estate planning and probate law and practice section mcle ......trackman v. michela, 2019 il app...
TRANSCRIPT
Estate Planning and Probate Law and Practice Section MCLE Meeting
DuPage Judicial Center - ARC
January 22, 2020
11:45 AM – 12:00 PM Welcome/Introductions
Bill Hardesty – Estate Planning and Probate Law Chair
A few words John Matejcak JD, from First American Bank Wealth
Management Group – Today’s Lunch Sponsor
12:00 PM – 1:00 PM Program – On the High Wire with Goldilocks: 2020 Economic and
Financial Markets Outlook
Kurt Funderburg, First American Bank Wealth Management Group
Speakers’ Bio - See attached
Presentation Summary
Review of the U.S. economy and financial markets of 2019 as well as
the outlook for 2020.
Next Meeting: February 26th – Representing Clients with Diminished Capacity
Janet Rae Montgomery, Nisen & Elliott, LLC
DCBA Events: January 24th – DCBA/DBF Memorial Program – ARC
February 5th – Lawyers Lending a Hand CPR Instruction – Bar Center
Classroom
February 21st – DCBA Unwind – Weber Grill, Lombard
February 28th – 45th Annual Judges’ Nite – COD McAninch Center
Earn CLE Online!
DCBA OnDemand CLE is Now Powered by IICLE The Illinois Institute for Continuing Legal
Education (IICLE®) and the DuPage County Bar Association (DCBA) are excited to offer a new
IICLE®Share collaboration to provide DCBA members a high quality and reliable online
learning experience. Members can find the link to The Illinois Institute for Continuing Legal
Education (IICLE) on the DCBA website under “Legal Community”→OnDemand CLE →Online
CLE Catalog. You must be logged into your DCBA Membership Profile in order to view courses
for free or at a reduced price.
View & Print All CLE Certificates through the DCBA Website:
Manage Profile -> Professional Development (under content & features) and choose the icon to
the left of each meeting to print your certificate directly or choose to have them emailed to you
to save to your computer (you MUST be logged in to view this feature)
Kurt Funderburg, Director of Equity & Economic Research - First American Bank Wealth
Management Group
Kurt Funderburg has more than 30 years of experience providing investment advice and
analysis to high net worth clients and institutional investors. Kurt is responsible for
providing analysis of the economy and equity markets utilized as an input in the formation
of asset allocation models and proprietary equity strategies for First American Bank's
Wealth Management Clients. He also manages the equity research department and
functions as an equity research analyst. Prior to joining First American Bank in 2016, Kurt
served as Senior Equity Analyst with Morningstar Equity Research; Senior Equity Analyst
with Harris Associates, LP, advisor to the $140 Billion Oakmark family of mutual funds;
Senior Vice President and Director of Equity Research with Ferris, Baker Watts, Inc.; and
Investment Officer and Portfolio Manager with Mercantile Safe Deposit & Trust Company.
Kurt has appeared on Bloomberg Television and has been quoted in business publications
including The Wall Street Journal, Barron's, Fortune, Forbes and Business Week. He holds a
bachelor's degree in finance from West Virginia University and an MBA in finance from
Pennsylvania State University.
Join us Tuesday for lunch in the ARC!
The DCBA Wellness Committee is actively seeking members to assist
and participate in future committee events, social gatherings, and
organized functions!
If you, or someone you know, are interested in focusing on the mind,
body, or spirit within the legal field, please join us! Lunch to be
provided!
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Email: [email protected] or [email protected] for more information
Tuesday, January 28, 2020, 12:00 pm – 1:00 pm Attorney Resource Center, 3rd Floor, DuPage Judicial Center
FLYING TOO CLOSE TO THE SUN
The DuPage County Bar Association presents The 45th Annual Judges’ Nite
Friday, February 28, 2020Cocktails and Heavy Appetizers at 5:30 pm Show at 7:00 pm
The Belushi Auditorium at the College of DuPage
A DuPage Legal Assistance Foundation Fundraiserdirected by NICK NELSON music by JUDGES’ NITE BAND stage manager PAM TROJAN
produced by CHRISTINA MORRISON artwork by ANNA PIRO DESIGN
To purchase tickets go to dcba.org or call 630-653-7779
Trackman v. Michela, 2019 IL App (2d) 190131 (op. filed Nov. 20, 2019).
In this opinion, the Second District affirmed a ruling that the plaintiff’s claim in the current
litigation (“Trackman II”) for tortious interference with an expectation of inheritance against the
defendant was barred by res judicata in light of a previously filed, and dismissed, claim by the
plaintiff challenging a trust amendment for lack of testator/settlor capacity raised in an earlier
action (“Trackman I”).* According to the court, plaintiff’s claim in Trackman II that the defendant
engaged in various tortious acts, which caused the testator/settlor to sign a trust amendment that
deprived the plaintiff of his inheritance, was “the same for res judicata purposes” as the plaintiff’s
earlier claim in Trackman I that the testator/settlor lacked the capacity to execute the trust
amendment. Under Illinois’ “transactional test” for determining whether two causes of action are
identical for res judicata purposes, the Trackman I cause of action alleging lack of capacity and
the Trackman II cause of action for tortious interference were “based on the same core of operative
facts, even though their theories and factual bases are not identical. Both are based on [the
testator/settlor’s] conduct in creating trust documents that excluded plaintiff from any inheritance.
