Taxation & Estate Planning

Cook County's "Norris" Rule

By Joel A. Schoenmeyer

For the most part, closing a probate estate is pretty easy. The executor or administrator signs a document called a final report, and this document -- along with receipts from each beneficiary -- is submitted to the court. That being said, one of the Cook County Rules of Court (this one -- 12.13(c)(iii)) can throw a wrench into the works. Let's look at it:

If a part or all of the estate is distributable to the trustee or trustees of a trust of which each trustee is also a representative of the estate, in addition to the requirements of the Probate Act and unless notice is waived by the person entitled thereto, notice of the hearing on an account under Section 24-2 [755 ILCS 5/24-2] or notice of the filing of a final report under Section 28-11 [755 ILCS 5/28-11], as the case may be, shall be given to each beneficiary then entitled to receive or eligible to have the benefit of the income from the trust. In the case of a beneficiary of the trust who is a minor or disabled person, notice shall also be given to the guardian of the estate of the beneficiary or, if no guardian of the estate has been appointed, to the personal fiduciary for the beneficiary under Section 28-3 [755 ILCS 5/28-3] or, if none, to the spouse, parent, adult child or guardian of the person of the beneficiary. The court in its discretion may waive notice to a beneficiary who is a minor or disabled person if notice has been waived and the account or report has been approved by another beneficiary whose interest is substantially the same as the interest of the minor or disabled beneficiary and who has no conflict of interest.

The key here is the first sentence, which sets out when the Rule (which takes its name from a court case) applies. It's only in situations where (a) a part or all of the estate is distributable to a trust AND (b) the trustee of the trust is also the executor or administrator. In that case, the court wants to make sure that the trust beneficiaries are apprised of any and all actions taken by the trustee in the probate context. After all, this scenario presents a possibility for self-dealing by the fiduciary. So, the trust beneficiaries (actually, just the INCOME beneficiaries) must also receive notice of the closing of the probate estate, and have the right to make sure the probate was handled correctly.

Full post as published by Death and Taxes Blog on January 30, 2009 (boomark / email).