Hammer v. People Ex Rel. Madigan

950 N.E.2d 280, 409 Ill. App. 3d 1101
CourtAppellate Court of Illinois
DecidedMay 20, 2011
Docket4-10-0338
StatusPublished
Cited by4 cases

This text of 950 N.E.2d 280 (Hammer v. People Ex Rel. Madigan) 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
Hammer v. People Ex Rel. Madigan, 950 N.E.2d 280, 409 Ill. App. 3d 1101 (Ill. Ct. App. 2011).

Opinion

PRESIDING JUSTICE KNECHT

delivered the judgment of the court, with opinion.

Justices Turner and Pope concurred in the judgment and opinion.

OPINION

In April 2008, petitioner David W. Hammer was appointed independent executor of decedent Ronald D. Weeks’s estate. Hammer hired petitioner Thomas L. Brucker to serve as his attorney with respect to administering the estate. In their final accounting of the estate, petitioners indicated they had withdrawn fees from the estate in the amount of $120,000 for executor Hammer and over $170,000 for attorney Brucker. Intervenor, the Attorney General of Illinois, objected to the requested fees on behalf of an out-of-state charity. After a hearing, the trial court reduced the fees for executor Hammer to $37,500 and those for attorney Brucker to $75,000 and otherwise approved the final accounting. The court ordered petitioners to refund the excess fees withdrawn from the estate.

On appeal, petitioners argue the trial court erred in its interpretation of what constitutes a “reasonable” fee under sections 27 — 1 and 27 — 2 of the Probate Act of 1975 (Act) (755 ILCS 5/27—1, 27—2 (West 2008)). Petitioners assert the court erroneously concluded the Act per se prohibits attorneys and executors from charging a fee based on a percentage of the estate’s gross value. Intervenor responds the court applied the appropriate factors based on controlling precedent and correctly determined petitioners’ requested fees were unrelated to the value of the work petitioners performed in administering the estate. We affirm.

I. BACKGROUND

In March 2008, Ronald D. Weeks died testate. The gross value of Weeks’s estate was $4,024,361. The value of Weeks’s probate assets was $3,042,706.16. The nonprobate assets were largely comprised of payable on death (POD) assets and joint accounts held by Weeks and another person. In his will, Weeks made several specific bequests and divided his residuary estate among three beneficiaries: 50% to Teri Witten, 25% to Charles Schott, and 25% to Disabled and Alone Life Services for the Handicapped, Inc., a New York charity (hereinafter Disabled and Alone). Weeks’s will named Hammer as the executor of his estate, and Hammer later hired Brucker as his attorney with respect to estate-administration matters. In April 2008, the will was admitted to probate and letters of office were issued to executor Hammer, who was appointed independent administrator of the estate.

Weeks’s probate assets consisted of cash, certificates of deposit, a residence, farmland, a farmstead, and personal property. Petitioners had Weeks’s real estate appraised. Weeks’s residence was initially appraised at $145,000. A real estate agent estimated the sale price would be between $100,000 and $105,000. After petitioners discovered a deficiency in its foundation, Weeks’s house was reappraised at $125,000. When the real estate agent received bids of no higher than $106,000 with a $6,000 limit on repairing the foundation flaw in the basement, petitioners transferred the residence in kind to Schott, the residuary beneficiary, as part of his share of the estate’s residue at a value of $101,000. In connection with the transfer, the estate paid a 6% commission and $500 in legal fees.

Weeks’s farmland was initially appraised at $2,076,450, or $5,324.23 per acre. Petitioners decided they could sell it, divided into two parcels, for more than the appraised value by conducting a sealed-bid auction before the deadline for filing the estate-tax return in December and before the crop was harvested. Attorney Brucker conducted the auction. He sought a minimum bid of $6,500 per acre. One parcel sold for $1,527,500, or $6,500 per acre, and the other for $990,168.75, or $6,525 per acre. Brucker received an attorney fee of 2% of the sale price, or a total of $50,353.37, for acting as auctioneer.

The will granted Weeks’s farm tenant and his wife an option to purchase the farmstead at its appraised value. The tenant initially rejected the option but later changed his mind and purchased the farmstead for $173,000 after petitioners had it surveyed to ensure the purchased land included a certain hedgerow the tenant found desirable. The estate paid $900 in legal fees for this transaction.

In December 2008, executor Hammer filed federal and state estate-tax returns. These filings were accepted by the Internal Revenue Service (IRS) and intervenor, respectively, and Hammer was accordingly discharged of his personal liability for the state estate tax.

In July 2009, petitioners served an accounting of Weeks’s probate estate’s receipts and disbursements on Weeks’s heirs and legatees. The accounting showed gross receipts of $3,042,706.16, including bank holdings and proceeds from the sales of Weeks’s real and personal property. The estate had disbursed $2,333,365.46, including $120,000 each distributed to petitioners for attorney and executor fees and partial distributions of the estate’s residue ($800,000 to Witten and $400,000 each to Schott, including the in-kind transfer of the residence, and Disabled and Alone). Attorney Brucker’s $120,000 in attorney fees was in addition to the fees he collected in connection with the real-estate sales. In July and August 2009, residuary beneficiaries Schott and Witten entered their appearances in the probate matter, waived the filing of an accounting, and consented to and petitioned for the discharge of Hammer as “Independent Executor.”

In July 2009, after receiving petitioners’ accounting, Brian Andrew Tully, an attorney for Disabled and Alone, inquired into the appropriateness of the fees withdrawn by petitioners. Tully asked attorney Brucker to provide Disabled and Alone with a copy of petitioners’ retainer agreement and “a detailed explanation as to fees and disbursements, including hours billed and hourly rates.” Tully expressed surprise regarding the size of the executor fees, explaining an executor in New York would receive approximately $85,000 for administering an estate the size of Weeks’s. Brucker responded, “With respect to attorneys’ fees and executor’s fees paid, the fees were based upon 3% of the gross estate of $4,024,361.00, which is the standard rate when an estate is this large and a [federal estate-tax] Form 706 return is required.” Tully responded, again requesting a copy of petitioners’ retainer and questioning petitioners’ decision to base their fee on the value of the gross taxable estate rather than the probate estate. Tully noted, “This practice is unusual, as non-probate assets pass by operation of law and are therefore not considered part of the estate administration. Also, Executor’s [sic] commissions are usually based on the assets actually received and accounted for by the Executor.”

Later, in another letter, Tully requested a copy of the estate’s federal estate-tax return and informed Brucker the default rule in New York was for tax-exempt organizations not to bear any of the estate tax, which petitioners had apportioned among the residuary beneficiaries in proportion to their shares under the will.

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Cite This Page — Counsel Stack

Bluebook (online)
950 N.E.2d 280, 409 Ill. App. 3d 1101, Counsel Stack Legal Research, https://law.counselstack.com/opinion/hammer-v-people-ex-rel-madigan-illappct-2011.