No Deed Needed to Transfer Property…With a Valid Trust
[vc_row type=\”in_container\” full_screen_row_position=\”middle\” column_margin=\”default\” column_direction=\”default\” column_direction_tablet=\”default\” column_direction_phone=\”default\” scene_position=\”center\” text_color=\”dark\” text_align=\”left\” row_border_radius=\”none\” row_border_radius_applies=\”bg\” overflow=\”visible\” overlay_strength=\”0.3\” gradient_direction=\”left_to_right\” shape_divider_position=\”bottom\” bg_image_animation=\”none\”][vc_column column_padding=\”no-extra-padding\” column_padding_tablet=\”inherit\” column_padding_phone=\”inherit\” column_padding_position=\”all\” column_element_spacing=\”default\” background_color_opacity=\”1\” background_hover_color_opacity=\”1\” column_shadow=\”none\” column_border_radius=\”none\” column_link_target=\”_self\” column_position=\”default\” gradient_direction=\”left_to_right\” overlay_strength=\”0.3\” width=\”1/1\” tablet_width_inherit=\”default\” tablet_text_alignment=\”default\” phone_text_alignment=\”default\” animation_type=\”default\” bg_image_animation=\”none\” border_type=\”simple\” column_border_width=\”none\” column_border_style=\”solid\”][vc_column_text]***This issue has an important update.*** In September, a ruling by the Illinois Second District Appellate Court sent small shockwaves throughout the Illinois estate planning community. The case, The Estate of Mendelson v. Mendelson, presented the Court with the question of whether real property transferred via a trust without recording the transfer is a valid transfer. To preserve legal chain of title, real estate transfers in Illinois must be recorded with the appropriate county recorder of deeds office. Additionally, it is well-settled law that a transfer to a trust is valid without recording a deed if one later uses a pour-over will via probate. Mendelson questions the need for a pour-over will or recording before death. Timeline & Facts 2005: The decedent, Diane, signed a deed transferring the home she owned outright into joint tenancy with one of her 4 sons, Michael. The deed wasn’t recorded. 2006: Diane established a trust and executed another deed that, upon her death, divided the home among the 4 sons. The trust and that deed were recorded. 2011: Diane established a new trust, completely revoking the 2006 trust and designated Michael, once again, as the sole beneficiary of the home and successor trustee to Diane. On October 1, Diane died leaving her sons and no surviving spouse. A few days later, Michael recorded the 2005 deed and the 2011 trust. In November, the legal battle begins. 2014: A trial court ruled that the 2006 trust was valid and, thus, the home was to be shared by the 4 sons. Michael appealed. Battle Theories The Estate (representing the 3 sons) made 2 arguments: (1) The 2006 trust was valid; or (2) the 2011 trust was valid, revoking the 2006 trust but because the 2005 deed was recorded post-death, the home was probate property subject to Illinois laws of intestacy. Illinois descent and distribution laws state that if a property is subject to probate whereby there was no valid will in place and no surviving spouse, the property shall be divided evenly between descendants. The Final Ruling The Appellate Court found that the 2005 deed was invalid because it was not properly delivered to Michael; it wasn\’t Diane’s intent to transfer the property to Michael then. The Court also found that the 2011 trust revoked the 2006 trust, the revocation meeting the requirements for revoking a trust. In so finding, the Court fleshed out the valid requirements of a trust: (1) intent to create a trust; (2) defined trust assets; (3) stated beneficiaries; (4) designated trustee; (5) stated purpose and administration provisions; and (6) delivery of property to trustee. Mendelson’s ruling hinged on number 6: whether the property of the trust – the home – was delivered to the trustee. No Illinois law existed before this case to answer whether assets needed to be formally transferred to a trust. In this case, the trust was a revocable living trust, so the Court reasoned that because the trustee of a revocable living trust already owns the property, no formal transfer was necessary. Therefore, Mendelson’s final ruling, which is arguably narrow, is that a “[trustmaker] who declares a trust naming herself a trustee is not required to separately and formally transfer the designated property into the trust.” Accordingly, Michael’s actions after Diane’ death – recording the deed and trust – were legally valid. The ruling caused shockwaves for 2 primary reasons: (1) Titling property to trusts is a revenue stream for title companies and municipalities; and more importantly, (2) if real estate is assigned to trustees without recording the transfer with municipalities, then the chain of title listed with the recorder of deeds indices will eventually become fraught with errors, leading to increased litigation over property rights. Nevertheless, for now, Mendelson is the law in Illinois.[/vc_column_text][/vc_column][/vc_row]
What If I\’m Neither: More Non-Financial Planning Pointers for Transgender & Queer Persons
