Fleisch v. First American Bank

710 N.E.2d 1281, 305 Ill. App. 3d 105, 238 Ill. Dec. 179
CourtAppellate Court of Illinois
DecidedMay 21, 1999
Docket3-98-0599
StatusPublished
Cited by7 cases

This text of 710 N.E.2d 1281 (Fleisch v. First American Bank) is published on Counsel Stack Legal Research, covering Appellate Court of Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Fleisch v. First American Bank, 710 N.E.2d 1281, 305 Ill. App. 3d 105, 238 Ill. Dec. 179 (Ill. Ct. App. 1999).

Opinion

JUSTICE SLATER

delivered the opinion of the court:

Prior to her death on November 19, 1993, Helen D. Fleisch (Helen) created a trust to provide income for her son, plaintiff Christopher R. Fleisch. On June 13, 1997, at age 54, plaintiff brought suit for declaratory judgment, seeking court approval of a proposed “family settlement agreement” to distribute the corpus of the trust. Following a hearing, the trial court granted judgment against plaintiff. Plaintiff appeals. We affirm.

FACTS

Plaintiff was Helen’s only child, and he is the only income beneficiary of the trust. Defendant First American Bank (trustee) is the successor trustee. Defendants Richard I. Angell, M.D., and four charitable organizations are contingent remaindermen, and the Attorney General of the State of Illinois is a nominal defendant under the Charitable Trust Act (760 ILCS 55/1 et seq. (West 1996)).

Article 6 of the trust instrument pertains to the distribution of the residuary trust after Helen’s death. Section 1 provides that the income and principal of the residuary trust “may” be distributed at the discretion of the trustee for plaintiffs support, education and health needs “considering his standard of living at [Helen’s] death.” Section 2 provides that upon plaintiffs death, the trust proceeds “shall” be distributed to Helen’s descendants and their spouses as appointed in plaintiffs will, “provided, however, [plaintiff] may not so appoint to himself, his estate, his creditor or the creditors of his estate.” Section 3 provides for the distribution of the residuary trust to Helen’s grandchildren upon the death of plaintiffs appointees; and section 4 provides for contingency distribution of the trust proceeds to the defendant remaindermen in default of beneficiaries appointed under section 3.

In January 1997, when the trust corpus amounted to approximately $450,000, plaintiff presented a “proposed acceleration settlement” to the contingent remaindermen. Plaintiff proposed to distribute the trust as follows: 65% to himself, or $292,500; $78,750 to Angell; and $19,687.50 to each of the charitable remaindermen. On June 13, 1997, plaintiff filed his complaint for declaratory relief seeking court approval of the proposed settlement on grounds of (1) a bona fide family controversy between himself and Dr. Angell, and (2) defects in the trust instrument. Plaintiff thereafter moved for summary judgment, claiming that four of the contingent remaindermen had accepted the proposed settlement and the fifth, Episcopal Charities, had taken no position.

On October 1, 1997, the trustee answered the complaint and filed its opposition to plaintiffs summary judgment motion. In both pleadings, the trustee denied both that there was a bona fide family controversy and that the trust instrument was defective. The trustee requested that the complaint be dismissed and that judgment be entered against plaintiff.

Following a contested hearing, the trial court found that (1) there were no genuine issues of material fact; (2) there was no basis for believing that prolonged litigation would result over the proceeds of Helen’s estate or that family relationships would be impaired; and (3) the proposed settlement would frustrate the trust settlor’s intent. Accordingly, the court denied plaintiffs motion for summary judgment and dismissed the complaint with prejudice. In a postjudgment motion, plaintiff requested leave to amend his complaint. The motion was denied, and plaintiff appeals.

ISSUES AND ANALYSIS

I. The Family Settlement Doctrine

Initially, plaintiff argues that he was entitled to summary judgment because the elements of the family settlement doctrine were established as a matter of law. We disagree.

Family settlement agreements are encouraged in situations where there is a reasonable or substantial basis for believing that prolonged or expensive litigation will result over the proceeds or distribution of an estate, the estate will be depleted, and family relationships will be “torn asunder.” Wolf v. Uhlemann, 325 Ill. 165, 183, 156 N.E. 334, 340 (1927). A bona fide dispute between rival beneficiaries that would give rise to prolonged, estate-depleting litigation may constitute adequate consideration for the parties’ mutual concessions in a settlement agreement. Wolf, 325 Ill. 165, 156 N.E.2d 334. However, family settlement agreements cannot be employed simply to accelerate distribution of a trust corpus in contravention of the settlor’s express intent in the trust instrument. Altemeier v. Harris, 403 Ill. 345, 86 N.E.2d 229 (1949). Only where the design and object of a trust have been practically accomplished and all of the interests created by it have become vested may the trust be terminated by agreement. Mohler v. Wesner, 382 Ill. 225, 47 N.E.2d 64 (1943). Accordingly, family settlement agreements are subjected to close scrutiny to determine whether the disputes they purport to resolve are genuine or simply ill-conceived threats concocted to subvert the settlor’s intent. In re Estate of McCabe, 95 Ill. App. 3d 1081, 420 N.E.2d 1024 (1981).

In this case, plaintiff alleged that he might marry a woman with children that he might adopt, and he might then exercise his power of appointment under the trust in favor of the children. He described Dr. Angell as his “quasi step-brother” based on an allegation that Helen reared him from age 12, upon the death of Angell’s mother. He alleged that the settlement agreement would prevent a “bona fide family controversy with Dr. Angell” from arising. Plaintiff further alleged that the language of the trust was inconsistent in that both “may” and “shall” were used with respect to the trustee’s duties.

It is apparent to us, as it was to the trial court, that there is no reasonable or substantial basis for finding a bona fide family dispute in this case. Plaintiffs complaint on its face acknowledges that there is a possibility of other beneficiaries coming into existence, whose contingent interests would not be protected by the proposed settlement agreement. Plaintiffs controversy is with the spendthrift terms of the trust, not with Dr. Angell or any of the charitable contingent remaindermen. Even according Dr. Angell status as a “family” member, it is apparent that he has no bona fide dispute with the terms of the trust, including plaintiffs rights as the sole income beneficiary. Nor is there a reasonable or substantial basis for finding that construing the use of discretionary and mandatory language in the trust instrument will result in prolonged litigation. The “settlement agreement” proposed only to defeat the spendthrift provisions of the trust and the interests of potential contingent beneficiaries. By law, the trust could not be terminated on the facts presented to the trial court; therefore, plaintiffs summary judgment motion was properly denied. See Altemeier, 403 Ill. 345, 86 N.E.2d 229

Free access — add to your briefcase to read the full text and ask questions with AI

Related

United Equitable Insurance Company v. Webb
Appellate Court of Illinois, 2026
Schroeder v. Harksen
2021 IL App (3d) 190359-U (Appellate Court of Illinois, 2021)
Wilson v. Dallas
743 S.E.2d 746 (Supreme Court of South Carolina, 2011)
Mandel v. Hernandez
936 N.E.2d 1079 (Appellate Court of Illinois, 2010)
Hayes Mechanical, Inc. v. First Industrial, L.P.
Appellate Court of Illinois, 2004
Northern Trust Bank of Arizona, N.A. v. Goodman
23 P.3d 108 (Court of Appeals of Arizona, 2001)

Cite This Page — Counsel Stack

Bluebook (online)
710 N.E.2d 1281, 305 Ill. App. 3d 105, 238 Ill. Dec. 179, Counsel Stack Legal Research, https://law.counselstack.com/opinion/fleisch-v-first-american-bank-illappct-1999.