Probate II: A Tool to Avoid Probate Becomes Even More User Friendly

by David McCarthy

One of the many probate-avoidance devices available in Illinois has just been amended to make it easier for homeowners to transfer ownership of the home without going through probate.

 The Illinois Residential Real Property Transfer on Death Instrument Act (755 ILCS 27/1 et seq.) permits residential real estate to be conveyed outside probate by the use of a document that blends the features of a deed and the features of a will and is known as a transfer-on-death-instrument ("TODI").

The amendment, which became effective on August 1, 2014, made a transfer simpler and easier in at least two ways. It eliminated an inference that the beneficiary must accept the transfer during the owner's life time in order for the transfer to take effect. It also altered the nature of the so-called notice of death affidavit. The recording of that document is now required in order for the beneficiary to confirm his or her title to the property where before it was required to perfect title. Failure to record the document is still risky and could be fatal. If it is not recorded within 30 days of the death of the owner, the personal representative of the estate of the owner may take possession of the property, assert control over it, and gain rights to reimbursement and to lien the property; and if the document is not recorded within two years of the death of the owner, the TODI will become void and ineffective.

The amendment also imparted some protection to the so-called BFP -- bona fide purchaser for value: Persons, groups, and organizations who acquire an ownership or mortgage interest in the property for value and without notice before the recording of a lis pendens for an action to set aside or challenge a TODI, take free of the contest.

The amendment also removed the authority of agents acting under a durable power of attorney from creating or revoking a TODI.

The TODI is a handy item in the probate-avoidance tool box, alongside living trusts, the use of joint tenancies, and the small-estate affidavit. Picture this: A married couple raised their family in a house they owned as tenants by the entireties. One of them dies. That would terminate the tenancy, and the house would become part of the probate estate of the survivor unless it is put in a trust or sold. The survivor wants to stay in the house and does not have a trust. And but for the house, the probate estate would be modest enough to qualify for treatment under the small estate affidavit provisions of the Probate Act. That is not a far-fetched hypothetical. And the TODI is an almost perfect solution to the problem.

"Contested Probate" and Its Cure

    Probate is the court procedure for administering the estate of a deceased person. (The term is also used in reference to administration of the estates of persons who are minors or disabled or both.)

   It has a bad name in some quarters. That is owing, so near as we can tell, to the endless court proceeding in Bleak House by Charles Dickens, to a book from the 1960s, How to Avoid Probate by Norman Dacey, and to the public filing in California of an inventory of the property and assets of a celebrity (Natalie Wood? Bing Crosby?).

   The reality of probate in Illinois is that it can be annoying and expensive, or largely painless, depending on the extent to which it is a "contested probate." The potential for contest exists at almost every step in the process. 

   There is room for contest even at step number one, determining who will serve as the representative. In theory, this risk is greater in an intestate estate (when there is no will) than in a testate estate (when there is a will), because a will will name an executor, and usually a number of back-ups, whereas, when there is no will, those entitled to serve as representative and those entitled to nominate a representative are not named but only described generically by the Probate Act of 1975. (755 ILCS 5/1-1 et seq.)

   However, the presence of a will does not of itself eliminate the risk of contest over who will be in charge of administering an estate. Will contests are so common that the Probate Act devotes a whole section to the subject (Article VIII, titled "Will Contests"). A "will contest" can materialize over the question whether a will that has been admitted to probate is invalid for one reason or another (e.g., incompetence, undue influence, fraud), or when two or more wills surface and a competition ensues to determine which is the true "last will."

   Potential for contest exists in the next step of the process, too, collecting the property of the estate and paying the claims. Any doubt of that is dispelled by the existence of sections of the Probate Act that spell out the ways and means of locating and identifying property and assets of the estate; resolving disputes over ownership of that property; submitting and responding to claims against the estate; and resolving disputes as to whether a claim should be allowed or disallowed in whole or in part. (See Probate Act of 1975 at Article XVI, titled "Recovery of Property and Discovery of Information," and at Article XVIII, titled "Claims Against Estates").

   The representative of an estate must, by law, render an accounting from time to time of the receipts and disbursements. This duty to account exists without regard to whether there is or is not a will and without regard to whether there is an "independent administration" or a "supervised administration." There is room for contest as to the accuracy of the accounting and the legitimacy of the disbursements. Representatives and their attorneys are entitled to compensation (See Probate Act at Article XXVII). That, too, holds the potential for contest.

   Oliver Wendell Holmes Jr. wrote that the life of the law is not logic but experience. The existence of legislation implies a problem. The Probate Act is peppered with provisions that anticipate contest and strive to remove the risk of it, reduce the risk of it, and resolve it in a sensible, orderly way.

   Readers of a certain age may remember that scene in the movie Zorba the Greek, where the villagers ransack the house of Dame Hortense right after her death. Probate in Illinois is a bit more orderly, and steps can be taken to simplify and smooth the process. 

   Here is our "top three" list. One, avoid probate altogether (or at least limit the scope of it) by setting up an inter vivos trust (also known as a "living trust") and taking care to see that all pertinent property is placed in the trust (including especially property that is acquired after the trust has been established). Two, make a will in order to deal with the eventuality that some property will end up as "probate property" despite diligent efforts to put it in the trust. If probate is inevitable, and it often is, a will can make it a simpler, more agreeable experience. Three, make a "pour-over will," that is, a will which names the trust as the beneficiary of the "residuary clause" (the part of a will that disposes of all property not the subject of specific gifts).