This is the 5th in our segment on estate planning for the T & Q of the LGBTQ Community… Most people will agree that family battles are what make estate planning “sexy.” Forget about the smart tech wizards who create subtrusts and the stability that goes with it; Philip Seymour Hoffman’s story, may he rest in peace, is much more interesting. However, squabbles – or wars – in families of straight married couples may benefit on settled law and when the legal issue is murky, experienced judges are readily available. Neither settled law nor experienced judges are generally available when addressing family dynamics for transgender or queer couples. So, a transgender or queer person’s first line of defense against contentious family members is their trusted advisors. Attorneys must be able to identify potential conflicts of interest and manage confidentiality with aplomb. Conflicts of interests involve understanding who our client is, e.g., are we representing Dana as an individual or Dana and Chris as a couple. Equally, if not more important is the issue of confidentiality. What information have we been given permission to disclose, to whom, in what manner, and when. For example, can Bobbie’s mom know that Dana was born male? The employer? The children? With respect to a will or trust, below are a few key concerns in light of family dynamics. Disinheritance. Family members who are contentious can always be written out. Fiduciaries. Would you want a family member who has always been a tad combative acting on your behalf? Digital assets. Only close loved ones should have access and control to the digital assets, especially personal email and social media accounts; otherwise, such assets should probably be deleted or destroyed. It’s nobody’s business when Dana or if Dana had sexual reconstruction. As with all testamentary documents and trusts, the critical administrative provisions are also critical areas where instructions should be included with respect to communicating information, fiduciary selections, and more. Another broad category under non-financial considerations is lifestyle intentions, i.e., travel and retirement in particular. Again, the overall issues are similar to straight married couples. However, the nuances are what distinguish planning for straight married couples from planning for transgender or queer couples. For example, today’s society is very mobile and clients are becoming more informed about a little of what we do, which is dangerous, especially if they don’t consult local lawyers about what they have learned. So, when considering lifestyle intentions and non-financial estate planning considerations, planning should include the following considerations. Vacations. Vacations should not be ruined because, while being treated for an allergic reaction, the client’s spouse can’t visit them. Relocation from Illinois or Cook County to an unfriendly jurisdiction. Though this may not be necessary, soon. Perhaps employment, grandchildren, or retirement has provided a desire to move. While many attorneys are only licensed to practice in one or two jurisdictions, any lawyer serving the LGBTQ community on issues related to family should have a thorough understanding of the national jurisdictional landscape with respect to marriage equality. For example, what does the jurisdiction say about children of married couples who are not adopted; what is the landscape for transgender rights? Does the retirement community or municipality to which the client plans to retire or visit as a snowbird provide healthcare treatment for transgender or queer persons? Is the community friendly to transgender or queer elders? The more unfriendly the jurisdiction, the more “right and tight” as Justice Ginsburg says the estate plan must be for those who travel or plan to relocate but retain property in Illinois, and especially for transgender and queer persons. Estate Planning for the T&Q of the LGBTQ Community: Part 1 | Part 2 | Part 3 | Part 4 | Part 5
What if I\’m Neither: Practical Planning Tips for Transgender and Queer Persons
Welcome to our 4th segment in our series on estate planning for transgender and queer persons. When planning for the \”T\” & \”Q\” of the LGBTQ community, attorneys must understand the overlapping factors and relationships between retirement planning, estate planning, gender definitions, and legal interpretation. While we can control some factors, such as estate planning and applicable definitions, other factors, such as the laws governing retirement plans and statutory definitions of gender, are typically out of our control. Additionally, estate-planning attorneys should consider planning in the context of Windsor for transgender and queer persons as we do for all clients: examining financial and non-financial issues. Yet, most attorneys also agree that non-financial issues are usually the more challenging part of planning. The 3 categories generally considered in non-financial estate planning conversations are: (1) the client’s health and the health of close family members and loved ones; (2) family dynamics; and (3) lifestyle and retirement goals. This article focuses on health and issues attorneys face with healthcare Advanced Directives. Good health and healthcare is important to everyone; transgender and queer persons may have more or less issues and some of their issues are different. So, this issue may or may not be important, and is only one of many for transgender and queer persons. Assessing a client’s health for purposes of estate planning includes, but is not limited to, issues surrounding chronic or terminal illness. For transgender and queer persons, we should consider the implications of sexual reconstruction and potential related matters, e.g., whether our client has or had a therapist. All of these issues should be addressed in our clients’ Advanced Directives. Other than certified copies of vital records, Advanced Directives are probably the most important documents a person can have during their lifetime. Additionally, like lesbian, gay, or bigender persons who are unmarried, transgender