In January of 1968, Patrick Piton wrote a will which left his estate to his parents provided that they survive him, then to his siblings provided that they survive him, and then to his niece and nephews in equal shares. During his lifetime, Patrick named his siblings, Dorothy and V. Lawrence, each as 50% beneficiaries of his Vanguard retirement accounts. He named V. Lawrence as agent on a healthcare power of attorney, with
Dorothy as successor agent. When V. Lawrence died, Dorothy took over as Patrick’s healthcare agent. Patrick later signed a power of attorney for property, giving her full agency over his Vanguard accounts, which authorized her to change the beneficiaries of the accounts. In 2020, Dorothy removed her then-deceased brother V. Lawrence as a beneficiary on the Vanguard accounts and instead designated herself as the sole beneficiary with her children as contingent beneficiaries.
After Patrick passed away, the children of V. Lawrence filed a petition alleging that Dorothy’s removal of V. Lawrence as beneficiary constituted a breach of fiduciary duty and tortious interference with their inheritance expectancy. Dorothy filed a motion to dismiss based on lack of standing. The niece and nephews appealed, arguing that they are successors in interest under the Section 2-7 of the Illinois Power of Attorney Act (“Act”) and subsequently have the requisite standing to bring the breach of fiduciary duty claim. 755 ILCS 45/2-7(f).
Because Patrick appointed Dorothy as his agent over his Vanguard accounts, the Court explains, Dorothy owed him a fiduciary duty to act in good faith for his benefit. The Court looks to 755 ILCS 45/2-7(f) and clarifies that only Patrick or his “successors in interest” could bring an action for breach of fiduciary duty. The key issue in this case then turned on the question of whether the petitioners, Patrick’s niece and nephews, should be considered successors in interest.
Interested Persons or Successors in Interest?
The petitioners contended that they are successors in interest and consequently have standing to bring their claim because they should have been named as beneficiaries if Dorothy had done what they allege Patrick instructed her to do. The Court held that, because the children of V. Lawerence were not named beneficiaries on the accounts, they were not “successors in interest” and therefore lacked standing.
The Court also rejected the argument (raised by a dissenting judge) that the nieces and nephews had standing as “interested persons” under section 2-10 of the Act. 755 ILCS 45/2-10(f). Section 2-10 of the Act allows an “interested person” to file a petition on behalf of a principal who has appointed an agent under a power of attorney while the principal is still alive. The term “interested person” is defined under section 2-10 to include: (1) the principal or the agent; (2) a guardian of the person, guardian of the estate, or other fiduciary charged with management of the principal’s property; (3) the principal’s spouse, parent, or descendant; (4) a person who would be a presumptive heir-at-law of the principal; (5) a person named as a beneficiary to receive any property, benefit, or contractual right upon the principal’s death, or as a beneficiary of a trust created by or for the principal; (6) certain government agencies; and (7) the principal’s caregiver or another person who demonstrates sufficient interest in the principal’s welfare. Id. §2-10(f).
The Court interpreted the statutes literally and reasoned that where the legislature uses certain language in one statutory provision and “wholly different” language in another, as in sections 2-7(f) and 2-10(f), then Courts must assume the legislature intended different meanings. Furthermore, the Court considered that section 2-10 specifies that the definition of an “interested person” should apply only “in this section.” Id. §2-10(f). Because of this definite language, the Court found that the rights allocated in section 2-10 to “interested persons” do not apply to “successors in interest” under section 2-7, who have the ability to file a claim for breach of fiduciary duty after a principal’s death.
Conclusions and Best Practices
In conclusion, the Court held that the statutory rights of successors in interest are not the same as those of interested persons in Illinois: only successors in interest have the right to bring a claim of breach of fiduciary duty. To qualify as a successor in interest, one must have actually been named a beneficiary of the accounts. However, the petitioners presented no evidence or case law to make that argument and likely could not. Thus, the Court clarified that a party must demonstrate that they are, or at one point were, named as a beneficiary to qualify as a successor in interest and have the requisite standing to bring a breach of fiduciary duty claim. A mere “interested person” is entirely different and lacks this statutory right.
This case demonstrates the importance of proper estate planning well in advance of death or illness. When V. Lawrence died, in 2018, Patrick could have re-evaluated his end-of-life planning to change the beneficiaries of the accounts himself rather than relying on his sister, who was faced with a difficult situation. Good planning helps to minimize legal squabbles after death and defines which beneficiaries will take assets upon death.
By: Anne Bredemann, law clerk and Sandra D. Mertens, Esq.