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First National Bank v. Baker

OPINION FILED JANUARY 30, 1976.

FIRST NATIONAL BANK OF JOLIET, TRUSTEE, PLAINTIFF,

v.

HELEN BAKER, EX'RX OF THE ESTATE OF RALPH I. BAKER, DEFENDANT-APPELLANT. — (MARY ALLOTT BAKER, DEFENDANT-APPELLEE; YOUNG MEN'S CHRISTIAN ATHLETIC ASSOCIATION, DEFENDANT.)



APPEAL from the Circuit Court of Will County; the Hon. THOMAS W. VINSON, Judge, presiding.

MR. JUSTICE STENGEL DELIVERED THE OPINION OF THE COURT:

Defendant Helen Baker appeals from an order of the Circuit Court of Will County directing plaintiff First National Bank of Joliet, as trustee, to sell the home of her deceased father, Ralph Baker, and to use the proceeds to pay for nursing home care for Ralph's widow, Mary Baker.

Shortly before Ralph married his second wife, Mary, in 1968, he placed a substantial number of corporate stocks and his residence property in a trust, with a provision that, after his death, his daughter Helen would receive the income during her life and the principal would pass to her descendants at her death; however, if she had no descendants, then it would pass to the Y.M.C.A. After Ralph's marriage to Mary, he executed a first amendment to the trust agreement by adding the following:

"Since subsequent to the execution of the original trust agreement, the undersigned married Mary Allott Baker, the right to live in the residence located at 1014 Buell Avenue, Joliet, Illinois, for the duration of her lifetime or at her pleasure is hereby granted to the said Mary Allott Baker without payment of rent. In addition, the trustee shall pay all real estate taxes and may make such expenditures as it deems necessary to maintain the home in a proper state of repair. It may also make such improvements as it may deem necessary for the comfort and welfare of my said wife while living in said home. Upon the death of my said wife, Mary Allott Baker, or upon her remarriage, or if she permanently vacates the premises to establish a new residence, the trustee is hereby directed to sell my residence to such parties and upon such terms as it may deem advisable and to invest and reinvest the proceeds therefrom according to the terms of the original trust agreement executed by myself on April 5, 1968.

In other respects I hereby reaffirm the said original trust agreement."

A second amendment to the trust agreement was executed in 1971 which provided:

"[Ralph Baker,] pursuant to the power reserved in said Trust Agreement, amends ARTICLE SECOND and ARTICLE THIRD entirely by substituting the following:

ARTICLE SECOND: Upon my death, the Trustee shall continue to hold the remaining principal and any accrued or undistributed income in trust for the benefit of my daughter, HELEN ESTHER BAKER, and shall pay the net income in convenient installments to my said daughter, in addition to such portions of principal as may be necessary for the support and health of my said daughter as the Trustee in its sole discretion shall determine. Upon my daughter reaching the age of Forty (40) years, the Trustee shall distribute to her One-third (1/3rd) of the principal of this Trust as constituted at the time of distribution. When she shall have reached the age of Forty-five (45) years, the Trustee shall further distribute to her One-half (1/2) of the remaining principal of the Trust as constituted at the time of distribution. When she shall have reached the age of Fifty (50) years, the Trustee shall distribute to her the balance of the Trust. I am mindful of the provision I have made for my present wife to live in the residence which is a part of this Trust; and I direct my Trustee to consider this residence as separate from my other Trust assets in computing the distributions as set forth above. Should my present wife die or cease to live in the residence for any reason, the Trustee at that time shall consider the residence part of the principal of the Trust and the distributions shall then include the value of the residence or the proceeds from a sale thereof.

ARTICLE THIRD: Should my daughter die before reaching the age as set forth in ARTICLE SECOND above, or upon my death if she predeceases me, the Trust as then constituted shall pass to the living descendants of my daughter, if any, and the Trust shall terminate. If there be no such living descendants, the Trustee shall distribute the remaining principal and income to the YOUNG MEN'S CHRISTIAN ASSOCIATION OF JOLIET, ILLINOIS, subject to the provision for my present wife as set out in the First Amendment to the Trust.

In other respects I hereby reaffirm the said original Trust Agreement and First Amendment thereto."

In 1973 Mary was hospitalized for tests, with a resulting diagnosis of senile psychosis associated with chronic brain syndrome, and cerebral cortical atrophy. According to her doctor, her condition is irreversible, and she requires chronic institutional care. After two months' hospitalization, Mary was transferred to a nursing home where she remains. The cost of her care is approximately $700 per month, and her only income is $120.90 monthly from Social Security. Ralph died in 1974, and since his death, the residence has been unoccupied.

This cause was initiated when the trustee bank petitioned the court for directions concerning the residence property in order to avoid any claim that the bank was wasting trust assets by leaving the home vacant. Mary was represented by a guardian ad litem. Both Mary's guardian and Helen agreed that the residence should be sold. Helen contended that Mary, who was then 74 years old, had vacated the residence, and under the terms of the trust, the proceeds of sale should be made available for distribution to Helen as a part of the trust corpus. Helen was 39 years old. Mary's guardian argued that she had not left the residence voluntarily with the intent of making a permanent home elsewhere, and thus that she had not forfeited her right to care and maintenance as provided by her husband. He asked that her life estate portion of the proceeds be used for her care and maintenance.

By agreement no testimony was presented at trial, and the court considered arguments of counsel, exhibits and pleadings. No objection was made by any party to any representations of fact or introduction of exhibits by counsel. At the conclusion of the hearing, the trial court ordered the trustee to sell the residence and to use the proceeds for the care and maintenance of Mary, with any proceeds remaining at Mary's death to become part of the trust assets available for distribution to Helen. The trial court denied Helen's post-trial motion with a well-reasoned written opinion explaining the decision.

On appeal Helen first asserts that Mary's removal to a nursing home was a permanent vacation of the residence accompanied by the establishment of a new residence which, under the provisions of the first amendment, must result in the termination of Mary's interest in the property. In the alternative, Helen argues that the second amendment changed the condition for termination of Mary's rights because it provided that the residence ...


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