Trusts

In re the Estate of Weitzman, 724 NE2d 1120 (Ind Ct App 2000).

Facts: Esther Baldwin Weitzman (Esther) is the widow of Paul R. Weitzman (Paul). In 1988, Paul asked Esther to sign a prenuptial agreement waiving her survivor's allowance and statutory elective share in his estate. Since Esther is Paul's second wife and the couple did not have any children together, she would be entitled to one-third of Paul's personal estate and would have a life estate in one-third of his land. Esther refused to sign the prenuptial agreement. At the time of the agreement, Paul's estate was worth about $1,000,000.

Four years later, Paul executed a living trust agreement with the Fort Wayne National Bank (Bank) as trustee. The trust provided that Esther would receive $50,000 at Paul's death and an annual income of $25,000. In 1996, Paul executed a will in which he left to the trust a part of his estate remaining after the payment of expenses and taxes. Over the next few months, Paul continued transferring assets into the trust. When Paul died two years later, the value of the assets had grown to approximately $2,300,000. All of his assets had been transferred to the trust and were held by the Bank. Esther filed a petition requesting the assets in the trust be included in her statutory share of the estate. The Bank and Esther filed cross motions for summary judgment. The Superior Court granted the Bank's motion for summary judgment. Esther appealed.

Holding: Judgment reversed and remanded. A living trust's property does not pass by descent and distribution laws and thus, is not part of the decedent's estate. Dunnewind v Cook, 697 NE2d 485 (Ind Ct App, 1998). There are no provisions that give the surviving spouse rights to any of the assets of a trust to satisfy an elected distributive share. Dunnewind v Cook, 697 NE2d at 489. However, a trust will not defeat a spouse's share when a testator executes a trust in contemplation of death and with the intent to defeat the surviving spouse's statutory share. Dunnewind, 697 NE2d at 490. In the present case, the Bank failed to demonstrate that Paul did not execute the trust in contemplation of his death and was unable to negate the possibility that Paul intended to defeat Esther's share. First, Paul's failing health raises the possibility that the amendments were made in contemplation of death. Secondly, since Paul had tried to get Esther to waive her survivor's allowance and statutory share in a prenuptial agreement, there is the possibility that he had the intent to defeat her elective share by transferring assets to the trust.

EDITOR'S NOTE: Under Illinois law, an individual may transfer property even if the transfer is for the precise purpose of defeating or minimizing the statutory shares and interests of the surviving spouse. Johnson v LaGrange State Bank, 73 Ill 2d 342, 22 Ill Dec 709, 383 NE2d 185 (Ill 1978). Pursuant to 755 ILCS 25, the transfer of property is not subject to attack by the surviving spouse unless there was "intent to defraud." 755 ILCS 25/1. A surviving spouse may attack a transfer if the transaction is "colorable" or "illusory." Holmes v Mims, 1 Ill 2d 274, 115 NE2d 790 (Ill 1953).

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