Scroll Top
200 N. LaSalle Street Suite 2150 Chicago, IL 60601

Are Transfers to a Fiduciary Fraudulent?


The sick and elderly are often exploited by the people closest to them. Caretakers and other individuals can take advantage of the most vulnerable by coercing them into making significant transfers of their assets for the benefit of the caretaker or the caretaker’s family. After someone passes away, it is often difficult to prove that a fiduciary coerced and manipulated the decedent because that manipulation often occurs in private. In order to address this problem, Illinois law protects individuals from exploitation by their fiduciaries, such as agents and caretakers, by presuming that all transfers to such individuals are presumed to be fraudulent. Under Illinois law:

“Where a fiduciary relationship exists between the testator and the devisee who receives a substantial benefit from the will, and where the testator is the dependent and the devisee the dominant party and the testator reposes trust and confidence in the devisee, and where the will is written or its preparation procured by that devisee, proof of these facts establishes prima facie the charge that the execution of the will was the result of undue influence exercised by that beneficiary.” Schmidt v. Schwear, 98 Ill.App.3d 336 (1st Dist. 1981).

The following is a breakdown of each of the elements that a claimant must prove in order to establish a presumption of fraud with respect to any transfer of assets:

I.   The Existence Of A Fiduciary Relationship Between The Decedent And The Beneficiary Such That The Beneficiary Is The Dominant Party

The fiduciary relationship necessary to satisfy this element can either be established “as a matter of law” or “as a matter of fact.”

Matter of Law

A fiduciary “as a matter of law” is a fiduciary relationship which Arises from some specifically Defined contractual relationship. Examples of this are the fiduciary duty that a trustee owes to a beneficiary; an agent owes to the principal under a power of attorney document; or an attorney owes to his/her client.

Matter of Fact

Illinois law defines this type of relationship as that which arises “when trust and confidence, by reason of friendship, agency and experience, are reposed by one person in another so the latter gains influence and superiority over the former.” Pottinger v. Pottinger, 238 Ill.App.3d 908 (2nd Dist. 1992).This situation exists when there is no contractual relationship between the parties, but one party is clearly dependent upon the other, such as a caretaker.

II.   The Decedent Reposed Trust And Confidence In The Beneficiary

Faith and confidence may be reposed in a dominant party without entrusting much in the way of business and financial affairs to that party. In re Estate of Long, 311 Ill.App.3d

959 (4th Dist. 2000). In order to establish a presumption of fraud, the decedent must rely upon the fiduciary for at least some assistance with financial matters.

III.   The Beneficiary Prepared Or Procured The Preparation Of The Purported Will Or Transfer.

In order to give rise to the presumption, the claimant must show that the fiduciary was somehow involved in the creation of the will or the transfer of property from which the fiduciary benefited. This can include arranging for the meeting with an estate planning attorney to draft a will, arranging for the completion of forms in order to transfer financial accounts to the fiduciary outright or to the fiduciary and the decedent as joint tenants, or assisting the decedent in writing checks which are then deposited into the fiduciary’s account.

IV.   The Beneficiary Would Receive A Substantial Benefit Under The Document.

The final element that the claimant must show is that the fiduciary benefited from the transfer, or change in the estate plan, that is the subject of litigation.

Once a presumption of fraud is established, it is very difficult for the fiduciary to overcome this presumption. It is not enough that the fiduciary produce some evidence to rebut the presumption. Instead, the fiduciary must establish “by clear and convincing evidence” that the transfer from which they benefited was “fair and equitable and not result from undue influence.” This is certainly a very difficult standard and often fiduciaries are unable to produce such evidence.

Contact Us

If you are concerned that a loved one is, or was, being financially exploited or are in the position of defending yourself against such claims, please contact Hays Firm LLC to discuss your options. Our attorneys have many years representing both family members and fiduciaries in litigation involving disputes over the presumption of fraudulent transfers.