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In Re Estate of Aylsworth

SEPTEMBER 9, 1966.

IN THE MATTER OF THE ESTATE OF IVAN S. AYLSWORTH, DECEASED.


Appeal from the Circuit Court of the Ninth Judicial Circuit of Warren County; the Hon. SCOTT I. KLUKOS, Judge, presiding. Order adverse to petitioners affirmed.

ALLOY, J.

This is an appeal from an order of the Circuit Court of Warren County denying a petition for leave to make partial distribution in the Matter of the Estate of Ivan S. Aylsworth, deceased. Ivan S. Aylsworth died on June 28, 1963, and in his will provided that the rest, residue and remainder of his estate was given, devised and bequeathed to John J. Kritzer, in trust, for the benefit of the son of the testator, Homer H. Aylsworth, for life. The annual income under the trust was payable to the son with a discretionary right in the trustee to reserve such portions as the trustee shall deem for the best interest of Homer Aylsworth and the will also contained the customary spendthrift trust provisions prohibiting the transfer or assignment of payments to Homer Aylsworth, the life tenant, in anticipation thereof, and providing also that payments would not be available for any obligation, including alimony, of Homer Aylsworth. The will further provided that upon the death of the son, Homer Aylsworth, the trustee was to sell and convert the real and personal property into cash and "the balance remaining in his hands, including proceeds from the sale of said lands and personal property, rentals and all other items of income, shall be divided into four parts and distributed in the manner following:

1. I give, devise and bequeath to Dwane Huston one part absolutely."

Similar provisions were made for three other beneficiaries. The will thereafter provided:

"It is further my will that in the event any of said legatees and devisees, namely: Dwane Huston, Dale Huston, Ruth Huston and Ralph Edwin Strickler die leaving child or children living at the date of distribution, it is my will that the part which such deceased legatee or devisee would have taken had he or she been living at the date of distribution shall pass to the child or children of the legatee or devisees so dying before said date of distribution."

The will had a further gift over if any of the named beneficiaries died "without child or children at the date of distribution" in which case the share was to be distributed to the other legatees or devisees named who survived at the date of distribution.

There was evidence by Homer Aylsworth to the effect that he had talked with the trustee shortly after his father's death and that when he requested money he was told "there wouldn't be any money in the Estate for a long time." Homer Aylsworth actually received no money until he was paid for a claim he had filed against the estate in March of 1964.

The record before us discloses that on April 13, 1964, Homer Aylsworth, the life tenant, pursuant to the Disclaimer Act of 1961 (1963 Ill Rev Stats, c 3, § 15(b), (c), (d)) and within 10 months following the date of the death of the decedent, disclaimed all interest in the trust established by his father's will. On the same day and as part of a transaction which led to the disclaimer, Homer Aylsworth entered into a written agreement with three of the four remaindermen and their spouses in which the remaindermen promised to convey their shares of the corpus of the trust property to Homer Aylsworth, and Homer Aylsworth in turn, agreed to execute a will naming the three remaindermen as his sole beneficiaries. Thereafter, three of the four remaindermen who had entered into the agreement with Homer Aylsworth, petitioned the court for leave to make partial distribution on the theory that the estate was solvent and there were more than sufficient assets to pay any claims outstanding against the estate as well as taxes. The trustee objected to the petition and alleged affirmatively that the petitioners falsely conspired to defeat the trust. Two of the four remaindermen had already filed a complaint for partition in May of 1964 but this partition suit was dismissed by the court and it is not in issue in the instant case.

Homer Aylsworth met with the three remaindermen and with Homer Aylsworth's attorney and the effect of a disclaimer was explained to all persons present. It was the plan and intent of the parties that Homer Aylsworth should file a disclaimer upon execution of the agreement; that the property would thereupon pass to the four remaindermen; that they in turn would deed the property to Homer; and Homer (pursuant to the written agreement executed on April 13, 1964) would leave it to them by will. The fourth remainderman to whom Homer Aylsworth had talked did not join in the agreement but Homer Aylsworth had entered into an understanding that this one-fourth interest was to be purchased for $30,000 and such figure was agreeable to all of the remaindermen.

A disclaimer could be made within 10 months of the date of the death of the testator, under the terms of the Disclaimer Act (1963 Ill Rev Stats, c 3, § 15(b), (c), (d)), where it is also provided:

"Any conveyance of or contract to convey real property or any interest therein, or assignment or transfer of or contract to assign or transfer personal property, or written waiver of the right to disclaim the succession to real or personal property, by an heir, next of kin, devisee, legatee, person succeeding to a disclaimed interest, beneficiary or person designated to take . . . pursuant to judicial process, made before the expiration of the period in which he may disclaim as herein provided, bars the right to disclaim as to the property or interest."

In the instant case the Trial Court concluded that the agreement between the three remaindermen and the life tenant falls within the purview of the section of the act referred to and that the disclaimer was ineffective because the agreement was executed prior to April 28, 1964, which would have been within 10 months from the date of the death of the decedent, Ivan Aylsworth. In the process of so concluding, it was observed by the Trial Court that a beneficiary may disclaim any gift made to himself even though it is beneficial, and that one is not obligated to accept the benefit under all circumstances. The court likewise agreed that under the Disclaimer Act this right to disclaim applies equally to a spendthrift trust and that the motive for making the disclaimer is immaterial. In the present instance, it was observed by the court that if Homer Aylsworth executed and filed a disclaimer, he would be on firm ground regardless of the motive. He would thus have separated himself completely from any property interest involved and if the property would then have returned to him without further steps on his part as a result of the disclaimer, that is by operation of law, it would have been a true disclaimer. The court stated, however, that he did not do this. Instead he entered into a combination with three of the four remaindermen and executed a memorandum of agreement which had the effect of nullifying three-fourths of the purported disclaimer. If the fourth remainderman had also agreed, he would have nullified it completely.

The court observed that he was "disclaiming through the front door and reclaiming through the back door." The Trial Court then posed the question: "Is this a true disclaimer or an attempt to break the trust using a fake disclaimer as the excuse?" That court stated that if it were a true disclaimer the motive would not be material and also that it would be immaterial if the effect of a disclaimer would be to alter the testator's will so as to wipe out the spendthrift trust provision giving the life income to Homer Aylsworth. It was clear that the life tenant and the remaindermen understood that the action would break the trust and relieve the trustee. The court thereupon concluded that the memorandum of agreement which was executed contemporaneously with the disclaimer brought it within the prohibitions of the Disclaimer Act.

On appeal in this court it is contended by the appellants that a vested remainder may generally be accelerated where time for its vesting and possession is shortened by the premature determination of the preceding estate, whether by renunciation or otherwise. In this connection it is contended that under the Illinois Disclaimer Act the Aylsworth spendthrift trust was effectively terminated and, likewise, that the contract to convey made prior to or simultaneously with the disclaimer could not have any legal effect for the reason that the spendthrift trust beneficiary was not in position to make a conveyance but simply acted to disclaim as he had the undoubted right to do under the Act and under the authority of People v. Flanagin, 331 Ill. 203, 162 N.E. 848. Appellees, on the contrary, contend that we are dealing with contingent remainders which cannot be accelerated by disclaimer by the beneficiary of a spendthrift trust; that in any ...


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