Current Developments: Legislation and Regulations
Chicago Bar Association
Trust Law Committee
September 8, 2014
Ryan A. Walsh
Hamilton Thies & Lorch LLP
200 Wacker Drive, Suite 3800
Chicago, Illinois 60606
312. 650.8650
These materials and the related presentation are intended to provide those attending the presentation with useful ideas in the area of estate planning and administration. The materials and comments made by the presenter during the presentation or otherwise do not constitute and should not be treated as legal advice regarding the use of any estate planning or other technique, device, or suggestion, or any of the tax or other consequences associated with them. Neither Ryan A. Walsh nor Hamilton Thies & Lorch LLP assumes responsibility for any individual’s reliance on the written or oral information presented in association with this material. Each attendee should verify independently all statements made in the materials and in association with the presentation before applying them to a particular fact pattern, and should determine independently the tax and other consequences of using any particular device, technique, or suggestion before implementation.
CURRENT DEVELOPMENTS: LEGISLATION AND REGULATIONS
Public Act 98-1113 (SB3228). Amends the Illinois Power of Attorney Act.
Replaces the statutory short form power of attorney for health care and the notice to the individual signing the power of attorney for health care.
Changes default rule for effective date to be determination of incapacity rather than upon signing.
Provides that no specific format is required for the statutory health care power of attorney other than the notice must precede the form.
Defines "health care agent" to mean “an individual at least 18 years old designated by the principal to make health care decisions of any type, including, but not limited to, anatomical gift, autopsy, or disposition of remains for and on behalf of the individual. A health care agent is a personal representative under state and federal law. The health care agent has the authority of a personal representative under both state and federal law unless restricted specifically by the health care agency.”
Changes the term "health care provider" to "health care provider" or "health care professional".
Deletes the definitions of "incurable or irreversible condition", "permanent unconsciousness", and "terminal condition".
Changes references to "body donation" to "whole body donation".
Provides that no witness to the signing of a health care agency may be under 18 years of age. Enumerates list of health care professionals who cannot act as witnesses: “the attending physician, advanced practice nurse, physician assistant, dentist, podiatric physician, optometrist, or mental health service provider of the principal, or a relative of the physician, advanced practice nurse, physician assistant, dentist, podiatric physician, optometrist, or mental health service provider;”
Provides that nonstatutory health care powers must meet certain criteria.
Provides that the agent's authority to examine and copy the principal's medical records applies to any information governed by the Health Insurance Portability and Accountability Act of 1996 ("HIPAA") and regulations thereunder.
Provides that the agent serves as the principal's personal representative, as that term is defined under HIPAA and regulations thereunder.
In the portion of the form concerning life-sustaining treatment preferences, adds language indicating that the principal does not want treatments that delay death, but does want treatment to make the principal comfortable and to relieve the principal of pain.
Provides that the amendatory Act does not in any way invalidate any health care agency executed or any act of any agent done, or affect any claim, right, or remedy that accrued, prior to the effective date.
Effective January 1, 2015.
Public Act 98-0946 (SB2984). Amends the Trusts and Trustees Act provisions concerning Virtual Representation and Total Return Trusts.
Removes questions about the definition of “primary beneficiary” and the interrelationship of subsections (a)(2) and (a)(3) by combining them into one section. “Presumptive remainder beneficiary” is now a definition within the class of “primary beneficiaries.”
Substitutes “has legal capacity” for “not disabled” and adds definitions of “legal capacity” and “disabled person.”
Provides that an agent acting under a power of attorney for property may act for the principal if there is no conflict of interest as to the particular question or dispute and the agent has the authority to act with respect to the particular question or dispute. Section 16.1(a)(4).
Provides that if a trust beneficiary is an unrepresented minor, disabled, or unborn person, a parent of the beneficiary may represent and bind the beneficiary if there is no conflict of interest between the beneficiary and either of that person's parents on that particular question or dispute. Section 16.1(a)(5)
Order of representatives is now:
1. Court-appointed guardian
2. Agent
3. Parent
4. Beneficiary having substantially similar (changed from substantially identical) interest on a particular question or dispute.
A guardian, agent, or parent may represent and bind an unborn or unascertainable beneficiary who has an interest that is substantially similar to the interest of the person being represented, but only if there is no conflict of interest between the minor or the disabled person and the unborn or unascertainable person. Section 16.1(a)(6).
Expands the definition of “interested persons” (for nonjudicial settlement agreements) to include trust advisors and protectors when their powers are relevant to the particular question or dispute. Section 16.1(d)(1).
Makes changes concerning the matters that may be resolved by a nonjudicial settlement agreement.
- Clarifies that nonexclusive list of matters that may be resolved is a safe harbor list, available without the necessity of satisfying the requirement that it be an agreement that a court could approve.
- Disputes regarding administration, investment, distribution or other matters that may be resolved by a nonjudicial settlement agreement must be “bona fide.”
- Clarifies that nonjudicial settlement agreement may deal with removal or appointment of a trustee, trust advisor, investment advisor, or trust protector, including a plan of succession. Sectoin 16.1(d)(3)(F).