Both allege the same harm. That they would have formed a convenient trial unit is self-evident [.
. .].”
* Trackman, 2015 IL App (2d) 140985-U.
Shakman v. Department of Revenue, 2019 IL App (1st) 182197 (op. filed Dec. 12, 2019).
In this opinion, the First District agreed with the Illinois Department of Revenue that the
transfer of the plaintiff’s aircraft from himself individually to himself as the trustee of his revocable
(grantor) trust, done as part of the plaintiff’s estate planning, was a “taxable event” under Illinois’
Aircraft Use Tax Law, which imposes a 6.25% tax “on the privilege of using . . . any aircraft . . .
acquired by transfer” (35 ILCS 157/10-15). In 2014, the plaintiff transferred ownership of his
aircraft to his revocable trust by completing an aircraft bill of sale using a preprinted form from
the FAA. The Department, which monitors FAA records, sent the plaintiff a notice of tax liability
under the Aircraft Use Tax Law when it noticed the change in legal ownership of the plaintiff’s
aircraft. The plaintiff, who had already paid a use tax when he initially purchased the aircraft in
2008, paid the 2014 use tax under protest and filed a declaratory judgment action against the
Department. In reviewing the language of the Aircraft Use Tax Law, the court noted “it is clear
that the legislative intent was to cover an expansive and nearly limitless array of aircraft
dispositions.” With respect to the plaintiff’s specific disposition, because the applicable definition
of “person” for purposes of the Aircraft Use Tax Law (which is expressly incorporated from the
Use Tax Act) includes both a “natural individual” and a “trustee,” the court concluded “that the
legislature intended to tax as a ‘transfer’ [the plaintiff’s] change of ownership of his aircraft from
himself individually to himself as trustee of his revocable trust.”
While recognizing that the plaintiff “is ultimately the same person as a natural individual
and trustee,” the court stressed that “the privileges of use are different by virtue of him being a
trustee.” Importantly, “under Illinois law, a natural individual is legally different than a trustee of
a trust and clearly different for purposes of the Aircraft Use Tax Law as exemplified by the
definition of ‘person’ incorporated into the statute. Because [the plaintiff] individually and [the
plaintiff] as trustee are legally distinct persons under Illinois common law and Aircraft Use Tax
Law, the privilege of using his aircraft that had been first acquired by himself individually was
acquired by transfer to himself as trustee of his trust.” As such, under the plain language of the
Aircraft Use Tax Law, he, as trustee of his trust, had also to pay a use tax.
Towards the end of the opinion, the court explained that even though it reached the
conclusion it reached, “we are not unsympathetic to [the plaintiff’s] cause. The Department
imposed against him a nearly $8000 tax (inclusive of a penalty and interest) for routine estate
planning. And certainly, if [the plaintiff] decided to remove the plane from his revocable trust, he
could very well incur a third tax on his airplane. But as previously discussed, we must interpret a
statute and apply it consistently with the manner it is written, and when a statute is unambiguous,
we have no power to depart from its plain language and read into it exceptions, limitations or
conditions which the legislature did not express. Only the legislature has the power to amend a
statute.” (Citations and quotations omitted.)
Additional cases of interest:
Litvak v. Black, as Trustee of the Supplemental Needs Trust for the Benefit of Joanne Black, as
Trustee of the Irrevocable Trust for the Benefit of the Issue of Renata Black, and as Trustee of
the Joanne Black 2013 Trust Agreement (Goodwin, as Court-Appointed Successor Conservator
for Joanne Black, Intervenor-Appellant), 2019 IL App (1st) 181707 (op. filed Nov. 22, 2019) –
In which the First District vacated an agreed judgment against a trust (called the “Issue Trust” in
the opinion) because the motion to vacate (filed by the intervenor-appellant on behalf of Joanne
Black, a non-beneficiary of the Issue Trust) adequately established that the agreed judgment was
the product of fraud and collusion and vacating it was appropriate in order to protect Joanne’s
interests given that the Issue Trust held funds a Colorado court had previously ruled were stolen
by the defendant, Bernard Black, from Joanne.
In re Estate of Crawford, 2019 IL App (1st) 182703 (op. filed Dec. 26, 2019) – In which the First
District affirmed summary judgment denying a claim against two estates on the basis that the
Dead-Man’s Act (735 ILCS 5/8-201) prevented the claimant from establishing that he made any
payments to the decedents (who were the claimant’s son and daughter-in-law) or that any payments
were loans and not gifts, in large part because the Dead-Man’s Act barred the claimant’s testimony
and his main piece of documentary evidence (a handwritten “contemporaneous log” maintained
by the claimant listing the date and amount of the purported loan payments to the decedents).