and queer persons generally need more than a basic power of attorney for healthcare and a living will and even if married. Advanced Directives should include: 1. Illinois Statutory Power of Attorney for Health Care; 2. Illinois Statutory Power of Attorney for Property 3. HIPAA forms 1 and 2 4. Illinois Mental Health Treatment Declaration 5. Hospital Visitation Authorization form 6. Illinois Living Will 7. Illinois Department of Health DNR-POLST To be clear, a person’s sexual physiology is generally irrelevant for purposes of protecting a transgender or queer person’s interests. What is relevant and most important is how that person identifies on the societal gender scale. What is also relevant are the facts as that person wants them communicated, how and when the facts should be communicated, to whom those facts must be communicated, and that those facts are accurately and legally. The Illinois Power of Attorney Act changed substantially last year, and the changes went into effect January 1, 2015. The changes provide individuals with more options regarding the authority they grant to their agents. Yet, more options also requires the need for more information on the part of the principal, which is why we do not recommend individuals completing this form without the assistance of an attorney. The issues to consider in the new Illinois Power of Attorney for Healthcare form cover 5 pages of questions whose considerations could result in a disastrous miscommunication of facts if not done in precise legal context. Again, before addressing financial matters, especially for transgender and queer persons, estate-planning attorneys must ensure that carefully prepared Advanced Directives are in place. Otherwise, the wills and trusts could easily be contested and nullified. Estate Planning for the T&Q of the LGBTQ Community: Part 1 | Part 2 | Part 3 | Part 4 | Part 5
What If I\’m Neither: The Dual-Track Agency Dance
In our first article in this series, unlike Illinois law, we alluded to how Windsor created tricky issues for the LGBTQ community to navigate with respect to marriage. The Illinois Marriage Fairness Act embraces the entire LGBTQ community, whereas Windsor does not. Okay, but what does this mean? Part of the Windsor decision required action by the IRS, which resulted in the IRS passing Revenue Rule 2013-17 (“Rev. Rule 2013-17” or “Rev. Rule-17”). The rule stated that the agency never gave much, if any, meaningful consideration to gender; so, since the Court in Windsor required IRS action, the agency the IRS mandated that, post-Windsor, its rules and regulations governing all taxation applicable to heteronormative (“straight”) married couples would also apply to lawfully same-sex married couples. Additionally, the IRS announced that it would use the “place of celebration” standard when reviewing its matters with respect to married couples. Finally, the agency strongly suggested that other federal agencies, especially those whose benefits were governed by IRS rules and regulations, to follow suit. However, many federal agencies that used male and female descriptors in definitions involving marriage didn’t recognize same-sex marriages before Windsor. So, post-Windsor, a number of federal agencies decided that, like the IRS, they were required to abide by the Supreme Court decision for lawfully married same-sex couples, the agencies were not required to use the same standard of review for determining benefits as the IRS and the Court would not disagree, per another seminal Supreme Court case, Chevron. Therefore, many agencies decided to use the “place of domicile” standard instead. Explaining the \”standards\” Place of Celebration: Same-gender marriages are recognized as legal as long as the place where the couple was married provides legal same-gender marriages. An agency that uses this standard will recognize your marriage even if you live in an unfriendly state. Place of Domicile: The same-gender marriage must be legal where the married couple resides. Ergo, if the couple was married in Illinois, which provides same-gender marriages, but lives in Florida, an unfriendly state that does not recognize same-gender marriages, then an agency using this standard will not recognize the marriage as legal. The dual-standard usage by federal agencies resulted in a dual-track federal benefit system for legally married same-sex couples. So, while Windsor was a great milestone for the LGBTQ community, the federal agency guidance that followed created an interesting path for planners to navigate, depending on the benefits the plan needed to consider. For example, if estate planning attorneys consider the dual-track federal benefit system strictly from a same-sex paradigm, i.e., lesbian, gay, and bigender, the decision matrix would resemble the chart to the left. Also, if attorneys consider the dual-track benefit system when planning for a transgender person who is in transition and cannot check a gender box or a queer person who will not check a box, then we\’re left with the question marks below. All of the question marks are appropriate for transgender married couples who even reside in friendly states, such as Illinois, because lawyers must consider a plethora of benefits from agencies that a potential surviving spouse should receive were that spouse in a heteronormative marriage. Still, as the chart below illustrates, agencies following Windsor and using the place of domicile standard can inadvertently preclude transgender or queer surviving spouses from enjoying benefits that surviving spouses who are in lawful same-sex marriages enjoy. Considering a transgender