Illinois Appellate Court (First District) holds that Discretionary Supplemental Support Trust cannot be compelled to pay fees of Guardian of the person or that Guardian's Attorney's Fees
In what appears to be a case of first impression in Illinois, the Illinois Appellate Court First District (Justice Burke writing the opinion-Appeal No. 1--95--461) affirmed the guardianship trial judge’s decision (Judge Richard E. Dowdle-Case No. 94 P 1858) that the trustee of a discretionary supplemental support trust is not required to use funds from the trust to pay the fees of the court appointed guardian of the person, nor is the trustee required to pay the fees of that personal guardian’s attorney.
The essential facts were not in dispute. On August 16, 1993, John T. McInerny (John) executed a declaration of trust naming John as trustee during his lifetime and, upon John’s death, distributing payments to various individuals. Also, after John’s death, there was a provision, which provided for the needs of John’s daughter, Alice Lee McInerny (Alice). In pertinent part, the trust provides as follows:
I. Commencing with my death and during the life of my daughter, ALICE LEE McINERNEY [sic], the trustee shall expend such amounts from income and, to the extent necessary, from principal, as the trustee in the trustee’s sole discretion deems desirable for the comfort of ALICE LEE McINERNEY [sic] with supplemental care above and beyond the care she was receiving at my death and thereafter becomes eligible to receive by reason of both her disability and her personal lack of assets from any state, federal, or personal agency that provides services or benefits to disabled persons. Any income not so spent shall be accumulated and from time to time added to principal.
On December 11, 1993, John died and respondent First National Bank of Evergreen Park, Illinois was appointed the successor trustee (trustee). Alicia M. Winkelman (Winkelman) petitioned to have Winkelman appointed as plenary guardian of Alice’s person and Winkelman was so appointed. Winkelman filed a petition to approve her fees as guardian of Alice and fees for guardian’s attorney. The trustee filed a motion to dismiss Winkelman’s petition. The trial court (Judge Richard E. Dowdle) stated that he would have seen things differently had the trust been an inter vivos trust. Then funds of the trust would have been subject to fees. He stated: But in the discretionary trust it seems above and beyond. The trial court then entered an order dismissing Winkelman’s petition with prejudice.
Winkelman appealed, arguing that under sections 27-1 and 11(a-)17 of the Illinois Probate Act of 1975 that guardianship fees are compensable from Alice’s estate and since, in this case, Alice does not have an estate, Winkelman should not be compensated from Alice’s estate. Winkelman said that the trustee does not really have absolute discretion where disbursements for Alice’s support are concerned, and so the trial court can compel guardian’s fees. Also, Winkelman asserted that her services are compensable under Illinois law since payments for the emotional benefit of a disabled person are compensable from his or her estate. The trustee responded that the trial court lacked jurisdiction to award guardian’s fees because such fees are only compensable from a ward’s guardianship estate, and a trust is not part of Alice’s estate. Also, the trustee argued that the trust in question is a discretionary supplemental needs trust, and not a discretionary primary support trust, and the trial court cannot compel the trustee to pay for services provided to Alice which amount to primary support. Finally, the trustee argued that section 5105 of the Illinois Mental Health and Developmental Disabilities Code 405 ILCS 5/5105 (West 1996) provides that a parent is not required to support an adult disabled child during the parent’s lifetime, and that John was entitled to set up this trust during his lifetime for Alice’s benefit, and owed no legal obligation to write the trust in a way which would provide for Alice’s primary care.
The appellate court, while acknowledging that the statute and case law allow for the guardian being compensated for his or her services from Alice’s estate, stated that Winkelman is not entitled to compensation from John’s trust because the trust is not actually a part of Alice’s estate.
Winkelman nevertheless argued that John did not really intend to create a discretionary supplemental needs trust; rather, he meant to create a discretionary primary support trust, and it should be construed as such. Winkelman argued that since the trustee had in fact been making payments for Alice’s primary support, and since Alice was not currently receiving any form of public assistance, that John’s intent to create a supplemental needs trust could not be realized anyway, and thus his trust was in reality functioning as a primary support trust. Winkelman further contended that the spendthrift language in John’s trust does not apply to her because she is not a common creditor.
The appellate court began by noting that both Winkelman and the trustee agreed in their briefs that John intended to create a discretionary supplemental support trust with spendthrift provisions. The only Illinois case law allowing reimbursement had to do with State agencies seeking reimbursement from discretionary supplemental support trusts. Winkelman, however, is not a State agency, the court said. Even if Winkelman were, however, she would still be precluded from compelling payment from Alice’s trust due to the enactment in 1991 of 760 ILCS. 5/15. (West 1996), which clearly protects discretionary trusts in Illinois created for disabled beneficiaries against claims by State agencies.
Winkelman then argued that if her services are more like those of a creditor than those of a State agency, then under section 157(b) of the Restatement of Trusts, her claim should be allowed not withstanding the spendthrift provision in John’s trust. Specifically Winkelman pointed to subparagraph (c) of section 157, which allows a creditor to reach a spendthrift trust, provided that the trust is for services rendered and materials furnished which preserve or benefit the interest of the beneficiary. The court rejected this argument, however, concluding that Winkelman, if acting as a creditor, was not supplying necessary services to Alice. Furthermore, it said that Winkelman is not required to provide the services she is now seeking to have the trust reimburse, such as grocery shopping, taking Alice to lunch, or taking Alice on vacation. The court went on to say that it is irrelevant whether the trustee had disbursed funds for Alice’s primary support contrary to John’s intent, because regardless of what type of trust Alice now had, Winkelman cannot get paid anyway because her services did not constitute primary support.
Finally, the court rejected Winkelman’s argument that the trustee had abused its discretion by refusing to pay Winkelman’s guardian’s and attorney’s fees. Had the trustee not paid for Alice’s food when she was going hungry, that would have been a different matter.
The author is grateful to attorney John E. Voorn, with Bueikema, Hakes, Dillner, O’Donnell, & Marovich LTD. for providing him with the appellate court’s opinion in this case.
8/97 ISBA General Practice Newsletter