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Dept. of Mental Health v. First Nat'l Bk.





APPEAL from the Circuit Court of Cook County; the Hon. DONALD J. O'BRIEN, Judge, presiding.


The sole issue presented in this appeal is whether the trial court erred in finding that petitioner was entitled to recover the costs of providing institutionalized care to adult incompetents from the income and principal of strict spendthrift trusts.

Petitioner sought an order requiring respondents to reimburse it for the costs of past, present, and future maintenance and care of Janet Nice Fredericks (Janet) and Constance Nice (Constance), the adult income beneficiaries of spendthrift trusts created under the wills of their deceased parents. It is alleged in the second amended petition that Janet has been cared for by petitioner intermittently from October 1959 to date; *fn1 that Constance was cared for intermittently from 1959 to June 1977; that the costs incurred by petitioner in caring for both have been only partially reimbursed; and that demands made upon respondents for full reimbursement have been refused.

In their answer, respondents alleged that at his death on January 18, 1974, the father of Janet and Constance left a will which created, in effect, strict spendthrift trusts — the income of each to be paid for life to or for the benefit of Janet and Constance, with discretion given the trustees to accumulate income and add it to principal and, as further provided by the will, to use such principal for any "unusual expenses caused by illness, accident or other unexpected misfortune" of the beneficiaries; that the trusts were initially funded by distributions from the probate estate on November 10, 1975; that the mother of Janet and Constance died June 26, 1974, leaving a will which created strict spendthrift trusts for Janet and Constance identical in all material respects to those created by her husband's will; and that those trusts were funded by distributions from her probate estate on June 28, 1976.

It was stipulated that the respondents, as trustees of the trusts, were not liable to petitioner for reimbursement of charges incurred by either Janet or Constance while hospitalized for treatment in a State facility prior to January 18, 1974; that the unreimbursed costs incurred by Constance from April 9, 1974, to September 5, 1974, and from December 16, 1976, to March 21, 1977, was $5,826.80; and that the unreimbursed costs incurred by Janet from January 19, 1974, to September 30, 1979, was $43,405.03 and has been accruing since October 1, 1979, at the rate of $948 per month.

The trial court appointed a guardian ad litem for Janet and a trustee for the remainder interests not in being. In the judgment order from which this appeal is taken, the court found petitioner entitled to recover from the trusts all unreimbursed treatment charges incurred by Janet and Constance from the date of funding of the trusts and to receive payment for all continuing treatment charges — such amounts to be taken first from trust income and, if insufficient, from a reasonable amount of principal as agreed to by the parties.


This appeal brings us the question as to whether petitioner, having provided institutional care for the adult beneficiaries of the spendthrift trusts, may recover the cost of that care from the trusts.

Relevant to this question are paragraphs 1 and 2 of article V of both wills, which are as follows:

"1. If at any time any person to whom the Trustees are directed in this instrument to pay any income is under legal disability or in the opinion of the Trustees is incapable of properly managing her affairs, the Trustees may use so much of such income for her support, maintenance and comfort as the Trustees determine to be required for those purposes.

2. The Trustees either may expend directly any income or principal which they are authorized in this instrument to use for the benefit of any person or may pay it over to her for her use or to her parent or guardian or to any person with whom she is residing without responsibility for its expenditure. The Trustees shall withhold any such income not so used and at their discretion add it to principal * * *."

In general, the rules for construction of written instruments, including contracts, deeds and wills, apply to the interpretation of trusts — the question of paramount importance being the settlor's intention, which if unambiguous is gathered from the whole instrument creating the trust (Storkan v. Ziska (1950), 406 Ill. 259, 94 N.E.2d 185), and such intention will be given effect if not in conflict with any rule of law or the public policy of the State (United States Trust Co. v. Jones (1953), 414 Ill. 265, 111 N.E.2d 144).

It is undisputed that the beneficiaries were incapable of properly managing their affairs, and because the trustees determined under article V that no trust funds were required for their support, it is the position of respondents that the trusts were not subject to the claims of petitioner.

To the contrary, petitioner maintains that it was entitled to reimbursement by virtue of section 5-105 of the Mental Health and Developmental Disabilities Code (Code) (Ill. Rev. Stat. 1979, ch. 91 ...

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