In re Estate of McInerny

June 26. 2997
Nunc pro tunc March 27, 1997                                     
          






No. 1--95--1461

IN RE THE ESTATE OF ALICE LEE McINERNY, )    Appeal from the 
               A Disabled Person.       )    Circuit Court of 
                                        )    Cook County. 
ALICIA M. WINKELMAN,                    )    
                                        )
               Petitioner-Appellant,    )    
                                        )    
                    v.                  )
                                        )
FIRST NATIONAL BANK OF EVERGREEN PARK,  )    Honorable
                                        )    Richard E. Dowdle,
               Respondent-Appellee.     )    Judge Presiding
                                                                  

     JUSTICE BURKE delivered the opinion of the court:

     Petitioner Alicia Winkelman (Winkelman), guardian of Alice Lee
McInerny (Alice), the beneficiary of a discretionary supplemental
trust with a spendthrift provision, appeals from an order of the
circuit court dismissing her petition for fees for herself as
guardian and fees for the guardian's attorney.  On appeal,
Winkelman contends that the trial court erred in dismissing her
petition because "guardianship fees are statutorily compensable and
the nature of the Trust has been deviated."  For the reasons set
forth below, we affirm.
     On August 16, 1993, John F. McInerny (John) executed a
declaration of trust.  The trust named John as trustee during his
lifetime, and provided that after his death, trust funds were to be
distributed as indicated in the trust instrument.  Specifically,
the trust provided that, upon John's death, certain lump sum
payments were to be disbursed to various individuals.  The trust
also provided for the needs of John's daughter, Alice Lee McInerny,
as follows:
               "1.  Commencing with my death and during
          the life of my daughter, ALICE LEE MC INERNEY
          [sic], the trustee shall expend such amounts
          from income and, to the extent necessary, from
          principal, as the trustee in the trustee's
          sole discretion deems desirable for the
          comfort of ALICE LEE MC INERNEY [sic], taking
          into consideration other income and cash
          resources known to the trustee to be available
          for such purposes, it being my intent that the
          trust property shall be used to provide ALICE
          LEE MC INERNEY [sic] with supplemental care
          above and beyond the care she was receiving at
          my death and thereafter becomes eligible to
          receive by reason of both her disability and
          her personal lack of assets from any state,
          federal or private agency that provides
          services or benefits to disabled persons.  Any
          income not so spent shall be accumulated and
          from time to time added to principal."  
          The trust further provided that at Alice's death, "any interest in
the fund not effectively disposed of pursuant to the [trust]
provisions [should] be distributed" to John's nephew, Robert
Harney, and John's son, William, in equal portions.  The trust also
contained the following provision:
               "The interests of beneficiaries in
          principal or income shall not be subject to
          the claims of any creditor, any spouse for
          alimony or support or other, or to legal
          process, and may not be voluntarily or
          involuntarily alienated or encumbered.  This
          provision shall not limit the exercise of any
          power of appointment."
               On December 11, 1993, John died, and respondent First National
Bank of Evergreen Park was appointed the successor trustee of the
trust (trustee).    
     On March 3, 1994, Winkelman instituted proceedings for her
appointment as Alice's guardian.  A report was filed by Dr. Joel
Leff which stated that Alice was unable to care for herself because
she had "longstanding psychiatric problems" and "suffer[ed] from
schizoaffective disorder, manic."  The report also stated that
Alice had been diagnosed with diabetes mellitus and was unable to
follow a diabetic diet.  On March 31, the trial court appointed
Winkelman as Alice's guardian.  
     On September 16, 1994, Winkelman filed a motion for withdrawal
and substitution of attorney, substituting Deborah Helms as her
attorney in place of the Bank's attorney, which the trial court
subsequently granted.  On the same day, Winkelman also filed a
petition to approve her fees as guardian of Alice and fees for the
guardian's attorney.  
