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Reversing an appeals court, the Illinois Supreme Court has ruled that assets in a trust may be withheld from grandchildren who married outside the Jewish faith, as the original trust document required. However, the ruling does not address the issue of whether the provision of the original trust disinheriting someone if they married a non-Jew is invalid because it is against public policy.
As ElderLawAnswers previously reported, Max Feinberg established a trust that contained a clause disinheriting any of his grandchildren if they married outside the Jewish faith. Despite this clause, four of his five grandchildren chose to marry spouses who were not Jewish. After both Max and his wife, Erla, had died, one of the grandchildren sued her father and an aunt and uncle -- the co-executors of Max and Erla's estates -- claiming that the three had conspired to evade estate taxes and had misappropriated millions of dollars from the estates. The co-executors countered that the grandchild had no legal standing to sue them because she was no longer a beneficiary of the estate, having married a non-Jew.
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A trial court ruled that the clause disinheriting the grandchildren was invalid because it was against public policy by placing a significant limitation on the grandchildren's freedom to marry. The Feinbergs' children appealed, arguing that many jurisdictions recognize such clauses and that Max had the right to determine the conditions for the distribution of his and his wife's estates.
In June 2008, the Appellate Court of Illinois upheld the trial court's ruling, agreeing that the provisions are against public policy. The Feinberg children appealed the ruling to the state's highest court.
In reversing the lower courts, the Illinois Supreme Court based its decision on the fact that Erla had a "power of appointment" that allowed her to reassign which descendants could benefit from the trust. She exercised this power, changing the distributions from the trust but still disinheriting the grandchildren who had married outside the Jewish faith. The court ruled that she had the power to do this. But in basing its ruling on Erla's powers, the court did not address the broader question of whether the restrictions in Max's estate plan run counter to public policy. In other words, if Erla had not exercised her power of appointment, the court might well have reached a difference conclusion regarding the validity of the trust's requirements.
To read the Illinois Supreme Court's decision in In re Estate of Feinberg (Ill., No. 106982, Sept. 24, 2009), click here.
For an interesting analysis of the case in the South Florida Estate Planning Law blog, click here.
Medicaid Rules, etc