ARDC Charges Lawyer With Preparing Estate Planning Documents That Gave the Lawyer A Substantial Gift

BEFORE THE HEARING BOARD:

‘via Blog this’

Because the alleged misconduct occurred prior to 2010, this case is brought pursuant to the 1990 Illinois Rules of Professional Conduct. Those rules are similar to the current rules. Rule 1.8(c) prohibits a lawyer from preparing an instrument that provides the lawyer with a substantial gift. The rule was designed to protect the public from overreaching lawyers. In recent years the rule has been used to attack elder abuse situations. The relevant allegations are these:

1. In or around the spring of 2006, Elizabeth S. Hewitt (“Ms. Hewitt”) retained Respondent, for the purpose of updating Ms. Hewitt’s 1996 Revocable Trust (the “1996 Trust”). Ms. Hewitt’s financial advisor, Jack Dunk (“Mr. Dunk”), had introduced Respondent to Ms. Hewitt after Ms. Hewitt advised him that she wanted to update her 1996 Trust. At the time of the introduction, Ms. Hewitt, a widow with no children, was in her 90s and in failing health.

2. Pursuant to the terms of the 1996 Trust, other than her home and her button collection, which were left to a church and a friend, respectively, all of the assets of the 1996 trust, both real and personal, were to be distributed by designated shares to six personal friends and fourteen established not-for profit organizations.

3. Respondent prepared the Restatement of the Elizabeth S. Hewitt Revocable Trust (the “2006 Trust”), after meeting with Ms. Hewitt and Mr. Dunk and reviewing and discussing the changes Ms. Hewitt had noted on a copy of the 1996 Trust. Ms. Hewitt signed the 2006 Trust on April 12, 2006.

4. The terms of the 2006 Trust provided that Respondent was to become the successor trustee, but not a beneficiary. As successor trustee, Respondent was to distribute outright Ms. Hewitt’s home and button collection, by offering them for sale to a church and two friends, with the proceeds added to the assets of the trust estate and the assets distributed, by designated shares, to six personal friends and thirteen established not-for-profit organizations.

5. At the time that Respondent prepared the 2006 Trust, she was unaware of the extent of the assets of the trust which were largely under the supervision of Mr. Dunk, who was employed by Ameriprise. Over the next few years, however, Respondent befriended Ms. Hewitt, driving her to appointments and generally spending time with Ms. Hewitt. In so doing, Respondent came to know that Ms. Hewitt had assets exceeding one million dollars. These included Ms. Hewitt’s home and personal belongings, including her valuable button collection, as well as her brokerage accounts, checking and savings accounts.

6. Respondent continued to act as Ms. Hewitt’s attorney, regularly meeting with her following the preparation of the 2006 Trust. Ms. Hewitt told Respondent that she had a will that she was unable to locate and asked Respondent to prepare a new will. Respondent agreed to prepare a new will and, in 2008, Respondent prepared a pour-over will for Ms. Hewitt, naming the successor trustee of the 2006 Trust (Respondent), as executor of the 2008 will.

7. In 2009, when Ms. Hewitt was 94 years old, with the encouragement of Respondent and some friends that Ms. Hewitt knew from her years as a collector of buttons, Ms. Hewitt decided to revise her 2006 Trust to provide, inter alia, for the establishment of a button museum and to make changes to the recipients of the assets of the trust estate. Respondent agreed to prepare a revised trust.

8. Respondent prepared the Second Amendment to the Restatement of the Elizabeth S. Hewitt Revocable Trust (the “2009 Trust”), which Ms. Hewitt signed on April 13, 2009. Respondent remained the successor trustee under the terms of the 2009 Trust. The terms of the 2009 Trust, changed the distribution of assets from shares to specific bequests to three individuals, in the total amount of $75,000, and four charitable, religious and community organizations in the total amount of $285,000. The 2009 Trust eliminated distributions to eleven other individuals and charitable institutions that had been named in the 2006 Trust. The 2009 Trust provided for a distribution of $100,000 to Mr. Dunk, which he later declined. The 2009 Trust also provided that Respondent was to become a 1/3 beneficiary of the remainder of approximately $1,000,000 (the “Residuary”), in her individual capacity, and 1/3 beneficiary as the director of a “button museum” that was to be established. The final 1/3 of the Residuary was to be distributed to Ms. Hewitt’s neighbor, Gary Campbell. Respondent never advised Mr. Dunk of the changes made to the 2009 Trust.

