73 Ill. 2d 342, 383 N.E.2d 185 (1978)
In 1937 H. Franklin Johnson and Eleanor Johnson married and for more than 36 years enjoyed a happy marriage without children.1 The plaintiff accumulated an estate in excess of $2,000,000 and frequently gave his wife substantial gifts of money and securities that she managed following his advice.2 In 1966 Mrs. Johnson learned she had cancer and a life expectancy of less than five years.3
Prior to 1969 the couple maintained reciprocal wills leaving the survivor the entire estate.4 On February 5, 1969 they executed new wills under which Mrs. Johnson's relatives would receive 20 percent of the plaintiff's estate if she predeceased him.5 In the summer of 1970 Mrs. Johnson executed a new will.6 Again in February 1972 she executed another will and simultaneously created a revocable inter vivos trust into which she placed substantially all her assets with the will pouring any residue into the trust.7
She named herself trustee.8 She retained the entire income for life.9 She held the power to invade principal in her discretion.10 She held broad powers to invest and distribute the property.11 She held the power to alter amend or revoke the trust.12 She designated La Grange State Bank as successor trustee upon her death or disability.13 Upon her death the successor trustee was to distribute the assets to her mother, sister, niece and named charities.14 A limited provision existed for the plaintiff's emergency support medical and burial expenses after considering other sources and the needs of her mother and sister.15 Mrs. Johnson moved to Florida in 1972 where she died in September 1972.16 Her will was admitted to probate in Florida on October 19, 1973.17
During the Florida probate the plaintiff filed a three-count amended complaint in the circuit court of Cook County against the trustee and trust beneficiaries alleging the trust was illusory and fraudulent as to his marital rights and seeking a constructive trust for his statutory share.18 The trial court dismissed counts I and II.19 It allowed count III to stand.20 After a bench trial the court entered judgment for the defendants at the close of the plaintiff's case.21 The court also assessed attorney's fees and costs against the plaintiff under section 41 of the Civil Practice Act.22 The First District Appellate Court reversed both the judgment and the fee award.23
Myra Havey and Paul Havey had been married more than 35 years when she died in 1972 although they lived apart amid marital difficulties.24 In July 1972, knowing she was terminally ill, Mrs. Havey converted a savings account standing in her name to a joint account with her sister-in-law Frances B. Patton.25 She opened another joint savings account with Patton. She purchased a joint certificate of deposit.26 None of which Patton funded and from which Patton could withdraw only to pay Mrs. Havey's bills.27
Mrs. Havey executed a will naming Patton executor and dividing her estate between Patton and her husband with a paragraph stating the joint accounts were to pass by operation of law outside probate.28 Her probate estate totaled approximately $4,000, insufficient to cover last-illness, funeral and administration expenses.29 The joint accounts held $47,509.77.30 Paul Havey renounced his wife's will.31 He died during administration of the estate.32 His executor John F. Havey then filed an action for declaratory judgment alleging the joint accounts fraudulently deprived Paul Havey of his marital rights.33 The trial court entered judgment for defendant Patton and the Fourth District Appellate Court affirmed finding sufficient donative intent.34 The Supreme Court of Illinois consolidated the appeals noting that the Florida judgment did not bind Illinois courts on the validity of the inter vivos trust whose corpus remained in Illinois.35
Whether an inter vivos trust created by a spouse who retains substantial control over the assets defeats the surviving spouse's marital rights?36
An inter vivos transfer of property is valid as against the marital rights of the surviving spouse unless the transaction is tantamount to a fraud as manifested by the absence of donative intent to make a conveyance of a present interest in the property conveyed. Without such an intent the transfer would simply be a sham or merely a colorable or illusory transfer of legal title.37
No. H. Franklin Johnson and Eleanor Johnson married in 1937 and for more than 36 years enjoyed a happy marriage without children. The plaintiff accumulated an estate in excess of $2,000,000 and frequently gave his wife substantial gifts of money and securities that she managed following his advice. In 1966 Mrs. Johnson learned she had cancer and a life expectancy of less than five years.
