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trustwillcommon law
trustwillcommon law

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Rush University Medical Center v. Sessions, 2012 IL 112906, 980 N.E.2d 45, 366 Ill.Dec. 245

Facts

Robert W. Sessions established the 'Sessions Family Trust' in 1994, placing significant assets into it and making himself both the settlor and a lifetime beneficiary. In 1995, he made an irrevocable pledge of $1.5 million to Rush University Medical Center for a new president's house, which he confirmed in subsequent codicils to his will. Despite this pledge, Sessions did not make any payments before his death in 2005, and after his death, the Medical Center sought to enforce the pledge against the trust assets.

Robert W. Sessions established the 'Sessions Family Trust' in 1994, placing significant assets into it and making himself both the settlor and a lifetime beneficiary. In 1995, he made an irrevocable pledge of $1.5 million to Rush University Medical Center for a new president's house, which he confirmed in subsequent codicils to his will. Despite this pledge, Sessions did not make any payments before his death in 2005, and after his death, the Medical Center sought to enforce the pledge against the trust assets.

Issue

Did the common law rule that a self-settled spendthrift trust is void as to existing and future creditors survive the enactment of the Uniform Fraudulent Transfer Act?

Did the common law rule that a self-settled spendthrift trust is void as to existing and future creditors survive the enactment of the Uniform Fraudulent Transfer Act?

Rule

The common law rule states that if a settlor creates a trust for their own benefit and includes a spendthrift provision, the trust is void as to existing and future creditors, allowing them to reach the settlor's interest in the trust.

The common law rule states that if a settlor creates a trust for their own benefit and includes a spendthrift provision, the trust is void as to existing and future creditors, allowing them to reach the settlor's interest in the trust.

Analysis

The court analyzed the relationship between the common law rule and the Uniform Fraudulent Transfer Act, concluding that the two could coexist. The court found that the common law rule provided additional protection for creditors and did not conflict with the statutory provisions of the Act, which focused on fraudulent transfers. The court emphasized that the common law rule was designed to prevent a settlor from using a trust to shield assets from creditors while still benefiting from those assets.

The court analyzed the relationship between the common law rule and the Uniform Fraudulent Transfer Act, concluding that the two could coexist. The court found that the common law rule provided additional protection for creditors and did not conflict with the statutory provisions of the Act, which focused on fraudulent transfers. The court emphasized that the common law rule was designed to prevent a settlor from using a trust to shield assets from creditors while still benefiting from those assets.

Conclusion

The Supreme Court held that the common law rule regarding self-settled spendthrift trusts was not abrogated by the Uniform Fraudulent Transfer Act, allowing Rush University Medical Center to recover the pledged amount from the trust.

The Supreme Court held that the common law rule regarding self-settled spendthrift trusts was not abrogated by the Uniform Fraudulent Transfer Act, allowing Rush University Medical Center to recover the pledged amount from the trust.

Who won?

Rush University Medical Center prevailed in the case because the Supreme Court upheld the common law rule that allowed creditors to reach the assets of a self-settled spendthrift trust.

Rush University Medical Center prevailed in the case because the Supreme Court upheld the common law rule that allowed creditors to reach the assets of a self-settled spendthrift trust.

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