar Code Cover Sheet.• Bar Code Cover Sheet is placed on top of document.• Document is prepped (staples, paper clips removed) for scanning.• Document is scanned.• Scanned image goes through queues (Quality Assurance,
Awaiting Index, etc.) before it is released for viewing.• Scanned Image appears on Electronic Docket as an “I” Ready to
be viewed.
www.cookcountyclerkofcourt.org
IDMS Con’t• Copies of scanned images may be printed and purchased
after being retrieved from Public Access terminals in the Daley Center (see Probate Cashier/Counter Clerk forDaley Center (see Probate Cashier/Counter Clerk for instructions). Instructions also available at the counter (and in this presentation). Standard statutory copying fees apply.
• Images replace microfilm or “PR” numbers seen on Electronic Docket.
• Images not yet available on internet for viewing.• Wills are being imaged; however images of Wills not• Wills are being imaged; however, images of Wills not
available on Public Access terminals or the internet for viewing.
www.cookcountyclerkofcourt.org
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Screenshot of 11 P 1155
www.cookcountyclerkofcourt.org
Screenshot of document image that appears after clicking onto
I 1800001 in 11 P 1155
www.cookcountyclerkofcourt.org
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Retrieving/PRINT Your Case File DocumentsOnce you have located the case entry that you want to view, you can retrieve a single document or a folder view of documents related to that
case entry. Single View – click on Image #; Folder View – click on the activity date on the left side of entry.
Folder View Single Document View
An example of the Docket Screen is below.
When your document’s image appears, use the toolbar functions above your document to work with your image as described below.If you are requesting to print a document, please click the “print” key on the function toolbar above the document. All documents will print to queue and readied for verification of print request and payment with the Cashier at the designated area of each division.
Screenshot of Papercut Instructions
www.cookcountyclerkofcourt.org
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Screenshot of Papercut Instructions
Electronic Filing or E-Filing
• Electronic Filing or E-filing allows a case to be filed from the comfort of one’s own office.
• Has been the filing standard in Federal Court through the PACER system. (Clerk’s Office system is COURT Plus.)
• Processes payment and court filing with a click of a mouse.
• E-Filing available with commercial litigation case type in Law DivisionLaw Division.
www.cookcountyclerkofcourt.org
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Electronic Filing or E-Filing con’t.
• Per AOIC (Illinois Supreme Court)Per AOIC (Illinois Supreme Court), Electronic Filing or E-Filing not available in Probate for Probate case types.
www.cookcountyclerkofcourt.org
Other Proposals
• Automated Motion Calendar in Probate• Automated Motion Calendar in Probate.
www.cookcountyclerkofcourt.org
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THANK YOU!
Honorable Dorothy BrownClerk of the Circuit Court of Cook County
John ChatzExecutive Clerk of Operations and Administration
Kathleen McDonnellAssociate Clerk of County Bureau
Jennifer SmithChief Deputy Clerk of Probate Division
www.cookcountyclerkofcourt.org
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Jennifer M. Smith is the Chief Deputy Clerk of the Probate Division with the Office of the Clerk of the Circuit Court of Cook County and a licensed attorney. Attorney Smith has held this position for nine years, having started with the Office on July 1, 2002. Prior to coming to the Clerk's Office, Attorney Smith worked in various industries in various capacities. She was an Investment Advisor with Edward Jones where she held Series 7 and Series 63 licenses. She was a Human Resources Manager with Anthem Blue Cross and Blue Shield. She worked as a Labor Relations Representative for the City of Chicago-Department of Personnel where she had responsibility for contracts and prevailing wage rates for 33 unions including IBEW Local 134, Operating Engineers Local 399, International Association of Machinists, Carpenters, Bricklayers, SEIU, AFSCME etc. Attorney Smith was a Legal Editor for the Clearinghouse Review, an LSC-funded publication, and she taught in the Chicago Public Schools. Attorney Smith is a graduate of Yale University, where she earned a B.A in Political Science and New York University School of Law, where she was Note and Comment Editor for the Review of Law and Social Change. She was the Vice Chairperson of the CBA Probate Practice Committee (2007-2008) and in 2010 she participated as a speaker in the Cook County State’s Attorney’s Office Community Justice Center Senior Safety series: Avoiding Financial Exploitation Forums held at the 4th, 6th, and 22nd District Chicago Police Stations.
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