     In her petition, Winkelman stated that Alice lived with her in
Winkelman's home, and required supervised care at a minimum of 10
hours per day.  Alice's estate was valued at zero, and Alice had no
annual income.  Since undertaking guardianship services, Winkelman
had been reimbursed by the trustee for certain out-of-pocket
expenses such as mileage, clothing, shoes, eyeglasses, personal
items, meals, and other miscellaneous expenses which were provided
by the guardian to Alice.  The petition also stated that since her
appointment as guardian on March 31, 1994, Winkelman had expended
987.5 hours caring for Alice, which included time expended by
Winkelman for grocery shopping, taking Alice to lunch, and taking
Alice on vacation.  Winkelman requested that she be compensated for
this time at a rate of $20 per hour.  Winkelman also requested
reimbursement for attorney fees incurred by her in the total amount
of $3,310 and attorney costs in the amount of $59.  Winkelman
attached excerpts from the trust instrument, as well as a time and
expense log of her activities while caring for Alice beginning on
February 23, 1994, and ending on August 3, 1994.  Winkelman also
attached a detailed report of her attorney's time and fees for work
performed relating to Alice and Winkelman's guardianship of Alice. 
The daily entries in Winkelman's attorney's time sheet are dated
beginning January 12, 1994, and ending on an unspecified date in
1994 (the last dated entry is September 12, 1994, and one other
entry follows with the description "Court appearance on Petition"). 
     On December 21, 1994, the trustee filed a motion to dismiss
Winkelman's petition.  The trustee argued that it had no authority
to pay the requested fees and should not be forced to pay them
because the trust contained a spendthrift provision which protected
the trust from creditors' claims, and that Winkelman, as Alice's
guardian, was a creditor.  Winkelman filed a memorandum in
opposition to the motion to dismiss, in which she stated that
during John's final illness, Alice was living with John in squalid
conditions; after she discovered this fact, she began to care for
Alice, taking her to an eye doctor, administering her diabetes and
psychotropic medicines, monitoring her diet, and providing general
care; despite her care, Alice continued to behave erratically and
required constant attention; subsequent to her appointment as
guardian, Alice had undergone surgery for skin cancer; according to
Dr. Leff, Alice should be placed in a secure, structured living
environment with supervision; and she was preparing to resign her
guardianship, and the Public Guardian of Cook County had agreed to
become Alice's guardian when she resigned.  Winkelman further
stated that applications in behalf of Alice for social security
benefits, "SSI" benefits, and public aid were pending, social
security benefits having initially been denied and subsequently
appealed.
     Winkelman's memorandum further stated that the trustee refused
to pay the fees for Alice's placement in a residential care
facility, and until Alice begins receiving government aid, she must
remain in Winkelman's care.  Throughout her tenure as Alice's
guardian, the trustee made one payment to Winkelman for her
guardianship services, and paid a monthly allowance for Alice's
room and board, medical needs, and miscellaneous needs.  Winkelman
argued that she should be awarded guardian and attorney fees
because the trustee intended that Alice be provided necessary
support, and the trust was Alice's only source of income and
support until such time as public aid became available.  She
further argued that the settlor's intent that Alice's support be
supplemented by the trust could not be fulfilled because Alice was
not receiving any primary support.  Winkelman contended that the
trustee did not have complete discretion in disbursing funds, and
guardians were statutorily entitled to compensation from the ward's
estate.  Winkelman further argued that she was not a common
creditor, but rather was a necessary caregiver entitled to
compensation for her services, and because Alice (the ward) had no
estate, Winkelman should be compensated from the trust.
     On February 22, 1995, the trustee filed a memorandum in
support of its motion to dismiss Winkelman's petition for guardian
and attorney fees.  In its memorandum, the trustee first argued
that the trial court lacked jurisdiction and authority to compel
payment to Winkelman because there was no estate from which to
compensate the guardian as the trust was not a part of Alice's
estate, and the trust instrument did not authorize such a
disbursement.  The trustee further argued that the trust's
spendthrift provision  prevented the trustee from making payments
for guardian fees because the guardian was acting as a creditor.
