To my grandchildren who marry Jewish spouses, I leave ...

For all of you who want to control whom your children marry, here is an example of a method that worked (at least in Illinois). Max Feinberg died in 1986, survived by his wife, two children and five grandchildren. Prior to his death, Max established a trust and executed a pour-over Will. The trust provided that his wife, Erla, was the life beneficiary of both an A and B trust; following her death, 50% of the remaining trust balance would be distributed per stirpes to Max’s grandchildren; provided, however “any such descendent who married outside the Jewish faith or whose non-Jewish spouse did not convert to Judaism within one year of married would be deemed deceased.” The trust instrument gave Erla a limited testamentary power of appointment and a limited lifetime power of appointment. Erla exercised the lifetime power of appointment directing that, upon her death, each child and each grandchild who was not deemed deceased would receive $250,000. Erla’s disposition of the trust assets altered the distribution by adding the children and from a per stirpes distribution to per capita; however, it retained Max’s restriction on who could inherit. The record suggested that Erla’s gifts would deplete the trust, leaving no additional assets for future distribution. At the time of Erla’s death, all of the grandchildren were married, but only one met Max’s restriction. One of the non-complying grandchildren argued the restriction was against public policy; the trial court and court of appeals agreed. The Supreme Court held otherwise, reversing the decision below. While a restriction that discourages marriage or encourages divorce is generally against public policy, that was not the effect of the distribution here. First, the Supreme Court found that Max’s original plan of distribution created a mere expectancy and, thus, was not the operative distribution plan; the real distribution scheme was the one created when Erla exercised her power of appointment. Under Erla’s distribution scheme, the trust did not operate prospectively to encourage the grandchildren to make decisions about whom to marry; instead, it operated on the date of her death to determine which of her grandchildren qualified for a distribution on that date. Thus, it did not violate public policy. In reaching this conclusion, the court found three factors significant: (1) Illinois policy favors freedom of testation; (2) the grandchildren had no vested interest in the trust at the time of Max’s death; and (3) Erla’s changes in the distribution prevented it from having any prospective application.

The full case is In re Estate of Feinberg, 2009 Ill. LEXIS 1299, Appeal No. 106982 (September 24, 2009), which can be read at http://www.state.il.us/COURT/Opinions/SupremeCourt/2009/September/106982.pdf.

I hope this information is helpful. Paul Deloughery
(You can contact me directly by email at paul@delougherylaw.com or phone at 602-443-4888. For more information, visit www.delougherylaw.com)

The information in this blog is general in nature and is not intended to address any particular situation.

Use of Small Estate Affidavit for Bank Accounts

I often get asked by an adult child if he or she can close out a small bank account using the "Affidavit for Collection of Personal Property." (The one that is authorized by A.R.S. 14-3971(B).) This works IF the person signing the affidavit is actually entitled to receive the property. The tricky part happens when the decedent had multiple children (or a surviving spouse and children). No one person can then sign that Affidavit.

If fewer than all people entitled to receive the estate sign the Affidavit, then it could be construed as theft (and I have actually seen that happen before).

If there is a pourover will that transfers the estate (including the small bank account) to a trust, then at least an argument could be made that the trustees can sign the Affidavit in their capacity as trustees. This seems technically correct, but I have not had very good luck actually getting banks to accept this.

I would certainly welcome any input on this issue.

I hope this information is helpful. Paul Deloughery
(You can contact me directly by email at paul@delougherylaw.com or phone at 602-443-4888. For more information, visit www.delougherylaw.com)

The information in this blog is general in nature and is not intended to address any particular situation.