Estate of McInerny, In re

• Decision Date: 26 June 1997
• Docket Number: No. 1-95-1461,1-95-1461
• Citation: 682 N.E.2d 284,224 Ill.Dec. 723,289 Ill.App.3d 589
• Parties: , 224 Ill.Dec. 723 In re the ESTATE OF Alice Lee McINERNY, a Disabled Person (Alicia M. Winkelman, Petitioner-Appellant, v. First National Bank of Evergreen Park, Respondent-Appellee.)
• Court: United States Appellate Court of Illinois

Page 284

682 N.E.2d 284

289 Ill.App.3d 589, 224 Ill.Dec. 723

In re the ESTATE OF Alice Lee McINERNY, a Disabled Person (Alicia M. Winkelman, Petitioner-Appellant, v First National Bank of Evergreen Park Respondent-Appellee.)

No. 1-95-1461.

Appellate Court of Illinois First District, Fourth Division.

June 26, 1997.

Nunc Pro Tunc March 27, 1997.

Deborah L. Helms, Willowbrook, for Petitioner-Appellant.

Buikema, Hiskes, Dillner, O'Donnell & Marovich, Ltd. (John C. Voorn, of counsel), Orland Park, for Respondent-Appellee.

Justice BURKE delivered the opinion of the court:

Petitioner Alicia Winkelman (Winkelman), guardian of Alice Lee McInerny (Alice), the beneficiary of a discretionary supplemental trust with a spendthrift provision, appeals from an order of the circuit court dismissing her petition for fees for herself as guardian and fees for the guardian's attorney. On appeal, Winkelman contends that the trial court erred in dismissing her petition because "guardianship fees are statutorily compensable and the nature of the Trust has been deviated." For the reasons set forth below, we affirm.

On August 16, 1993, John F. McInerny (John) executed a declaration of trust. The trust named John as trustee during his lifetime, and provided that after his death, trust funds were to be distributed as indicated in the trust instrument. Specifically, the trust provided that, upon John's death, certain lump sum payments were to be disbursed to various individuals. The trust also provided for the needs of John's daughter, Alice Lee McInerny, as follows:

"I. Commencing with my death and during the life of my daughter, ALICE LEE MC INERNEY [sic ], the trustee shall expend such amounts from income and, to the extent necessary, from principal, as the trustee in the trustee's sole discretion deems desirable for the comfort of ALICE LEE MC INERNEY [sic ], taking into consideration other income and cash resources known to the trustee to be available for such purposes, it being my intent that the trust property shall be used to provide ALICE LEE MC INERNEY [sic ] with supplemental care above and beyond the care she was receiving at my death and thereafter becomes eligible to receive by reason of both her disability and her personal lack of assets from any state, federal or private agency that provides services or benefits to disabled persons. Any income not so spent shall be accumulated and from time to time added to principal."

The trust further provided that at Alice's death, "any interest in the fund not effectively disposed of pursuant to the [trust] provisions [should] be distributed" to John's nephew, Robert Harney, and John's son, William, in equal portions. The trust also contained the following provision:

"The interests of beneficiaries in principal or income shall not be subject to the claims of any creditor, any spouse for alimony or support or other, or to legal process, and may not be voluntarily or involuntarily alienated or encumbered. This provision shall not limit the exercise of any power of appointment."

On December 11, 1993, John died, and respondent First National Bank of Evergreen Park was appointed the successor trustee of the trust (trustee).

On March 3, 1994, Winkelman instituted proceedings for her appointment as Alice's guardian. A report was filed by Dr. Joel Leff which stated that Alice was unable to care for herself because she had "longstanding psychiatric problems" and "suffer[ed] from schizoaffective disorder, manic." The report also stated that Alice had been diagnosed with diabetes mellitus and was unable to follow a diabetic diet. On March 31, the trial court appointed Winkelman as Alice's guardian.

On September 16, 1994, Winkelman filed a motion for withdrawal and substitution of attorney, substituting Deborah Helms as her attorney in place of the Bank's attorney, which the trial court subsequently granted. On the same day, Winkelman also filed a petition to approve her fees as guardian of Alice and fees for the guardian's attorney.