Lastly, the trustee argued that it could not pay Winkelman as
Alice's guardian because the trust was a discretionary supplemental
needs trust.  The trustee contended that, under a supplemental
needs trust, a state agency could not seek reimbursement from the
trust and, as guardian, Winkelman should not be placed in a better
position than a government agency seeking reimbursement for the
same services.
     On April 5, 1995, the trial court held a hearing on
Winkelman's petition for fees and the trustee's motion to dismiss,
and made the following finding:
               "THE COURT:    Okay.  Thank you folks.  I
          believe the motion to dismiss the petition
          should be allowed.  This would certainly be
          different if this were inter-vivos trust,
          funds created from the ward--those are clearly
          subject to fees, no question about it.  And
          even though this language were in there at the
          sole discretion of the trustee those would
          definitely be allowable.  And I presume the
          trustee wouldn't have any problem with it,
          they would be approved.  But in this
          discretionary trust it seems above and beyond. 
          So that is my order."
          The trial court then entered an order dismissing Winkelman's
petition with prejudice.
     Winkelman filed a notice of appeal with this court on May 2,
1995.  On October 17, 1995, while this appeal was pending, the
trial court entered an order authorizing Winkelman to place Alice
in Bourbonnais Terrace, a residential care facility.
     Winkelman first argues that under sections 27--1 and 11a--17
of the Illinois Probate Act of 1975 (Probate Act) (755 ILCS 5/27--
1, 5/11a--17 (West 1992)), guardianship fees are compensable from
Alice's estate and, because Alice does not have an estate, she
should be compensated from Alice's trust fund.  Winkelman further
argues that although the trust instrument indicates that the
trustee retains discretion over disbursements, the trustee does not
have complete discretion when disbursing funds for Alice's support
and, therefore, the trial court can compel payment of Winkelman's
guardian fees.  Winkelman further argues that her services are
compensable because Illinois case law has established that services
performed exclusively for the emotional benefit of the disabled
adult are compensable from the ward's estate.
     The trustee argues that the trial court lacks jurisdiction to
compel payment because guardian fees are only compensable from a
ward's estate and the trust is not a part of Alice's estate.  The
trustee further argues that the trust is a discretionary
supplemental needs trust, not a discretionary primary support trust
and, therefore, the court cannot compel the trustee to pay for
services provided to Alice which constitute primary support.  The
trustee also argues that section 5--105 of the Mental Health and
Developmental Disabilities Code (405 ILCS 5/5--105 (West 1996))
provides that a parent is not required to support an adult disabled
child during the parent's life, and "the settlor [in this case] was
legally entitled to set up the John F. McInerny Trust to supplement
the care of Alice Lee McInerny and owed no legal obligation to
design the trust in a manner that would provide for the primary
care of the beneficiary."
     It is well settled that where no genuine issues of material
facts remain in dispute and a trial court has issued rulings of
law, a reviewing court must use a de novo standard of review. 
Jackson v. Moreno, 278 Ill. App. 3d 503, 505, 663 N.E.2d 27 (1996). 
Further, "the interpretation of statutory provisions is
traditionally a question of law to which a deferential standard of
review is inapplicable."  Mellon Bank N.A. v. Midwest Bank & Trust
Co., 265 Ill. App. 3d 859, 866, 638 N.E.2d 640 (1993).  "A guardian
of *** [a] person has a duty to make necessary provision for his
ward's 'support, care, comfort, health, education, and maintenance,
and such professional services as are appropriate.' "  In re Estate
of Burgeson, 125 Ill. 2d 477, 486, 532 N.E.2d 825 (1988).  The
Probate Act provides that "[a] representative [or guardian] is
entitled to reasonable compensation for his services."  755 ILCS
5/27--1 (West 1992).  The Act also provides that personal guardians
may be compensated from the estate of a ward, i.e.:
               "Duties of personal guardian.  ***  The
          guardian shall assist the ward in the
          development of maximum self-reliance and
          independence.  The guardian of the person may
          petition the court for an order directing the
          guardian of the estate to pay an amount
          periodically for the provision of the services
          specified by the court order."  755 ILCS
          5/11a--17 (West 1992)
          In addition, a guardian may be compensated from the estate of the
ward for services which "further the emotional well-being of the
ward," and sections 27--1 and 11a--17 have been interpreted "to
permit the probate court to consider services performed exclusively
for the emotional benefit of the disabled adult in setting
compensation for the adult's personal guardians."  In re Estate of
Donnelly, 111 Ill. App. 3d 1035, 1038-39, 445 N.E.2d 49 (1983).
