Tuesday, February 1, 2011

Tracing Commingled Assets

[This is Part 4 of a four part series concerning advanced collection techniques. The introductory post can be found HERE.]

So, apparently the Rogan children admitted that the district court traced some of their father's property to their trusts, but they argued that the court never determined whether their trusts still owned any of that property, or if they money in their trusts had come from other sources.  They contend that "no one knows precisely what the trusts own and, therefore, what assets are subject to a constructive trust."

On appeal, they argued that plaintiff was required to establish what happened to their father's assets after they were transferred. They essentially proposed that legitimate funds may have been commingled with their father's assets. They did not offer evidence of such commingling or equivocally argue that commingling occurred. Instead, they argued that nobody knows for sure.

However, even if such commingling occurred, it would not have imposed an additional burden of proof on plaintiff. See In re Estate of Wallen, 633 N.E.2d 1350, 1360 (Ill. App. Ct. 1994) ("[O]nce claimant made a specific showing that the administrator commingled the assets of the corporation with those of the estate, the burden shifted to the administrator to sort out and account for those assets as he was in the best position to know of them."); De Fontaine v. Passalino, 584 N.E.2d 933, 942 (Ill. App. Ct. 1991) (holding that when a trustee commingles his own property with that of the beneficiaries, the burden rests on the trustee to show which property belonged to the trustee before the commingling).

Because the Rogan children did not account for what they claimed to be legitimate funds in their trusts, the Court had no option but to affirm the district court's turnover of assets.

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