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06/09/88 In Re Guardianship of Mary Jane Connor

June 9, 1988



525 N.E.2d 214, 170 Ill. App. 3d 759, 121 Ill. Dec. 408 1988.IL.908

Appeal from the Circuit Court of Shelby County; the Hon. Vernon L. Plummer, Judge, presiding.


JUSTICE CALVO delivered the opinion of the court. HARRISON, P.J., and LEWIS, J., concur.


Shelby County State Bank, former guardian of the estate and person of Mary Jane Connor (petitioner), and Mary Jane Connor (respondent), the former ward, appeal and cross-appeal from a judgment entered by the circuit court upon the final financial settlement of the respondent's estate. The facts are as follows.

On April 27, 1978, respondent was adjudicated incapable of managing her estate and person so petitioner was appointed her guardian. Although respondent was a resident of the Lakeland Health Care Center at the time of the appointment, she was only an intermittent resident therein until sometime in 1981.

While we are unable to ascertain the precise amount of money available to the estate to pay respondent's nursing home bills, her estate was able to pay the entire nursing home bill without public assistance through December 31, 1983. At this time, respondent's assets consisted of a savings account with a balance of $1,642.81, United States series E savings bonds with a face value of $150, a residence, oil and gas interests which produced a monthly income of $160, a coin collection valued at $175, and assorted personal property of nominal value.

A handwritten memorandum indicates that on or before February 23, 1984, petitioner contacted the Illinois Department of Public Aid in order to determine whether respondent was eligible for medical benefits. The memorandum shows that petitioner was informed by the Department that respondent could qualify for benefits if she had no more than $1,500 in life insurance (actually $1,000 in life insurance benefits, or $1,500 in a prepaid burial plan) or a prepaid burial plan and no more than $1,500 in cash or other assets. Although there is no indication in the memorandum that exemptions were discussed, Lowell Hunsaker, the local public aid administrator for the Department, testified that a public aid applicant's homestead real estate and income-producing property such as respondent's oil and gas interests were exempt from eligibility consideration at the time of the bank's inquiry. Hunsaker further testified that at this time a gravesite, casket, and headstone were not counted toward the $1,500 amount allowed for prepaid burial.

On February 22, 1984, petitioner filed a motion in circuit court requesting leave to sell respondent's residence. On May 2, 1984, petitioner made application for public aid on behalf of respondent. On June 14, 1984, the Department rejected the application. Although petitioner never appealed this ruling or sought clarification of the reasons behind it, Hunsaker testified that the application was rejected because she had more than $1,500 in cash and other assets. Specifically, respondent's residence, which the application valued at $5,000, was considered nonexempt homestead property because an intended sale of residential property expresses an intention on the part of the owner not to return to the residence, thereby rendering the homestead property nonexempt rather than exempt. Hunsaker further testified that absent an intention to sell residential property, the Department ascertains the intention of an individual to return to the residence by asking the individual. If the individual says "yes," then the Department rules that the homestead property is exempt for purposes of determining eligibility.

On March 28, 1985, petitioner submitted a second application for public aid which was approved and made retroactive to December 1984. However, respondent accumulated a nursing home payment arrearage of $3,893.55 during the time prior to her receiving benefits. In an effort to pay the arrearage, petitioner obtained the circuit court's permission to sell the residence privately for $2,500 and to sell the oil and gas interests at a public sale, which grossed $2,200. Part of these proceeds was applied to a $1,500 certificate of deposit for a burial plan which was liquidated shortly thereafter to pay the arrearage. Although the proceeds from these sales exceed the amount of the arrearage, the costs associated with the sale and guardianship expenses made the net amount applied to the arrearage less than the total arrearage. At the time of trial respondent still had an arrearage of $118.35.

On July 24, 1986, petitioner authorized the nursing home to take money from respondent's social security living-expense trust account which had been set aside for her personal needs (e.g., clothing, postage, haircuts, lotion, personal items). Although the nursing home was authorized to take all or part of the $25 per month which was to be paid into this trust account from respondent's monthly social security check, Karen Wendt, the nursing home administrator, testified that they had not applied this money to the arrearage for several months because respondent had no spending money. Ms. Wendt further testified that although respondent's trust account received the $25 per month from petitioner from June 1986 onward, the full monthly amount had not been received since November 1985.

Sometime prior to November 13, 1986, the respondent contacted Senior Citizens Legal Services because the money in her trust account was insufficient to meet her personal needs. Legal Services sent petitioner a letter dated November 13, 1986, which demanded (1) that the trust account be made current, and (2) that the petitioner pay off the remaining arrearage with funds not belonging to respondent. This letter further told petitioner that petitioner was responsible for the entire arrearage because its improper application for public aid on respondent's behalf resulted in the arrearage. On December 11, 1986, petitioner filed its resignation as respondent's guardian along with its final report on respondent's finances, which showed that respondent's estate had $374.63. This amount represented petitioner's personal contribution toward the amount the trust account was to be reimbursed ($256.28) and the amount still owed on the arrearage ($118.35). On December 15, 1986, respondent filed a motion for hearing on the report of final settlement which alleged as reasons therefore, inter alia, that "[petitioner] has spent [respondent's] resources below the exemption permitted by the Illinois Department of Public Aid."

After hearing evidence the circuit court found that petitioner had violated its fiduciary duty to respondent by failing to expeditiously obtain public aid, thereby dissipating respondent's estate. The court ordered petitioner to reimburse the respondent's estate the sum of $1,874.63 plus costs. The petitioner appeals, alleging (1) that the alleged breach of fiduciary duty was improperly pleaded and should have been dismissed, and (2) that the ...

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