     While the statutory provisions and case law cited above
support Winkelman's argument that a guardian may be compensated for
his or her services from a ward's estate, in the present case, as
both parties agree, the trust is not a part of Alice's estate. 
Therefore, under sections 27--1 and 11a--17, Winkelman is not
entitled to compensation from the trust's funds for services she
has provided because those funds are not a part of Alice's estate.
     Winkelman argues, however, that although the trust's funds are
not a part of Alice's estate, she should be compensated from those
funds because while it was John's intent to create a discretionary
supplemental needs trust, in actuality the trust has been
functioning as a discretionary primary support trust and should be
construed as such.  Winkelman argues that because the trustee has
been providing payments for Alice's primary support, and because
Alice has not been able to secure any form of public aid, John's
intent that the trust pay supplemental support cannot be fulfilled. 
Moreover, Winkelman argues, John intended that the trust should
provide for Alice's comfort, and this requires the trustee to pay
for guardian services.  Winkelman further argues that under a
discretionary primary support trust, her services constitute
primary support and the trustee does not retain the discretion to
withhold payment to her under its discretionary power or under the
trust's spendthrift provision because she is not a common creditor. 
The trustee argues that the trust contains a spendthrift provision
which protects the principal and income from being subject to the
claims of any creditor or legal process, and Winkelman's claims for
her guardianship services and guardian attorney fees is that of a
creditor.  Therefore, the trustee argues, the plain language of the
trust prevents the trustee from being subject to Winkelman's
claims.
     "In general, the rules for construction of written instruments
*** apply to the interpretation of trusts--the question of
paramount importance being the settlor's intention, which if
unambiguous is gathered from the whole instrument creating the
trust."  Department of Mental Health and Developmental Disabilities
v. First National Bank of Chicago, 104 Ill. App. 3d 461, 463, 432 N.E.2d 1086 (1982).  The court will effectuate the terms of the
trust if it is not contrary to public policy.  Harris Trust &
Savings Bank v. Donovan, 145 Ill. 2d 166, 172, 582 N.E.2d 120
(1991).  When construing trusts, the court will apply the same
rules of construction it applies when it construes wills.  Harris
Trust, 145 Ill. 2d  at 172.  "The settlor's intent is to be
determined solely by reference to the plain language of the trust
itself, and extrinsic evidence may be admitted to aid
interpretation only if the document is ambiguous and the settlor's
intent cannot be ascertained."  Stein v. Scott, 252 Ill. App. 3d
611, 615, 625 N.E.2d 713 (1993).
     A court will permit the reformation of a trust only in extreme
cases, and this power is to be "exercised with great caution." 
Department of Mental Health & Developmental Disabilities v.
Phillips, 114 Ill. 2d 85, 91, 500 N.E.2d 29 (1986) (Phillips II). 
The court may consider "the surrounding circumstances at the time
the instrument was executed, to the extent they may aid in
determining the settlor's intention in using certain language." 
First National Bank v. Canton Council of Campfire Girls, Inc., 85 Ill. 2d 507, 514, 426 N.E.2d 1198 (1981).  "A court can allow
reformation of a trust when an unforeseen exigency arises which may
place the cestui que trust in 'pinching want,' making it necessary
for the court to place itself in the position of the settlor and
carry out his intention as if he had anticipated the changed
circumstances."  Phillips II, 114 Ill. 2d  at 91.