Prior to 1969 the couple maintained reciprocal wills leaving the survivor the entire estate. On February 5, 1969 they executed new wills under which Mrs. Johnson's relatives would receive 20 percent of the plaintiff's estate if she predeceased him. In the summer of 1970 Mrs. Johnson executed a new will. Again in February 1972 she executed another will and simultaneously created a revocable inter vivos trust into which she placed substantially all her assets with the will pouring any residue into the trust.
She named herself trustee. She retained the entire income for life. She held the power to invade principal in her discretion. She held broad powers to invest and distribute the property. She held the power to alter amend or revoke the trust. She designated La Grange State Bank as successor trustee upon her death or disability. Upon her death the successor trustee was to distribute the assets to her mother, sister, niece and named charities. A limited provision existed for the plaintiff's emergency support medical and burial expenses after considering other sources and the needs of her mother and sister.
Mrs. Johnson moved to Florida in 1972 where she died in September 1972. Her will was admitted to probate in Florida on October 19, 1973. During the Florida probate the plaintiff filed a three-count amended complaint in the circuit court of Cook County against the trustee and trust beneficiaries alleging the trust was illusory and fraudulent as to his marital rights and seeking a constructive trust for his statutory share. The trial court dismissed counts I and II. It allowed count III to stand. After a bench trial the court entered judgment for the defendants at the close of the plaintiff's case. The court also assessed attorney's fees and costs against the plaintiff under section 41 of the Civil Practice Act. The First District Appellate Court reversed both the judgment and the fee award.
Applying the rule to these facts from Johnson v. La Grange State Bank, Mrs. Johnson formalized a declaration of trust with advice of counsel for the benefit of her relatives.38 The declaration of trust immediately created an equitable interest in the beneficiaries although the enjoyment of the interest was postponed until Mrs. Johnson's death and subject to her power of revocation.39 The power of control that she had as trustee was not an irresponsible power.40 She was charged with a fiduciary duty in respect to the beneficiaries' interest.41 Her management and administration of the assets in trust could only be exercised in accordance with the terms of the trust.42 There is no evidence that Mrs. Johnson made any withdrawals from the principal or otherwise exercised any of her reserved powers to deplete the trust assets.43 These facts tend to show that she intended to make a valid and effective transfer at the time her declaration of trust was executed.44
The inter vivos trust created by Mrs. Johnson does not defeat the surviving spouse's marital rights because the transfer was valid and not illusory or colorable.45
Whether joint bank accounts created by a spouse with the express purpose of depriving the other spouse of marital rights constitute valid inter vivos transfers?46
The creation of joint tenancy accounts is evidence of donative intent and is sufficient to establish ownership in the survivor upon the death of the original owner in absence of evidence to the contrary. The fact that the donor executes a valid gift for the express purpose of defeating the rights of the surviving spouse does not make the transfer vulnerable to attack by such spouse.47
Yes. Myra Havey and Paul Havey had been married more than 35 years when she died in 1972 although they lived apart amid marital difficulties. In July 1972, knowing she was terminally ill, Mrs. Havey converted a savings account standing in her name to a joint account with her sister-in-law Frances B. Patton. She opened another joint savings account with Patton. She purchased a joint certificate of deposit. None of which Patton funded and from which Patton could withdraw only to pay Mrs. Havey's bills.
Mrs. Havey executed a will naming Patton executor and dividing her estate between Patton and her husband with a paragraph stating the joint accounts were to pass by operation of law outside probate. Her probate estate totaled approximately $4,000, insufficient to cover last-illness, funeral and administration expenses. The joint accounts held $47,509.77. Paul Havey renounced his wife's will. He died during administration of the estate. His executor John F. Havey then filed an action for declaratory judgment alleging the joint accounts fraudulently deprived Paul Havey of his marital rights. The trial court entered judgment for defendant Patton and the Fourth District Appellate Court affirmed finding sufficient donative intent.