person who has completed their sexual reconstruction and resides in an unfriendly state or who would like to leave benefits to their spouse, results in several questions about the definition of ‘spouse’ as derived from a particular statute or regulation governing a particular benefit: If the state defines spouse in terms of Windsor and the couple consists of a transgender man and a non-transgender woman, then is the couple a same-sex couple? If a state benefit did not follow Windsor, should the couple argue that the transgender man’s identity should apply and, therefore, they are a heteronormative couple able to receive the benefit? If the transgender man could transfer benefits to his spouse but a same-sex married couple living in the same state could not, is that fair? If the transgender man began his transition before Windsor and completed his transition after Windsor, would a federal benefit even apply? These and many questions are what transgender and queer couples must contend with in Windsor’s wake. Stay tuned for a few solutions and, of course, more questions. Estate Planning for the T&Q of the LGBTQ Community: Part 1 | Part 2 | Part 3 | Part 4
Protecting You and Yours Even if You\’re Neither…
Recognizing and hoping that this series may be moot in 6 months, when SCOTUS hears cases from Ohio, Michigan, Kentucky, and Tennessee that involve state bans on same-sex marriages, in the interim, planning for those who may be \”neither\” is important. The following are remarks from a presentation I gave in the fall of 2014 at the Illinois Institute for Continuing Legal Education: What if I\’m Neither: Estate Planning for Transgender and Queer Persons. In striking down Section 3 of the so-called Defense of Marriage Act (“DOMA”), SCOTUS’s U.S. v. Windsor ruling delivered a great victory to the LGBTQ community and especially to the L, G, and B persons and couples. However, the rights afforded this and other marriage equality victories were still questionable for certain couples, specifically those whose parties included transgender or queer persons. So estate planning for the entire LGBTQ community still required a thorough understanding of the laws, rules, regulations, and opinions involving both marriage and gender equality. A big issue for lawyers is understanding “who” our clients are. If this is important to us, it’s crucial for our clients because if the lawyer doesn’t get it; then you clients should find a lawyer who does. Identifying who is the client, can be reduced to a simplistic answer is we use Illinois law. Section 10(c) of The Illinois Religious Freedom and Marriage Fairness Act (“Illinois Marriage Fairness Act” or “Marriage Fairness Act”) provides: Parties to a marriage shall be included in any definition or use of terms such as “spouse,” “family,” “immediate family,” “dependent,” “next of kin,” “wife,” “husband,” “bride,” “groom,” “wedlock,” and other terms that refer to or denote the spouse relationship, as those terms are used throughout the law, regardless of whether the parties to a marriage are of the same sexes or different sexes. As you can see, this section of the Marriage Fairness Act completely removes gender orientation as a factor in determining marital relationships and the accompanying rights, burdens, benefits, and obligations for Illinois citizens. If gender is removed from the marital relationship formula, then what’s left? Who are the parties? Who are the clients? Simple: Persons. The individual who is sitting at the conference room table seeking our help is a person. The individual may be a transgender person or queer, but he, she, Dana, or they is (and, in this case, the grammar is correct) a person first, deserving of the respect, dignity, and excellent service provided any client. In other words, if a lawyer doesn’t recognize a potential client as a person, then that person shouldn’t recognize that lawyer as competent to serve the potential client’s needs. Estate Planning for the T&Q of the LGBTQ Community: Part 1 | Part 2 | Part 3 | Part 4
The Slayer Statute in the News Again
Teen allegedly murders mom; mom was affluent; teen charged with murder; teen is poor but retains defense team; asks trustee, who is teen\’s brother for legal expense funds; brother says no; through lawyers teen sues estate to pay legal defense fees. Question: Will teen prevail in lawsuit? According to Illinois\’s slayer statute, it depends. The plain language of the statute provides that one cannot profit from causing another person\’s death: A person who intentionally and unjustifiably causes the death of another shall not receive any property, benefit, or other interest by reason of the death, whether as heir, legatee, beneficiary, joint tenant, survivor, appointee or in any other capacity and whether the property, benefit, or other interest passes pursuant to any form of title registration, testamentary or nontestamentary instrument, intestacy, renunciation, or any other circumstance. The property, benefit, or other interest shall pass as if the person causing the death died before the decedent, provided that with respect to joint tenancy property the interest possessed prior to the death by the person causing the death shall not be However, the operative word in the statute is \”causes.\” This means that the person must be first convicted of knowingly, without legal justification, killing another human being. Ms. Mack hasn\’t been convicted yet. So what may happen? The court may tell defense to bill but don\’t even think about collecting until the jury is in. The next issue is then whether Ms. Mack be able to keep this same defense team.