     In the present case, both parties agree that John intended to
create a discretionary supplemental support trust with a
spendthrift provision.  As the trustee states in its brief, case
law addressing the issue of whether third parties may obtain
reimbursement from a discretionary supplemental support trust with
a spendthrift provision is scarce.  The cases cited by both
Winkelman and the trustee involved the issue of whether State
agencies may be reimbursed for services provided to beneficiaries
of discretionary trusts with spendthrift provisions, and have been
affected by a statute enacted by the Illinois legislature in 1991. 
See First National Bank, 104 Ill. App. 3d 461; Department of Mental
Health v. Phillips, 133 Ill. App. 3d 337, 478 N.E.2d 1052 (1985)
(Phillips I); Phillips II, 114 Ill. 2d 85; and Button v. Elmhurst
National Bank, 169 Ill. App. 3d 28, 522 N.E.2d 1368 (1988).  These
cases stand for the proposition that discretionary trust income and
principal should be considered as part of the beneficiary's estate
for purposes of reimbursement when a State agency is seeking to be
paid for its services provided to the beneficiary even when the
trust contains a spendthrift provision.  See First National Bank,
104 Ill. App. 3d at 465 (holding "that the interests of the
beneficiaries in the spendthrift trusts here should be considered
as estates within the meaning of that term in section 5--105 of the
Code [405 ILCS 5/5--105] and, in this regard, we also view the
omission of a specific reference to trustees in that section as not
implying a legislative intent to provide free treatment in State
facilities for the beneficiaries of spendthrift or other trusts").
     In the present case, however, Winkelman is the guardian, not
a State agency, seeking reimbursement for services provided to the
beneficiary.  Thus, the case law cited above does not apply.  In
addition, even if Winkelman's services were more similar to those
of a State agency than to those of a creditor, she would be
precluded from compelling payment from Alice's trust because in
1991 the Illinois legislature enacted a statute which protects
discretionary trusts created for disabled beneficiaries from claims
by State agencies, i.e.:
               "A discretionary trust for the benefit of
          an individual who has a disability that
          substantially impairs the individual's ability
          to provide for his or her own care or custody
          and constitutes a substantial handicap shall
          not be liable to pay or reimburse the State or
          any public agency for financial aid or
          services to the individual except to the
          extent the trust was created by the individual
          or trust property has been distributed
          directly to or is otherwise under the control
          of the individual ***.  A discretionary trust
          is one in which the trustee has discretionary
          power to determine distributions to be made
          under the trust."  (Emphasis added.)  760 ILCS
          5/15.1 (West 1996).
          Based on the facts of the present case, the exception in this
statute does not apply and, therefore, Winkelman may not recover
fees under the statute.
     Winkelman further argues, however, that if her services are
not similar to those of a State agency, but rather to those of a
creditor, she is providing primary support for Alice and, under
section 157(b) of the Restatement of Trusts, she should be allowed
to assert a claim against the trust even though the trust contains
a spendthrift provision protecting it from creditors' claims.
     Section 157 of the Restatement of Trusts specifies claims
which may be enforceable against a spendthrift trust and trusts for
support, as follows:
          "Although a trust is a spendthrift trust or a
          trust for support, the interest of the
          beneficiary can be reached in satisfaction of
          an enforceable claim against the beneficiary,
               (a) by the wife or child of the
          beneficiary for support, or by the wife for
          alimony;
               (b) for necessary services rendered to
          the beneficiary or necessary supplies
          furnished to him;
               (c) for services rendered and materials
          furnished which preserve or benefit the
          interest of the beneficiary;
               (d) by the United States or a State to
          satisfy a claim against the beneficiary." 
          (Emphasis added.)  Restatement of Trusts, 157
          (1959).