9. At no time did Respondent advise Ms. Hewitt that she was prohibited from preparing a testamentary instrument for her that gave Respondent a substantial gift, nor did she advise Ms. Hewitt that by naming herself as a beneficiary, she was affecting the likelihood of a contest of the validity of the estate documents.

10. At all times described in this complaint, the Illinois Notary Act, 5 ILCS Sec. 312/6-104(b), prohibited a notary public from acknowledging any instrument in which the notary’s name appears as a party to the transaction.

11. On April 13, 2009, Ms. Hewitt signed the 2009 Trust. One of the two witnesses to the execution of the 2009 Trust was Mary Collin, Respondent’s close friend, who traveled from Springfield, Illinois to Gurnee, Illinois to witness the signing. The other witness was Kim Stewart, the girlfriend of Respondent’s son. Respondent notarized the 2009 Trust.

12. On or before April 28, 2009, Respondent prepared two documents which allowed her to assume the role of successor trustee of the 2009 Trust as of that date. Those documents were a Relinquishment/Appointment of Successor Trustee, signed by Ms. Hewitt on April 28, 2009 and an Acceptance of Appointment of Successor Trustee, signed by Respondent on April 28, 2009.

13. In November of 2010, when Ms. Hewitt was 95, was in hospice care and was suffering from internal bleeding that required frequent transfusions, Respondent arranged for a road trip to New York with Ms. Hewitt to visit one of the oldest button shops in the country. On November 25, 2010, inside a hotel room in Ohio, on the way back from New York, Ms. Hewitt died in the presence of Respondent.

14. Following Ms. Hewitt’s death, Respondent gathered the assets of the estate, valued at 1.4 million dollars. Respondent issued checks to the specific beneficiaries named in the 2009 Trust. In addition, Respondent distributed 2/3 of the approximately one million dollars of the Residuary to herself and 1/3 to Gary Campbell. The distribution of the Residuary included over $400,000 that Respondent spent to establish, fund and run “The Button Room” museum, including the purchase of property that was deeded to Studer-Hewitt, LLC, a limited liability company controlled by Respondent.

15. In 2012, certain beneficiaries of the 2006 Trust brought an action in Lake County, Illinois to rescind or set aside the 2009 Trust based upon theories of undue influence and breach of fiduciary duty, and ordering Respondent to file an accounting and repay all money spent or lost as a result of the 2009 Trust and further seeking to have Ms Hewitt’s estate be divided and distributed in accordance with the 2006 Trust. (Neiman and McGovern, v. Leslie Klocek, et al. 12 P 978, Circuit Court of the Nineteenth Judicial Circuit, Lake County, Illinois). That lawsuit was settled on February 1, 2016 and the lawsuit was dismissed on February 11, 2016.

16. Pursuant to the terms of the settlement, Respondent was removed as trustee of the Elizabeth S. Hewitt Revocable Trust, the 2009 Trust was set aside and rescinded, and the Elizabeth S. Hewitt Revocable Trust was to be administered in accordance with the 2006 Trust, except that no further distribution was to be made to Gary Campbell. The property purchased by Studer- Hewitt was to be conveyed to the new trustee of the Elizabeth S. Hewitt Revocable Trust and Respondent was to turn over specific personal property to the new trustee, including Ms. Hewitt’s diamond ring and jewelry, and all buttons from Ms. Hewitt’s residence and the Button Museum.

The alleged violations were uncovered when Ms. Hewitt’s relatives filed a lawsuit to set aside the 2009 Trust and to recover the amounts distributed to Ms. Hewitt.

Edward X. Clinton, Jr.

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