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In Re Estate of Morgan

OPINION FILED AUGUST 2, 1979.

IN RE ESTATE OF VIRGINIA THATCHER MORGAN, DECEASED. — (JOHN ALDEN MORGAN, EX'R OF THE WILL OF VIRGINIA THATCHER MORGAN, PETITIONER-APPELLANT,

v.

CONTINENTAL ILLINOIS NATIONAL BANK AND TRUST COMPANY OF CHICAGO, TRUSTEE, ET AL., RESPONDENTS-APPELLEES.) — IN RE ESTATE OF DOROTHY O. THATCHER, A/K/A AGNES O. THATCHER, DECEASED. — (CONTINENTAL ILLINOIS NATIONAL BANK AND TRUST COMPANY OF CHICAGO, TRUSTEE, PETITIONER-APPELLEE,

v.

JOHN A. MORGAN, SUCCESSOR EX'R OF THE WILL OF DOROTHY O. THATCHER, A/K/A AGNES O. THATCHER, RESPONDENT-APPELLANT.)



APPEAL from the Circuit Court of Cook County; the Hon. WALTER P. DAHL, Judge, presiding.

MR. JUSTICE LINN DELIVERED THE OPINION OF THE COURT:

This is an appeal by John Alden Morgan, the executor of the estate of Virginia Thatcher Morgan, deceased, from an order of the probate division of the circuit court of Cook County. The order denied the executor leave to disclaim the decedent's interest in the estate of her mother, Dorothy O. Thatcher, pursuant to the amended disclaimer provision of the Probate Act of 1975 (Ill. Rev. Stat. 1977, ch. 110 1/2, par. 2-7). The issues on appeal involve a construction of the disclaimer provision and its application to the facts of this case.

We affirm the decision of the trial court.

Dorothy O. Thatcher died testate on April 7, 1977. Her will, dated February 15, 1967, was admitted to probate on May 2, 1977. In her will, Mrs. Thatcher named her daughter, Virginia Thatcher Morgan, executor and the residuary beneficiary of her entire estate. The will also provided that if Mrs. Morgan should predecease her mother, Mrs. Morgan's daughters, Pamela A. Johnson and Diana M. Senior, were to take as equal beneficiaries under their grandmother's will.

Approximately three months after her mother's death, on July 31, 1977, Virginia Thatcher Morgan died testate. Her will, dated October 24, 1972, was admitted to probate on August 11, 1977. Mrs. Morgan's husband, John Alden Morgan, was appointed executor of his wife's estate and succeeded his wife as the executor of the Thatcher estate. Mrs. Morgan left her personal and household belongings to her husband; however, Mr. Morgan has disclaimed any interest in his wife's estate, and his interest in Mrs. Morgan's personal effects has succeeded to her two daughters.

The Continental Illinois National Bank and Trust Company of Chicago, as trustee under a trust hereafter called the Morgan trust, was named as beneficiary of the residuary Morgan estate. The Morgan trust currently holds $154,000, the proceeds of an insurance policy on the life of Mrs. Morgan, and term and whole life insurance policies on the life of John Alden Morgan in the face amount of $250,000 upon which the trustee is authorized to continue premium payments. The Morgan trust agreement provides in substance that after the death of Mrs. Morgan's husband, the trust property will be held in separate trusts for the benefit of Mrs. Morgan's two daughters during their lifetimes, and on their respective deaths will be held in trust for their surviving descendants or distributed among Mrs. Morgan's descendants.

During each daughter's life, the trustee has discretion to use the income from the trust for her benefit or that of her descendants. The trustee may also use the principal of each daughter's trust for her support or best interest, but subject to the limitation that the aggregate distributions to a daughter during her lifetime for purposes other than support shall not exceed 25 percent of the value of the trust. Neither daughter is given any right to withdraw principal from the trust. On each daughter's death, her share is to be held in trust for her descendants with distribution to be made per stirpes, except to the extent that the daughter exercises a testamentary power of appointment to appoint the trust principal among Mrs. Morgan's descendants. If a daughter dies without exercising her power of appointment her trust is to be held in trust for her living descendants, if any, or to be distributed among Mrs. Morgan's living descendants, per stirpes. At the time of her death, Mrs. Morgan's living descendants were her daughters and three grandchildren, the children of Diana M. Senior.

On November 9, 1977, the executor, pursuant to the amended disclaimer provision of the Probate Act of 1975 (Ill. Rev. Stat. 1977, ch. 110 1/2, par. 2-7), petitioned the trial court for leave to disclaim the interest of Mrs. Morgan in the Thatcher estate. John Alden Morgan, individually and as executor of the Morgan and Thatcher estates, Pamela A. Johnson, Diana M. Senior and her husband, Richard J.L. Senior, all consented to the filing of the petition to disclaim. The effect of the disclaimer, if allowed, would be to pass property in the amount of approximately $160,000, which would otherwise go to the Morgan trust from the Thatcher estate, directly to Mrs. Morgan's daughters, Pamela and Diana. This would reduce the Morgan estate to a value of approximately $85,000. The parties do not dispute that the disclaimer would also reduce Illinois and Federal estate taxes payable on the Morgan estate.

The trial court initially granted the executor's petition for leave to disclaim and allowed the disclaimer on November 9, 1977. Subsequently, the trustee under the Morgan trust petitioned to vacate the order granting leave to disclaim. Although the trustee had been served with notice of the petition to disclaim, the notice had not been brought to the attention of the appropriate trust officer until after the November 9 hearing.

On December 15, 1977, the trial court vacated its previous order and appointed a guardian ad litem to represent the interests of the contingent beneficiaries of the Morgan trust — the minor children and unborn descendants of Mrs. Morgan's daughters. The guardian ad litem joins the trustee in opposing the disclaimer.

After considering memoranda filed by the interested parties, the trial court, on December 29, 1977, entered an order denying the executor's petition for leave to disclaim based on its finding that the disclaimer would frustrate the testamentary plan of Mrs. Morgan. The executor appeals from that order.

OPINION

In Illinois the right of an executor to disclaim an interest which his decedent had in the estate of another is provided for by statute. In pertinent part, section 2-7(a) of the Probate Act of 1975, as amended in 1977, states:

"An heir, legatee, person succeeding to a disclaimed interest, beneficiary under a will or person designated to take pursuant to a power of appointment exercised by a will may disclaim in whole or in part the succession to any real or personal property or interest therein by filing a written disclaimer within the time and at the place provided in this Section. A disclaimer may be of a fractional share or of any limited interest or estate. The right to disclaim of a decedent may ...


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