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In Re Estate of Sax

OPINION FILED JANUARY 19, 1981.

IN RE ESTATE OF GEORGE D. SAX, DECEASED. — (SAMUEL W. SAX, PETITIONER-APPELLEE,

v.

EDWARD L. SAX ET AL., RESPONDENTS-APPELLANTS. — (HOWARD KORENGOLD, GUARDIAN AD LITEM, APPELLEE; ANTONOW & FINK, ATTORNEYS, APPELLEES).)



APPEAL from the Circuit Court of Cook County; the Hon. FRANK M. SIRACUSA, Judge, presiding.

MR. JUSTICE CAMPBELL DELIVERED THE OPINION OF THE COURT:

This is an appeal from an order of the circuit court of Cook County, probate division, granting a petition brought by petitioner, Samuel W. Sax, to direct the executors of the estate of George D. Sax (hereinafter called testator) to carry out the provisions of the testator's will between the two trusts established by the will (a marital trust and a family trust). This appeal is taken by the respondents, Edward Sax and George Sax, with regard to that portion of the circuit court's order holding that "residue" is defined in the will to mean the gross probate estate less only the amount of the specific bequests.

Edward Sax, as executor, also appeals the circuit court order allowing Samuel Sax's attorneys, Antonow and Fink, $36,541.00 in interim fees, and expenses of $95.

The issues presented for review are: (1) whether the trial court erred in determining the proper allocation of the residue of the estate, as defined in the will of the testator, regarding the marital trust portion and the family trust portion established by that will and (2) whether the trial court abused its discretion in awarding fees to the attorneys for the petitioner.

The testator died on March 12, 1974. On May 15, 1974, the circuit court appointed three executors of his estate: one of his sons, Samuel Sax, his widow, Rhoda Sax, and the Exchange National Bank of Chicago (hereinafter called Exchange). Rhoda Sax died on December 9, 1977, and another son, Edward Sax, was appointed a successor executor, under the provisions of the testator's will.

The will of the testator required that his estate be divided by the executors into a marital trust and a family trust, pursuant to a formula provided in the will. The trustees of both of these trusts were to be Exchange, Rhoda Sax, and Samuel Sax. Exchange subsequently resigned as trustee and, by order of court, the Continental Illinois Bank and Trust Company of Chicago (hereinafter called Continental) was appointed co-trustee of both trusts. In the course of the proceedings below, the court also appointed a guardian ad litem to represent the interest of minors and unborn.

Rhoda Sax was the primary beneficiary of the marital trust. Upon her death, the remaining principal and undistributed income of the marital trust was to be distributed to the trustees of the family trust, except insofar as Rhoda Sax exercised a general power of appointment which was granted to her by testator's will. The entire net income of the family trust was to be distributed to Rhoda Sax during her lifetime. Upon her death, the family trust was to be divided into three separate trusts, the income of each one going to one of each of her three sons, for his lifetime. Upon his death, each son is allowed the limited power to appoint his share of the family trust to his children.

In her will Rhoda Sax exercised the general power appointment over the marital trust in favor of two of her sons, George Sax and Edward Sax, to the exclusion of her third son, Samuel Sax. Thus, none of the assets in the marital trust passed into the family trust.

After testator's death, the Exchange, as trustee, allocated the assets of the estate of the testator between the marital and family trusts in a manner with which Samuel Sax disagreed. The difference between the positions of the parties on this issue relates to the question of whether debts, taxes and expenses will be charged against the gross estate to arrive at the value of the residue of the estate in determining the value of the denominator of the formula to be used in determining the marital and family portions of the estate.

Samuel Sax filed a petition to direct the executors to carry out the provisions of the will in the manner suggested by him. The circuit court granted the petition, holding that only specific bequests are to be deducted from the gross probate estate to arrive at the value of the denominator.

Testator's intent as set forth in his will was to provide first for his wife, Rhoda, during her lifetime; then for his sons (Petitioner, Samuel, and Respondents, Edward and George), equally, during their lives; and then for his grandchildren and their descendants.

The will utilized two techniques to minimize taxes both in estates of the first generation (the testator and his wife) and the second generation (their sons). First, the will provided for a fractional share marital deduction formula; and second, the will provided for generation-skipping trusts for the benefit of his descendants, thereby keeping his property from being included in, and taxed in, the estates of his sons on their deaths.

Testator's will provided for certain specific bequests totaling $25,500. Thereafter, by application of the marital fraction, the estate was to be divided into a marital portion held in a marital trust and a family portion held in a family trust. The will further provided that debts, funeral expenses and expenses of administration should "be paid from the Residue other than the Marital Portion thereof."

Testator's wife, Rhoda, was to receive income from both trusts for life. Rhoda was given a general testamentary power of appointment over the marital trust. If she did not exercise that power, the marital trust, as it ...


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