A 90-Second Story on How Estate Planning Saves Lives*
Monday morning I typically share basic information about estate planning, hoping that someone will understand that it just isn\’t about planning for death. Yet, one also hopes that the plans you create don\’t go into effect until decades later but experience illustrates that is not the case. Then, this past weekend, into my inbox came an email from a former client, proving this very point: Estate planning is critical even if you have a very modest estate and even if you are young, e.g., late 20s. This is a scary story with a happy ending from a former client who gave consent to share. I share because my job is to protect and life is unpredictable. All personal identifying information has been removed and this sharing is consistent with what is allowed per the State of Illinois Rules of Professional Conduct and the American Bar Association Model Rules of Conduct. Hi Max, I hope all has been well with you… I recently had a medical emergency. Only because I have a living will and my medical providers have a copy of the document you prepare/instruct your clients to send to specific providers was I able to have my medical wishes honored. If I hadn\’t had you prepare my will, if my medical providers hadn\’t had a copy of the documents… I would likely be in an even worse medical situation. It was a horrifying experience… Thank you so much for preparing my will and for preparing the documents my medical providers needed in order to advocate for me. I only had you prepare my will in case I ended up dead or in a coma — I had no idea that the will could be life-saving while I was conscious and able to express my wishes. I am not exaggerating when I say that you helped save my life. This is a true story and why I love my job. *Having the appropriate documents in place doesn\’t always work, regardless of who prepares them. Yet, having some kind of plan is generally better than not having a plan at all.
Jennifer\’s Story – A Fiduciary\’s Tale, Part 3
If you’ve been following Jen’s story, you know that Bill’s, her father, condition was made worse by secondary emergency procedures instituted upon Alex’s, Jen’s brother, instructions to the ER doctors. This was an emergency; Jen was 30 minutes away; and the records were 10 minutes from being received by the ER. When the records arrived, it was clear from all of the advanced directives that Alex was not considered a fiduciary or personal representative. He was not to be given any information whatsoever. And as mentioned in the previous article, the information needed to prevent the complication that Bill suffered arrived 10 minutes after Alex had given the doctors the green light. In this case, because there was no third back-up to Jen and no way to contact her, the secondary steps taken could not have been avoided. The doctors proceeded with their hospital’s policy and that may not have been avoided even if Alex said he wasn’t a fiduciary. In emergencies, the difference between life and death can be seconds sometimes. So if Bill doesn’t fully recover or recover at all, the ultimate responsibility for his disability or death will likely sit with Bill for not naming a third back-up. The guilt will, however, rest heavily on Jen and possibly Alex. However, the doctor who spoke with Alex isn’t completely exonerated. Once the doctor saw who was designated on the advanced directives, which included the HIPAA forms, to receive Bill and Carla’s personal health information, the doctor should not have had any further conversation about Bill’s condition with Alex. Nevertheless, he continued speaking with Alex and sharing Bill’s medical history, contrary to law. Privacy provisions under HIPAA prohibit sharing personal health information with anyone, even next of kin, unless the person is designated as a personal representative on the form. Needless to say, Jen became even more distraught when she spoke with her attorney. Now, Alex has faded into the ER waiting room background and Jen is visiting with Carla, whose condition has improved to stable. Jen can’t tell Carla about Bill though and is contemplating the worst case scenario for Bill. Still, as Jen sits quietly while Carla sleeps, Jen reviews one document that provides a sliver of peace of mind at least for her parents, though the doctors probably won’t understand. But they don’t have to; families have their own overall personalities as these doctors will find out and the law is the law. More to come… Jen\’s Story – A Fiduciary\’s Tale, Part 1 | 2 | 3
