The newsletter of the ISBA’s Section on Real Estate Law
The January 2018 issue of the ISBA Real Estate Newsletter contains a thoughtful article by Paul Peterson, “Presumptively Void Transfers to Caregivers – A Bit of Mercy Please?” Mr. Peterson recommends that the Presumptively Void Transfers to Caregivers Act (“PVTA”)1 be amended to give judges discretion to mitigate the effect of its application. This article expresses an opposing view defending the PVTA as passed by the Illinois Legislature.
There is a Consensus that Caregiver Abuse is a Real Problem
The PVTA amended Article IV of the Illinois Probate Act, making presumptively void certain instruments executed after January 1, 2015, that transfer property to caregivers in excess of $20,000.2 Blood relatives often provide care during a senior’s lifetime for which they are not compensated and frequently are acknowledged with a special bequest in the decedent’s Will. The PVTA recognizes these contributions of blood relatives by excluding “family members” from the definition of a “caregiver.”3 However, there is consensus that millions of seniors lose billions of dollars each year due to abuse and financial exploitation by non-relative caregivers.4
The Law Has Long Recognized the PVTA’s Solution of a Rebuttable Presumption
The PVTA is unfairly criticized for presuming that the suspected caregiver is guilty until proven innocent. The PVTA does no more—but no less—than create a “rebuttable presumption” that the transfer instrument is void. The presumption is rebutted by evidence that the caregiver would have received at least the same amount, or by evidence that there was no fraud irrespective of the amount the caregiver receives.5 For over a century, courts have applied a similar evidentiary presumption to attorneys who benefit under documents they prepared for their clients.6 The PVTA simply extends this evidentiary presumption to caregivers. Typically, the suspect transfer document changes a prior estate plan or other expected distribution of the decedent’s assets quite dramatically away from the decedent’s blood relatives or a charity, and to an unrelated caregiver who became involved with the decedent shortly before he or she passed away.
Evidentiary presumptions are common generally and a part of will contests in particular. They are not a “presumption of guilt,” but rather a considered public policy decision by courts or the legislature to require that the party with the most personal knowledge of the facts come forward with evidence. The PVTA applies only to a “legal document intended to effectuate a transfer effective on or after the transferor’s death ….”7 Consequently, after the decedent has passed, it is likely that a caregiver who stands to benefit from the transfer document will be the person with the most knowledge as to the circumstances surrounding the execution of the document and his or her relationship with the decedent. The party challenging the validity of the transfer document, usually a disinherited legatee or a displaced heir at law, often cannot present competent evidence to prove the involuntary nature of the document’s execution. By creating a presumption of invalidity, the Illinois Legislature quite rightly understood that the caregiver is in the best position to tell a fact-finder what happened.
For the PVTA presumption to apply, the party challenging the document must allege or prove these basic facts: (i) the document is a transfer document; (ii) the other party is a caregiver; and (iii) the caregiver will receive at least $20,000. The PVTA does not create a conclusive presumption of the caregiver’s guilt. The PVTA’s rebuttable presumption is not evidence, but to avoid summary judgment the caregiver must come forward with some evidence that he or she would have received the inheritance anyway or there was no fraud. If the caregiver meets the burden of persuasion by the requisite quantum of proof, the presumption metaphorically “bursts” and the burden to prove fraud or undue influence by a preponderance of the evidence reverts to the party challenging the document. This is an equitable distribution of the evidentiary burden in a typical caregiver case.
The effect of a rebuttable presumption in the context of a will contest was clearly explained by the Illinois Supreme Court in Franciscan Sisters Health Care Corp. v. Dean, 95 Ill. 2d 452, 460-461, 448 N.E.2d 872, 875-876 (1983).8
The determination of whether a jury should be instructed as to the existence of a presumption must be made by the trial court …. With regard to the procedural effect of presumption, most jurisdictions in this county follow the rule that a rebuttable presumption may create a prima facie case as to the particular issue in question and thus has the practical effect of requiring the party against whom it operates to come forward with evidence to meet the presumption. However, once evidence opposing the presumption comes into the case, the presumption ceases to operate, and the issue is determined on the basis of the evidence adduced at trial as if no presumption had ever existed. [Citation omitted.] The burden of proof thus does not shift but remains with the party who initially had the benefit of the presumption. … “[I]t would naturally follow that no mention of the presumption would be made in the instructions to the jury, and issue is submitted without any knowledge on the part of the jury of the special legal significance of the basic fact from which the presumption originally arose.” [Citation omitted.]