               Here, we conclude that Winkelman, if acting as a creditor, is
not supplying necessary services to Alice.  The trustee has
distributed funds from the trust for food, clothing, shelter and
other miscellaneous items (primary support) at Winkelman's request
for Alice's necessities.  Winkelman, as Alice's guardian, is only
required to represent Alice's interests; Winkelman is not required
to provide the services she is now seeking to have the trust
reimburse, such as grocery shopping, taking Alice to lunch, or
taking Alice on vacation.  Thus, Winkelman is not entitled to
circumvent the trust's spendthrift provision by way of the
exceptions enumerated in section 157(b) of the Restatement of
Trusts.
     We also briefly note that it is irrelevant whether the trustee
has disbursed funds for Alice's primary support "in violation" of
the settlor's intent, as Winkelman argues, because under either a
discretionary supplemental support trust with a spendthrift
provision or a discretionary primary support trust with a
spendthrift provision, Winkelman is not entitled to compensation
because her services clearly do not constitute primary support. 
Therefore, this court does not have to determine whether it must
reform the trust, a power which is to be exercised "with great
caution."  Phillips II, 114 Ill. 2d  at 91.
     Winkelman also contends that the trustee abused its discretion
in refusing to pay for her guardianship services because they are
necessary for Alice's basic support.  Winkelman further argues that
because the trustee has withdrawn monies from the trust for trust
administration fees, it has breached its fiduciary duty.
     "Absent proof of fraud, abuse of discretion or bad faith, a
trustee's exercise of discretion is not subject to interference by
the court."  Taxy v. Worden, 181 Ill. App. 3d 97, 107, 536 N.E.2d 901 (1989).  A court cannot substitute its judgment for that of the
trustee's absent actions by the trustee which are outside the
bounds of reasonable judgment.  Taxy, 181 Ill. App. 3d at 107. 
However, "such discretion is not an arbitrary one and one which
would permit the trustee to provide no support whatever for [the
beneficiary]."  First National Bank, 104 Ill. App. 3d at 465.
     Here, we hold that the trustee has not abused its discretion
in performance of its duties enumerated under the trust instrument
in refusing to pay Winkelman guardian and attorney fees.  The trust
specifies that the trustee shall disburse funds at its discretion
for the comfort and support of Alice, supplemental to what Alice is
entitled to receive from government aid.  The trustee has made
disbursements for Alice's room and board, clothing, medical needs
and other miscellaneous needs because Alice has been unable to
secure any other form of income.  Simply because the trustee did
not authorize a disbursement for Winkelman's guardian and attorney
fees does not mean that the trustee has abused its discretion.  If
the trustee had not paid for food when Alice was in desperate need
for food, for example, the trustee could be considered to have
abused its discretion.  This is not the case, however.  In any
event, based on our determination that Winkelman's claims for
guardian and attorney fees were unenforceable against the trust,
there could be no abuse of discretion in the trustee's refusal to
pay them.
     We also reject Winkelman's argument that the trustee has
abused its fiduciary duty by charging the trust for trust
administration fees.  Winkelman, failed to produce evidence in the
trial court of the trustee's fees and, therefore, no record exists
of what, if any, charges the trustee has made to the trust res. 
Moreover, assuming arguendo that the trustee breached its fiduciary
duty to the beneficiary by charging excessive fees to the trust
res, Winkelman's remedy would be an action against the trust in
behalf of Alice, rather than in her own behalf for payment of
guardian and attorney fees.
     Lastly, it should be noted that Winkelman is requesting fees
for her services beginning on February 23, 1994, over one month
before she was appointed Alice's guardian on March 31, 1994. 
Additionally, Winkelman states in her opening and reply briefs that
family members and the trustee "prevailed" upon her to become
guardian and, therefore, equity and public policy dictate that she
be compensated for her services.  There is no indication in the
record, however, that Winkelman's assumption of guardianship duties
was anything other than voluntary.  Moreover, any implication in
Winkelman's brief that the trustee misled her regarding
compensation for her guardianship services is also unsupported by
the record.
     For the reasons stated, we affirm the order of the circuit
court dismissing Winkelman's petition for fees.
     Affirmed.
     McNAMARA and CERDA, JJ., concur.