The Illinois Supreme Court ruled today in the Estate of Max Feinberg,
Even though I’m not an Illinois attorney (which means the case does not directly apply to me), I find it very interesting both as a Trusts and Estates attorney and as a Jew. Fort Lauderdale and Broward County have a large, often elderly Jewish population who are engaging in estate planning. I have, on more than one occasion, per my clients’ wishes, drafted a will or a trust which provides that descendants are disinherited if they marry outside of the Jewish religion.
The facts of the case are as follows:
Max Feinberg died in 1986. Prior to his death he drafted a standard pourover will and revocable living trust. The trust provided that upon his death, his assets would be split into a standard credit shelter trust and a marital deduction trust. Max’s widow, Erla, was the lifetime income beneficiary of both trusts, and had, according to the opinion, “a limited right to withdraw principal,” presumably according to certain ascertainable standards.
Upon Erla’s death, the property would be distributed to Max’s descendants. Fifty percent of the trust estate was to be held in further, separate trusts for Max’s grandchildren (or to be more specific, for the descendants of Max’s children) during their lifetime on a per stirpital basis. However, and this is the key part, the trust provided that any descendant who married outside the Jewish faith or whose non-Jewish spouse did not convert to Judaism within one year would be disinherited.
I’m cutting the facts very short here, but one of the grandchildren sued, saying that the provision disinheriting someone from marrying outside the Jewish faith should be void as against public policy. For a more thorough discussion of the facts see the case itself, or the lower court opinion.
The lower court opinion held for the grandchildren holding that the trust clause disinheriting someone if they married a non-Jew was void against public policy. The lower court held that under Illinois law the provision was invalid because it seriously interferes with the right of individuals to marry a person of their own choosing. While I think the term “impassioned dissent” is a bit of a cliche, in there was certainly an impassioned dissent in the lower court case. (I highly recommend that you read Justice Greiman’s discussion on why this clause should be valid).
The lower court’s decision was appealed to the Illinois Supreme Court, and has been closely watched by both Estate Planning attorneys (be they in Illinois, or Fort Lauderdale or elsewhere), and various religious and civil rights groups. As I wrote earlier, the Supreme Court reversed the lower appellate court’s ruling and upheld the clause, but for different reasons.
What I did not point out earlier (and I’m a little surprised that the lower courts did not focus on it) was that Max granted his wife Erla a power of appointment, which Erla exercised giving $250,000 to each of her children and grandchildren who would not be deemed to be disinherited by the previous clause. The court changed and clarified the issue that they were deciding on. The Court wrote:
Thus, the question we must answer is whether the holder of a power of appointment over the assets of a trust may, without violating the public policy of the state of Illinois, direct that the assets be distributed at the time of her death to then-living descendants of the settlor, deeming deceased any descendant who has married outside the settlor’s religious tradition. In effect, we are not called upon to consider the validity of Max’s estate plan as a whole, which would have continued to hold the assets in trust for the benefit of the grandchildren only so long as they complied with the restriction. Rather, we must assess Max’s beneficiary restriction clause in conjunction with Erla’s directions for distribution.”
I’ll discuss the Court’s decision and the legal reasons behind it in my next post.
