There is a noticeable increase in news reports about individuals who take advantage of elderly persons with whom they have a trusted relationship. In many cases, these individuals are caregivers who have developed a close, almost familial relationship. The situation can be complicated if the elderly person has a diminished ability to understand the motivation of the trusted individual.

In order to address this problem, the Illinois legislature in August passed an amendment to the Illinois Probate Act which adds a section entitled “Presumptively Void Transfers.”

The new law creates a presumption that transfers in excess of $20,000 which are effective at death to certain individuals are presumed to be void. In order for the law to apply, the receiving individual must be the transferring individual’s caregiver, but not a “family member,” including a spouse, child, grandchild, sibling, aunt, uncle, niece, nephew, parent or first cousin. A caregiver is defined as an individual who voluntarily or for compensation assumes the responsibility of caring for another individual who needs assistance with daily living activities.

The presumption created by the Act can be overcome in one of two ways. First, if the amount given to the caregiver is no more than the caregiver would have received before the individual became a caregiver, the law does not apply. For example, if the caregiver who is a friend of the transferring party received a bequest in a will prior to becoming a caregiver and the bequest was not increased by a later will, the statute would not apply.

Secondly, the presumption can be rebutted by “clear and convincing evidence” that the gift was not a product of fraud, duress or undue influence. This is a very high legal burden of proof which is not easily overcome.

It is important to understand a number of points with respect to the new law:

• It only applies to transfers by will, trust or by operation of law, such as joint tenancy. It does not apply to lifetime gifts.
• It does not apply to relatives, even if those relatives are distant relatives, who are not the “natural objects of the bounty” of the transferor, such as children.
• Proving that “fraud, duress and undue influence” does not exist is extremely difficult, especially under circumstances where the transferor is elderly and may show some signs of diminished capacity.

The Act provides a new weapon for a family to combat fraud or undue influence by a caregiver. On the other hand, if an individual honestly has a trusted relationship with a caregiver and wants to make a substantial provision in his or her will or trust, the circumstances surrounding the individual’s motivation, as well as his or her mental capacity, should be clearly documented when the instrument is executed.

To discuss these issues or others related to your family business, contact: Barry Siegal, (312) 696-1699, bpsiegal@golanchristie.com.