Jennifer\’s Story – A Fiduciary\’s Tale, Part 2
If you recall from Jennifer’s Story Part 1, Jennifer’s parents, Bill and Carla, were in a terrible car accident but had healthcare powers of attorney on file with their primary hospital and had designated each other as primary agents, and then Jennifer as the tertiary successor agent. Yet, no agent was listed as a back-up for Jennifer who was unavailable at the time of the accident. Bill and Carla were taken to the nearest hospital and were in critical condition upon arrival. Emergency measures had to be instituted immediately. Fortunately, Bill had his cardiologist’s card in his wallet. Also, Carla’s primary care doctor practiced in the same hospital as Bill’s cardiologist. However, both doctor’s were not in the hospital during the time of the accident; so they were being paged. Jennifer’s estranged brother, Alex, learned about the accident from his grandmother and went to the hospital post-haste. Accordingly, the hospital, when faced with an emergency where the agent is incapacitated and the successor agent is unavailable, followed its standard policy and began consulting with the “next of kin,” Alex. The doctor described the situation to Alex and the fact that Bill probably had a heart condition. Alex told them to do whatever they thought was best. This was 30 minutes before Jen’s arrival. When Jen entered the ER, she came upon the doctor explaining to Alex that the medication initially administered to Bill caused a severe reaction and, consequently, more emergency steps were needed to arrest the seizure. The seizure had subsided and Bill’s medical records had also arrived. However, damage to Bill’s heart was a great likelihood, as his blood pressure skyrocketed before and during the seizure. Furthermore, the seizure had made the overall stability of his condition much worse. Jen knew that certain medications would trigger this seizure and the information was, in fact, on his healthcare power of attorney. However, this was an emergency. Still, what if her father doesn’t fully recover? Who is responsible? Jen is about to ask and learn… Stay tuned… Jennifer\’s Story, A Fiduciary\’s Tale, Part 1 | 2 | 3
Jennifer\’s Story – A Fiduciary\’s Tale, Part 1
Fiduciaries are individuals who are held to a higher standard of legal accountability than others with whom folks may enter into agreements. The high standard is attributed to fiduciaries because usually they\’re responsible for making very important decisions or taking critical actions on behalf of others. In Estate Planning and Estate Administration, professional fiduciaries help families and individuals create and implement plans that will protect their interests. Professional fiduciaries include bankers, lawyers, financial advisors, doctors, and accountants. So, the interests these important folks protect involve money, one’s life, or confidential information about the same. The information you share with professional fiduciaries should be considered and treated as trusted confidential information, to be shared with only those individuals you expressly authorize to receive the information. If that trust is not respected, i.e., breached, because fiduciaries are held to a higher standard of accountability, the professional usually can be hauled into court. The down n dirty scoop on fiduciaries can start with Jennifer\’s story*: Jennifer was visiting her grandmother when she learned that her parents were involved in a horrible car accident. Jennifer flew back home immediately, heading to the hospital directly from the airport. At the hospital, she was informed by one doctor that both parents were placed in a medically-induced coma. Additionally, her brother, Alex, who had been estranged from the family for 10 years was standing in the ER speaking with another doctor. It was clear to Jennifer that the doctor had presumed Alex had authority to make decisions for her parents and was providing Alex with information about her parents health. When Jen asked the doctor why he was sharing information with her brother, the doctor informed her that the nature of the situation required the medical staff to engage with the next of kin to determine and obtain permission for urgent care and treatment. Yet, was that legally the case? Jennifer’s parents had healthcare powers of attorney on file with their preferred hospital. However… Stay tuned… Jennifer\’s Story – A Fiduciary\’s Tale, Part 1 | 2 | 3