Divorce-related IRA fund dispute takes Edwardsville attorney to Supreme Court

By Glenn Minnis | Mar 11, 2019

Michael Hertz’s mind was on the same thing it has been focused on for more than a decade when he recently argued before the Illinois Supreme Court for first time on behalf of a client.

“It was my first case there,” Hertz, a partner with the Edwardsville-based firm of Lucco, Brown, Threlkeld & Dawson LLP, told the Record. “Beyond that, I really haven’t thought much about it, just focused on representing my client."

Hertz, who specializes in general civil practice, estate planning and real estate transactions law, was in Springfield to serve as counsel for a man embroiled in a bitter dispute with his ex-wife over the way he had pre-established how he wanted funds in his individual retirement account to be awarded.

Litigant Donald Smith had taken the necessary steps to designate his children as the rightful heirs to the funds, prompting a suit from his ex–wife on the grounds his actions were in violation of a court order stipulating that no such moves be taken while divorce proceedings between the two were still on going.

Michael J. Hertz  

The Cook County Record previously reported that JoAnn and Donald Smith were married for nearly four decades before contentiously splitting in 2013, bringing about a legal odyssey that ultimately landed both before the state’s high court with Hertz in the middle.

In 2014, Donald Smith officially named sons Scott and Jeffrey as the beneficiaries of the retirement funds that proved to be at the center of the proceedings. Amid months and months of legal wrangling, Donald Smith died in 2015, prompting JoAnn to sue for control of the funds on the grounds her husband defrauded her by changing beneficiaries during a period when all the assets in question were supposed to be frozen.

The Illinois Supreme Court eventually ruled in favor of the sons' motion to dismiss in a Jan. 25 decision.

“I’ll just say my clients and I are pleased with the result,” Hertz said. “I want go much further, because the estate is still open and it is up to their counsel what they will do. I would hope that their side won’t seek to stretch this out much further, but I can’t be sure certain of that.”

On the firm’s website, a post states Donald Smith initially had no beneficiary listed for the account in question and that someone only moved to designate JoAnn as the inheritor after he was hospitalized in 2013. 

"When Donald was released from the hospital, he filed an action for a temporary restraining order and injunction,” the post adds. “The - 2 - spouses stipulated to an injunction ordering that neither party engage in any transaction regarding the parties’ financial accounts. That injunction action was later combined with a dissolution action. While still bound by the injunction, Donald changed the beneficiary designation to his sons, Scott and Jeffrey Smith. After the combined actions were dismissed, Donald passed away. JoAnn subsequently brought this underlying action, alleging that the beneficiary change was in violation of the injunction and that the change was therefore void.”

In rendering its unanimous decision in favor of the sons' motion to dismiss on Jan. 25, the Illinois Supreme Court added that the change only became effective once the divorce proceedings ended, regardless of any other terms the injunction may have stipulated.

The court also highlighted the discrepancy about who moved to designate JoAnn as the IRA beneficiary to begin with, factoring in that Donald Smith had also identified his wife as the guilty party in the liquidation of another brokerage account belonging to the couple through the fraudulent use of an invalid power of attorney authorization.

“I’m happy for my clients and I hope this ruling effectively ends this matter,” Hertz added.

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Illinois Supreme Court Lucco Brown Threlkeld Dawson

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