NOTE: NONE OF THESE OPINIONS HAVE BEEN RELEASED FOR PUBLICATION IN THE
PERMANENT LAW REPORTS. UNTIL RELEASED, THEY ARE EACH SUBJECT TO
REVISION OR WITHDRAWAL.
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On the High Wire With Goldilocks2019 & 2020 Economic & Markets Review and Outlook
Agenda• Overview – Look back at 4Q18 & 2019
• Outlook for 2020 – What We’re Watching
• Long Term Economic Drivers & Challenges
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Disclaimer
This material has been prepared for informational purposes only and is not intended to provide investment, tax or legal advice. You should consult with your own investment, tax and legal advisers before engaging in any securities transaction.
www.firstambank.com
Chicago I Coral Gables I Kenosha I Tampa
Not FDIC Insured-Not Bank Guaranteed-May Lose Value
On the High Wire With Goldilocks
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Goldilocks Economy: One that is neither too hot nor too cold but just right. Characterized by full employment and stable growth without material inflationary pressure. This economy tends to drive asset prices higher.
Thoughts from the high wire: “To survive on the high wire one must stay straight and stubborn in his madness.” Philippe Petit – noted high wire walker.
Review of 4Q18, 2019 & How We Arrived Here
4Q18 – Dread, Despair and Panic
The Powell Pivot/The Wu-Xia Moment
Financial Markets Rejoice
Trump Tariff Tango
Global Economic Weakness Spreads
Interest Rates Go Negative
Reasons For Hope
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4Q18 – Dread, Despair and Panic
Growth scare abetted by market liquidity challenges
Fed executes its fourth target rate hike of the year and signals that more are on the way – “rates still below neutral level”
Fed balance sheet reduction continues apace
Bond market dislocation makes equity sell-off worse
Worst December for stocks since the Great Depression
Returns for virtually all major asset classes negative in 2018
The Powell Pivot & The Wu-Xia Moment
The financial markets make clear to Powell that higher rates will break asset markets and could bring a recession
Powell pivots from rate hikes to a strategic pause
Trump’s bluster for lower rates is mostly noise
Fed makes clear it will act as needed to sustain the economic expansion (and financial markets)
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Financial Markets Rejoice
Return of the Powell Put kindles continued rally in risk assets
Lower rates and liquidity will cure all ills
Falling rates bring rally in bond prices
Equities keep pricing in stronger earnings growth even as EPS for 2019 continue to slide
Trump Tariff Tango
Trump sets out to deliver another campaign promise –addressing U.S. foreign trade imbalances
He chooses the most blunt and confrontational tool in his trade arsenal, tariffs, as his weapon of choice
Trump’s methods may be brutal for nearly all involved but he tackles a problem – the economic and security relationship with China – that previous presidents punted
Stock market seems to drive the heat of Trumps rhetoric
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Global Economic Weakness Spreads
Already weakening global economy declines further
Reverse of globalization leads to drop in global trade
Europe – more exposed to international trade than the U.S. bears the brunt
China’s economic transition complicated by challenges to export growth
U.S. slows but remains relatively resilient
Interest Rates Go Negative Slowing global growth and desperate central pumping
liquidity drives more interest rates into negative territory
Negative-yielding bonds peak at $17 trillion – about 25% of global bonds outstanding – mainly in Japan and Western Europe
Negative rates drive up risk asset prices in search for returns
Rise and fall of the unicorns
Long-term impacts could be dire and benefits unclear
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Reasons for Hope
Global growth appears to bottom early in 4Q19
Trump, focused on re-election, engineers trade truces with Europe, Japan, Canada, Mexico and China
Not clear that the pain justified the gain but at least the threat to growth from trade tensions has faded for now
Stay tuned for what’s next on trade if Trump is re-elected
Outlook for 2020 – What We’re Watching
U.S. Economic growth in 2020 likely to stay near trend –between 1.75% and 2.25%
Equities maintain an upward bias but a lot of good news is priced in already and markets could be vulnerable to earnings disppointments
Bonds very unlikely to match 2019’s performance
Politics, both domestic and international, will replace trade as main points of concern for financial markets
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Outlook for 2020 – Potential Surprises Populism continues to rise globally
China’s economic rebound underwhelms and internal political problems worsen
Inflation rises above market expectations but not enough to spur Fed rate hikes – an additional Fed rate cut more probable
Earnings growth disappoints
Asset bubble become more apparent
Outlook for 2020 – How to Prepare
Know your risk tolerance and let it drive your allocation
Consider one, three and five-year liquidity needs and adjust accordingly
Lean toward quality and away from speculation
Keep dancing as long as the music is playing, but make sure to dance near the door
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Long-Term Economic Drivers & Challenges
Economic Growth = Labor Force Growth + Productivity Growth
Labor force growth is slow or negative in many economies
Productivity growth is feeble throughout most developed economies
Political conflict is worsening – problem solving suffers
Debt has exploded over the past decade
Q & A
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