The PVTA’s Remedy Achieves a Just Solution with Mercy
A recent actual case litigated by this author shows that the PVTA not only reached the result intended by the Illinois Legislature, but a just result would not have been achieved if its effects were mitigated.
A survivor of the Holocaust (call him “David”) sought refuge in Israel before coming to this country and becoming a citizen in the 1940s. David operated a successful business in upstate New York and at 95 years of age still owned assets of significant value. David’s wife of many years had predeceased him, but two adult children with whom he was not particularly close survived him. Several wills executed before 2012 left each child a modest specific bequest and named two charities identified with the state of Israel as residuary beneficiaries. After 2012, David was involved in several bizarre incidents where the local police were called and two estate practitioners, including David’s long-time attorney, refused to draft new wills because they questioned David’s competence. In 2015, David’s friends whom he knew from childhood asked their son (call him “Jonathan”) who lived in Illinois to assist David with managing his daily affairs. Jonathan traveled to New York, contacted a third lawyer, and personally paid the lawyer to have executed new powers of attorney for health care and finances, and a new will (the “2015 will”) that named Jonathan as executor and left all of David’s assets to Jonathan. Jonathan closed all of David’s existing financial accounts and transferred the assets to accounts over which Jonathan had exclusive authority. David was then moved to Illinois without notice to his family or friends. Jonathan looked after David in an independent living facility and paid his bills until David passed away six months later in Illinois. Even after some questionable transactions while David was still alive, his estate consisted of several hundreds of thousands of dollars that would all go to Jonathan under the 2015 will. Jonathan filed the 2015 will for probate in Illinois and was appointed executor, but he did not contact David’s children when he died or notify the specific beneficiaries under the 2012 will or the charity residuary beneficiaries. The executor nominated under David’s 2012 will notified the charities and the charities commenced an action to challenge the 2015 will.
Due to application of the PVTA presumption of invalidity, the charities’ complaint survived a motion to dismiss. To avoid summary judgment, the burden shifted to Jonathan to produce some evidence that there was no fraud or undue influence. Of course, Jonathan could not prove that he would have received the entire estate even before the 2015 will was executed. The effect of the PVTA presumption was to facilitate a just settlement that secured the lion’s share of David’s estate for his two children and the charities, and reduced the cost of the litigation to David’s estate. Without the PVTA’s presumption, this result would not have been achieved because of the insurmountable difficulties involved with the charities presenting competent evidence of fraud or undue influence.
If the effect of the PVTA is mitigated by giving judges more discretion as some advocate, the uncertainty injected into the process would eliminate the settlement leverage created by the PVTA. There is sufficient judicial discretion already as to whether the caregiver has rebutted the presumption and whether or how a jury should be instructed as to the presumption. Similarly, if the PVTA’s remedy is changed to invalidate just the bequest to the caregiver, the intent of the legislature would not be realized. It is not uncommon for the new transfer document to leave everything to the perpetrator of financial abuse. As the above case demonstrates, if only the bequest to Jonathan was invalidated, the charities would not have inherited anything and David’s longstanding intent would not have been realized.9
This author also opposes the view that the PVTA be amended to make its effect the same as under the elder abuse provisions in Article II of the Probate Act.10 Aside from the obvious criticism that it is unnecessary to have two statutes that achieve the same result, there are other problems with this proposal. For the remedies in Article II to apply, there must be a criminal conviction or civil finding of misappropriation. Although this author has litigated such a case,11 such a conviction or finding is rare, indeed. Accordingly, the financial elder abuse provisions, while necessary in extreme circumstances, will not apply to most caregiver situations; therefore, they do not adequately address the scope of the problem affecting millions of seniors.
Does the PVTA’s Presumption Apply if One Becomes a Caregiver Only After Execution of the Transfer Document?