   We have helped others with "contested probate." We can help you. Call 630-219-3068. 

Overtime Exemptions and Salary

     A salaried position is not ipso facto exempt from the time-and-a-half overtime pay rule imposed by section 207 of the Fair Labor Standards Act of 1938 (29 U.S.C. 201 et. seq. at 207).

     The list of exemptions from the overtime rule appears in section 213. At the top of the list are those employed "in a bona fide executive, administrative or professional capacity." (29 U.S.C. 213(a)(1)).

     Although such positions often are salaried, the decisive considerations are whether the job entails hiring, firing, and supervising others (executive); or exercising judgment and discretion as to "matters of significance" (administrative); or advanced knowledge of science or learning gained through a prolonged course of specialized instruction (professional). (29 C.F.R. 541.100, 541.200, 541.300).

Fee Shifting: Charging the Adversary for One's Own Legal Fees

 by David McCarthy

The most frequently asked question of all is whether one's legal expenses (and attorney's fees in particular) can be charged to an opponent. In general, the answer is no, each party bears its own litigation fees and costs. This is called the American Rule. 

There are exceptions when fee-shifting is called for by a relevant contract (e.g., an apartment lease) or a statute (e.g., the Illinois Wage Payment and Collection Act). (Typically, the client will pay its own attorney and then, if the client is also the "prevailing party," invoke the contract or the statute in support of an application for an order obligating the opponent for the fees.)

   When preparing or vetting contracts for clients, we put a lot of energy and attention on fee-shifting clauses. And we get push back from the other side all the time. A lot of advantage and disadvantage rides on the existence and content of a fee-shifting clause in a contract.

   As for statutes that permit or require fee shifting, they are as a rule available only to plaintiffs as applied even though many of them are neutral on their face (employing the term "prevailing party"). Make no mistake: They are game changers that alter the balance of power in favor of plaintiffs. We know it, and we have leveraged them to the great advantage of our clients.

   The rough equivalent for defendants is a motion for sanctions for frivolous pleadings on the part of a plaintiff. They are rarer than cases with fee-shifting potential because the conduct necessary to support an award of sanctions must be beyond the pale. (We have made three motions for sanctions, defended one, and have not lost yet.)

 

Hostile Work Environment

by David McCarthy                     

Another interesting misconception about hostile environment and retaliation came to our attention recently.  

An individual we will name John Doe had been employed for a relatively short time, about six months, but long enough to know that he and the owner of the business did not get along. What brought it to a head was a disagreement over a "prioritizing" of tasks.  

Mr. Doe was filling an order for a customer who was due to arrive later in the day. The owner asked him to put that work down and turn his attention to a different task -- a task that was perfectly legal. Mr. Doe did not do what the owner asked him to do. He opposed the owner and asserted that the task he was working on should receive priority.  

The owner threatened to strike Mr. Doe if his opposition continued, and Mr. Doe was suspended from work. He then contemplated the filing of criminal charges, and supposed that doing so would position him to be a viable retaliation plaintiff if he got fired. 

In our judgment, the State had a pretty good case against the owner on a misdemeanor charge, but that was not going to make Mr. Doe a viable retaliation plaintiff. Every antagonistic relationship between employees and superiors, and there are a lot of them, does not provide the ingredients for a "hostile environment" case.  

To get to that place, the "hostility" has to relate to a form of discrimination that is prohibited in the workplace, e.g., lewd jokes, racist remarks, mocking older workers. 

Something more than a mere clash of personalities is required, though a clash of personalities can certainly be distracting and stressful and unpleasant. Mr. Doe did not fall into any of the classes who are protected by workplace discrimination laws, and the friction between him and the owner, though plenty hostile, did not rise to the level of a "hostile environment" case.  

And in our judgment, the filing of a complaint with the police did not qualify as a predicate act that would set Mr. Doe up to be a viable retaliation plaintiff were he to lose his job over the dispute with the owner because it did not constitute the opposing of an unlawful employment practice. (Ironically, if Mr. Doe were to lose his job and apply for unemployment benefits, an objection by the employer on the grounds of insubordination would have a fair chance of being sustained.)

Family Medical Leave Act and Job Security

by David McCarthy

It is easy to suppose that an employee on leave under the Family and Medical Leave Act ("FMLA") enjoys a special "halo" of job security and protection that co-workers who are on the job do not. After all, businesses subject to FMLA must allow eligible workers up to 12 weeks of unpaid leave each year plus reinstatement to their old position. That invites an inference that an employee on leave has privileges and protections that an employee at work does not.

But it is not so. The work-at-will rule continues to apply to the employment relationship and does not yield to leave-taking.

Suppose the employee on leave had worked the night shift, and the employer puts an end to the night shift. Does that mean that only those who were actually working the night shift are out of a job while the one who was on leave is not?

Answer: no.

If the position would have been eliminated while the employee was on active duty, so to speak, the fact that the employee is on leave does not preclude elimination of the position or obligate the employer to hold the position open for the employee.

FMLA is codified at 29 U.S.C. 2601 et. seq. It generally applies to businesses with 50 employees or more. An eligible employee is one who has worked for the employer for at least 12 months (though that need not be 12 months in a row) and who has worked at least 1,250 hours in the 12 months immediately prior to the start of leave. That employee is entitled to reinstatement to his/her old position or to a position that is similar in terms of pay, benefits, etc.)