In her petition, Winkelman stated that Alice lived with her in Winkelman's home, and required supervised care at a minimum of 10 hours per day. Alice's estate was valued at zero, and Alice had no annual income. Since undertaking guardianship services, Winkelman had been reimbursed by the trustee for certain out-of-pocket expenses such as mileage, clothing, shoes, eyeglasses, personal items, meals, and other miscellaneous expenses which were provided by the guardian to Alice. The petition also stated that since her appointment as guardian on March 31, 1994, Winkelman had expended 987.5 hours caring for Alice, which included time expended by Winkelman for grocery shopping, taking Alice to lunch, and taking Alice on vacation. Winkelman requested that she be compensated for this time at a rate of $20 per hour. Winkelman also requested reimbursement for attorney fees incurred by her in the total amount of $3,310 and attorney costs in the amount of $59. Winkelman attached excerpts from the trust instrument, as well as a time and expense log of her activities while caring for Alice beginning on February 23, 1994, and ending on August 3, 1994. Winkelman also attached a detailed report of her attorney's time and fees for work performed relating to Alice and Winkelman's guardianship of Alice. The daily entries in Winkelman's attorney's time sheet are dated beginning January 12, 1994, and ending on an unspecified date in 1994 (the last dated entry is September 12, 1994, and one other entry follows with the description "Court appearance on Petition").

On December 21, 1994, the trustee filed a motion to dismiss Winkelman's petition. The trustee argued that it had no authority to pay the requested fees and should not be forced to pay them because the trust contained a spendthrift provision which protected the trust from creditors' claims, and that Winkelman, as Alice's guardian, was a creditor. Winkelman filed a memorandum in opposition to the motion to dismiss, in which she stated that during John's final illness, Alice was living with John in squalid conditions; after she discovered this fact, she began to care for Alice, taking her to an eye doctor, administering her diabetes and psychotropic medicines, monitoring her diet, and providing general care; despite her care, Alice continued to behave erratically and required constant attention; subsequent to her appointment as guardian, Alice had undergone surgery for skin cancer; according to Dr. Leff, Alice should be placed in a secure, structured living environment with supervision; and she was preparing to resign her guardianship, and the Public Guardian of Cook County had agreed to become Alice's guardian when she resigned. Winkelman further stated that applications in behalf of Alice for social security benefits, "SSI" benefits, and public aid were pending, social security benefits having initially been denied and subsequently appealed.

Winkelman's memorandum further stated that the trustee refused to pay the fees for Alice's placement in a residential care facility, and until Alice begins receiving government aid, she must remain in Winkelman's care. Throughout her tenure as Alice's guardian, the trustee made one payment to Winkelman for her guardianship services, and paid a monthly allowance for Alice's room and board, medical needs, and miscellaneous needs. Winkelman argued that she should be awarded guardian and attorney fees because the trustee intended that Alice be provided necessary support, and the trust was Alice's only source of income and support until such time as public aid became available. She further argued that the settlor's intent that Alice's support be supplemented by the trust could not be fulfilled because Alice was not receiving any primary support. Winkelman contended that the trustee did not have complete discretion in disbursing funds, and guardians were statutorily entitled to compensation from the ward's estate. Winkelman further argued that she was not a common creditor, but rather was a necessary caregiver entitled to compensation for her services, and because Alice (the ward) had no estate, Winkelman should be compensated from the trust.

On February 22, 1995, the trustee filed a memorandum in support of its motion to dismiss Winkelman's petition for guardian and attorney fees. In its memorandum, the trustee first argued that the trial court lacked jurisdiction and authority to compel payment to Winkelman because there was no estate from which to compensate the guardian as the trust was not a part of Alice's estate, and the trust instrument did not authorize such a disbursement. The trustee further argued that the trust's spendthrift provision prevented the trustee from making payments for guardian fees because the guardian was acting as a creditor. Lastly, the trustee argued that it could not pay Winkelman as Alice's guardian because the trust was a discretionary supplemental needs trust. The trustee contended that, under a supplemental needs trust, a state agency could not seek reimbursement from the trust and, as guardian, Winkelman should not be placed in a better position than a government agency seeking reimbursement for the same services.

On April 5, 1995, the trial court held a hearing on Winkelman's petition for fees and the trustee's motion to dismiss, and made the following finding:

"THE COURT: Okay. Thank you folks. I believe the motion to dismiss the petition should be allowed. This would certainly be different if this were inter-vivos trust, funds created from the ward--those are clearly subject to fees, no question about it. And even though this language were in there at the sole discretion of the trustee those would definitely be allowable. And I presume the trustee wouldn't have any problem with it, they would be approved. But in this discretionary trust it seems above and beyond. So that is my order."

The trial court then entered an order...