Applying the rule to these facts from Havey v. Patton, the joint account agreements were made pursuant to statute and by their very terms indicated the existence of a valid gift.48 Mrs. Havey was terminally ill at the time she created the accounts and intended for her sister-in-law rather than her husband from whom she had separated to receive the funds therein.49 The fact that Mrs. Havey contributed all the funds to the accounts and retained the right to withdraw them does not negate the existence of donative intent required to validate a gift.50 Under these circumstances it cannot be said that the accounts were made solely for the depositor's convenience.51 Mrs. Havey accomplished her goal of intending to create a valid present interest for her sister-in-law in the funds.52
The joint bank accounts created by Mrs. Havey constitute valid inter vivos transfers and do not fraudulently deprive the surviving spouse of marital rights.53
Whether a Florida probate judgment on a will precludes Illinois courts from determining the validity of an Illinois-created inter vivos trust against the surviving spouse's claims?54
The judgment of the Florida circuit court cannot be construed as impinging on the jurisdiction of the courts of this State to consider the validity of an inter vivos trust where the interests affected are wholly within this State.55 The trust was created in this State.56 The corpus has remained here.57 The plaintiff was domiciled here at the time of the decedent's death.58 The principal defendants are located in this State.59
No. The Supreme Court of Illinois consolidated the appeals noting that the Florida judgment did not bind Illinois courts on the validity of the inter vivos trust whose corpus remained in Illinois.60 Applying the rule to the facts the decision of the Florida court which has significance as a matter of probate law is entirely ancillary to the threshold question presented for consideration.61 Whether the assets of such an inter vivos trust may be properly insulated from the testator's probate estate insofar as her surviving spouse is concerned.62 Since an inter vivos trust is at issue in this case the plaintiff's apparent failure to renounce the will in Florida is not controlling on the power of the courts of this State to consider the trust's validity vis-a-vis the surviving spouse.63
A Florida probate judgment on a will does not preclude Illinois courts from determining the validity of an Illinois-created inter vivos trust against the surviving spouse's claims.64
Whether a plaintiff's allegations challenging an inter vivos trust as illusory and fraudulent were made without reasonable cause and not in good faith so as to support an award of attorney's fees under section 41 of the Civil Practice Act?65
Section 41 requires that the allegations be made without reasonable cause.66 They must be made not in good faith.67 The allegations must be found to be untrue.68 The burden is on the petitioner seeking to invoke section 41 to prove each of the three elements.69 It will be assumed that the attorneys in filing pleadings have due regard for their duties and responsibilities as officers of the court.70
No. Following the entry of judgment in favor of the defendants in the trial court the guardian ad litem and La Grange State Bank petitioned the court for allowance of fees under section 41 of the Civil Practice Act.71 The court allowed the motions and assessed fees against the plaintiff.72 Applying the rule to these facts the trial ended at the close of plaintiff's case.73 Thus petitioners offered no evidence during the trial.74
At the hearing on the petition for fees only evidence relating to the amount of fees was offered.75 The remainder of the hearing was made up of argument of the attorneys and references to the trial itself.76 Thus the petitioner has offered no proof in support of the three essentials of section 41.77 Although this evidence may have been insufficient to prove the allegations of the amended complaint it was not sufficient to support a finding that the allegations were made without reasonable cause or that they were made in bad faith.78
The attorneys for the plaintiff had originally filed a one-count complaint alleging that the trust was illusory and colorable and did not charge common law fraud.79 At the hearing on the motion to dismiss it appears that the court made some observation as to the type of allegations necessary to support a cause of action based on fraud.80 Thereafter the attorneys for the plaintiff filed a three-count amended complaint contending in addition to charges that the trust constituted an illusory or colorable transfer an additional count III alleging the elements of common law fraud.81 There is nothing in the record to indicate that the amended complaint was not filed as an effort made in good faith by plaintiff's counsel to attempt to state a cause of action to uphold their client's claim.82 It was not appropriate to assess fees and costs against plaintiff.83
The plaintiff's allegations challenging the inter vivos trust as illusory and fraudulent were not made without reasonable cause and not in good faith so an award of attorney's fees under section 41 of the Civil Practice Act is not supported.84