There may be an ambiguity in the PVTA that should be resolved through judicial interpretation and application. In the above case, arguably the facts showed that Jonathan did not become David’s caregiver until after the 2015 will was executed. Jonathan argued that the PVTA did not apply because a person must be a caregiver before the challenged transfer document was executed. There is no available legislative history on the PVTA and there are as yet no published court decisions interpreting the PVTA. In this author’s opinion, the PVTA should not be interpreted by courts to apply only when the facts show care was given before the transfer instrument was executed. As enacted, the PVTA applies to anyone who is a caregiver at any time—before, at the time of, or after the challenged transfer document was executed. The plain language of the PVTA states that it applies when: (i) the transferee “is” a caregiver, and (ii) the transferee will receive at least $20,000. The PVTA is silent as to when in relation to execution of the transfer document the person became a caregiver. It would be unfortunate if courts interpreted the PVTA to require proof that a person was a caregiver before the transfer document was executed. Inducing a senior to execute a new will from which the abuser benefits by promising that he or she will care for the senior should be covered by the PVTA presumption; otherwise, the perpetrator could use the suspect document itself as evidence that the abuser would have received the same before he became a caregiver. If the caregiver ceased giving care long before the transfer document was executed, it will be easy for the caregiver to rebut the PVTA presumption by showing there was no fraud in the execution. If the caregiver began giving care long after the transfer document was executed, it will be easy for the caregiver to rebut the presumption by showing that he or she would have received the same amount.
Illinois’ version of a caregiver statute is unique.12 As a practical litigation tool, the PVTA strikes the right balance between protecting seniors and permitting caregivers to receive bequests. With thoughtful application by Illinois courts, it will achieve the purpose intended by the Illinois Legislature without amendment.
Mr. Berg is a partner with the law firm of Ulmer & Berne LLP. © All rights reserved by Kenneth F. Berg, March 2018.
1. 755 ILCS 5/4a-5 et seq.
2. 755 ILCS 5/4a-10(a). “In any civil action in which a transfer instrument is being challenged, there is a rebuttable presumption … that the transfer instrument is void if the transferee is a caregiver and the fair market value of the transferred property exceeds $20,000.”
3. 755 ILCS 5/4a-5(1) defines “caregiver” as “a person who voluntarily, or in exchange for compensation, has assumed responsibility for all or a portion of the care of another person who needs assistance with activities of daily living. ‘Caregiver’ includes a caregiver’s spouse, cohabitant, child, or employee. ‘Caregiver’ does not include a family member of the person receiving assistance.”
4. Paul Peterson, Presumptively Void Transfers to Caregivers – A Bit of Mercy Please?, ISBA Real Property Newsletter, Jan. 2018, at 1.
5. 755 ILCS 5/4a-15. “The rebuttable presumption … can be overcome if the transferee proves to the court either: (1) by a preponderance of evidence that the transferee’s share under the transfer instrument is not greater than the share the transferee was entitled to under the transferor’s transfer instrument in effect prior to the transferee becoming a caregiver, or (2) by clear and convincing evidence that the transfer was not the product of fraud, duress, or undue influence.”
6. See, e.g., Wunderlich v. Buerger, 287 Ill. 440, 122 N.E. 827 (1919). (discussing presumption of undue influence where attorney drafted will for client that left a substantial bequest to the attorney).
7. 755 ILCS 5/4a-5(3).
8. The Illinois Supreme Court quotes Diederich v. Walters, 65 Ill. 2d 95, 100-03, 357 N.E.2d 1128 (1976).
9. 755 ILCS 5/2-1(b).
10. 755 ILCS 5/2-6.2 and 5/2-6.6.
11. In that case a court found that a brother diverted $1 million from his mother’s estate that was intended to be deposited in a special needs trust for the benefit of his mentally disabled sister by depositing the funds in a trust for the brother’s benefit and the benefit of his children. The court found that the brother committed civil theft by diverting the funds. The Article II provisions would not achieve the donor mother’s intent. The result would be that the mother’s estate would be distributed as if the brother had predeceased the mother and the brother’s share would go to his children instead of going to the special needs trust for the disabled sister.
12. Robert Barton et al., Gifts to Caretakers: Act of Gratitude or Disguised Malfeasance? New Statutes May Decide for Us, Probate and Property Magazine, May/June 2015.