© 2016 Joan E. Emery
On January 1, 2015, Article IVa was added to the Illinois Probate Act by Public Act 98-1093. Article IVa is titled “Presumptively Void Transfers” and contains 7 sections. Article IVa includes the following sections: definitions; a presumption of void transfer; exceptions; effect on the common law; attorney’s fees and costs; a limit regarding the duty of financial institutions and others; and an applicability section. Two of the most important sections of Article IVa are the presumption of void transfer (section 5/4a-10) and the exceptions (section 5/4a-15). In order to fully understand P. A. 98-1093, it is helpful to review some of the legislative history of this Act.
What problems were intended to be prevented by the passage of P. A. 98-1093? It’s very clear that P. A. 98-1093 was intended to protect disabled adults from financial fraud or undue influence by caregivers. Senate Bill 1048 was introduced on January 24, 2013 and it was actually a “shell bill” or “placeholder bill” because it contained one line of text and that line of text did not change anything. Shell or placeholder bills are introduced in order to satisfy the filing deadlines for new bills and the actual text of the bill is added at a later date.
Senate Amendment 001 was introduced on April 4, 2014. This amendment presented the concept of presumptively void transfers and contained 89 lines of text. Senate Amendment 001 modified the Probate Act definition of disabled adult. The existing definition of adult with a disability (section 11a-2 of the Probate Act) includes an adult with mental deterioration, physical incapacity, mental illness, developmental disability, and other specified health issues who is not able to manage his or her person or estate. Senate Amendment 001 broadened the definition of disabled adult to include an adult with mental deterioration, physical incapacity, mental illness, or developmental disability who is not able to manage his or her person or estate or is not able to resist fraud or undue influence. Additionally, Senate Amendment 001 defined “caregiver” very broadly and excluded from that definition only the spouse, and not other family members. Senate Amendment 001 also included a subsection which would have allowed the attorney for the person making the property transfer to certify that he or she had determined that property transfer document was not the product of fraud, duress, or undue influence. Although the text of these three provisions was not included in P. A. 98-1093, these provisions provide some clear guidance as to the original intent of the legislation.
Senate Amendment 002 was introduced on May 6, 2014 and it fine-tuned the original draft of Article IVa. For example, the definition of caregiver was changed to exclude most family members, the attorney certification option was deleted, and the definition of disabled person was deleted.
The final adjustments to Senate Bill 1048 were made by House Amendment 001, which was introduced on May 12, 2014. House Amendment 001 (1) deleted a provision which would have provided broad protection to asset holders such as financial institutions, trust companies and trustees who transferred assets in accordance with a transfer instrument, (2) deleted a provision which prevented the caregiver from overcoming the rebuttable presumption that the transfer was the product of fraud, duress or undue influence solely based on the testimony of that caregiver, (3) added language stating that the provisions of Article IVa were in addition to any other principle or rule of law, and (4) provided that the rebuttable presumption of section 4a-10 did not impose an independent duty on any financial institution, trust company, trustee or similar entity regarding any transfer instrument.
The main focus of P. A. 98-1093 is clearly on caregivers who take financial advantage of disabled adults. Although the some of the original concepts contained in Senate Amendment 001 were later modified by Senate Amendment 002 and House Amendment 001, the fundamental concept of Senate Amendment 001 remained the same – the goal was to prevent caregivers from improperly receiving the assets of adults who were not able to protect themselves from fraud or undue influence by their caregivers.
How does P. A. 98-1093 seek to prevent caregivers from improperly receiving the assets of adults they care for? Next time I will discuss the specific provisions of P. A. 98-1093.
I am an attorney practicing in the Chicago area.