Provides that if a charitable entity is a current beneficiary, is a presumptive remainder beneficiary, or has any vested interest in a trust, the parties to any proposed nonjudicial settlement agreement affecting the trust shall deliver to the Attorney General's Charitable Trust Bureau written notice of the proposed agreement at least 60 days prior to its effective date. Provides that if the Bureau objects in a writing delivered to one or more of the parties prior to the proposed effective date, the agreement shall not take effect unless the parties obtain court approval. Section 16.1(d)(4.5).
Provides that conversion of a trust to a total return trust may be made with a trustee and all primary beneficiaries (instead of with a trustee and all beneficiaries and presumptive remaindermen beneficiaries) in accordance with other provisions of the Act.
Provides that the Section concerning virtual representation shall be construed as pertaining to the administration of any trust that is administered in this State (whether or not Illinois law applies) or governed by Illinois law, unless certain conditions are met.
Provides that changes made apply to all trusts in existence on the effective date and to all trusts created after that date.
Effective January 1, 2015.
Public Act 98-0836 (SB2985). Amends the Probate Act of 1975 provisions regarding Small Estate Affidavits.
Requires the affiant to describe his or her relationship to the decedent or decedent's estate.
Requires a person executing a small estate affidavit to list and classify the debts of the decedent.
Provides that distributions pursuant to an affidavit may be made to the affiant notwithstanding the disclosure of known unpaid debts.
Provides that all valid claims against the decedent's estate must be paid before any distribution is made to any heir or legatee.
Provides that the decedent's estate should pay all claims in the order set forth in the listed classifications, and if the decedent's estate is insufficient to pay the claims in any one class, the claims in that class shall be paid pro rata.
Requires the affiant to agree to indemnify and hold harmless persons and entities who incur any loss because of reliance on the affidavit, up to the amount lost because of any act or omission by the affiant.
Requires the affiant to state that any person, corporation, or financial institution recovering under the new provisions shall be entitled to reasonable attorney's fees and the expenses of recovery.
Provides that the small estate affidavit shall be notarized.
Provides that parties that act in good faith reliance on a copy of a document purporting to be a small estate affidavit shall be fully protected and released upon fulfillment of requirements under such a document to the same extent as if the party had been complying with requests of the representative of the estate.
Provides that the affiant (instead of other specified persons) may in writing appoint one or more persons, or himself or herself, to access the safe deposit box of a decedent.
- Amends the Safety Deposit Box Opening Act. Provides that the lessor of a safety deposit box shall not open the box in accordance with the Act if the lessor has received a copy of a small estate affidavit. Provides that the lessor shall authorize a representative of a decedent's estate or a person designated in a small estate affidavit, upon presentation of letters of office, other applicable court order, or small estate affidavit, to open the box and examine and remove the contents.
Public Act 98-1093 (SB1048). Creates the Presumptively Void Transfers Article of the Probate Act of 1975.
Provides that certain transfers to caregivers with a fair market value over $20,000 are presumed void. Defines “caregiver” and excludes defined “family members.”
To overcome the presumption, the caregiver must prove either:
(1) by a preponderance of evidence that the transferee's share under the transfer instrument is not greater than the share the transferee was entitled to under the transferor's transfer instrument in effect prior to the transferee becoming a caregiver; or
(2) by clear and convincing evidence that the transfer was not the product of fraud, duress, or undue influence.
Provides that a transferee who tries unsuccessfully to overcome a presumption that a transfer is void shall bear the costs of the proceedings, including, without limitation, reasonable attorney's fees.
Provides that the new provisions do not abrogate or limit any principle or rule of the common law, unless the common law principle or rule is inconsistent with the provisions.
Provides that the new provisions apply only to transfer instruments executed after the effective date.
Effective January 1, 2015.
Public Act 98-0821. Amends the Illinois Residential Real Property Transfer on Death Instrument Act.
Changes the definition of "residential real estate" by replacing the phrase "units in residential cooperatives; or, condominium units" with "a residential condominium unit" and by providing that residential condominium units include any parking unit or units specified by the declaration to be allocated to a specific residential condominium unit.
- Provides that if a declaration of condominium ownership provides for individually owned and transferable parking units, "residential real estate" does not include the parking unit of a specific residential condominium unit unless the parking unit is included in the legal description of the property being transferred by a transfer on death instrument.
Provides that an agent under a durable power of attorney or other instrument creating an agency does not have the authority to create or revoke a transfer on death instrument on behalf of the owner, but the restriction shall not be construed to prohibit the agent from selling, transferring, or encumbering the residential real estate under the terms of the agency.
Provides that an instrument under the Act is effective if it is executed, witnessed, and acknowledged in substantial compliance (rather than "in compliance") with certain provisions of the Act.
Provides that a transfer on death instrument is effective without acceptance.
Replaces the provisions of a Section concerning the notice of death affidavit.
- Provides that a beneficiary who takes under a transfer on death instrument may file in the office of the recorder in the county or counties where the residential real estate is located a notice of death affidavit to confirm title following the death of the owner.
- Adds provisions concerning the required contents of the notice of death affidavit.
- Provides that the affidavit shall be acknowledged under penalty of perjury before a notary public or person authorized to administer oaths.
- Provides that the filing of a notice of death affidavit is not a condition to the transfer of title.
Provides that a purchaser or mortgagee for value and without notice before the recordation of a lis pendens for an action to set aside or contest the transfer on death instrument for any reason shall take free and clear of any such action or contest. Repeals the Section concerning the statutory form for the notice of death affidavit and acceptance.
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