Illinois appellate court orders do-over in Hirschfeld estate fight

Aug. 6—The bitter, six-year legal battle over the estate of prominent Champaign lawyer and politician John Hirschfeld will continue as a result of a unanimous appellate court decision last week.

Mr. Hirschfeld's seven children filed a 2017 lawsuit against Mary E. Hirschfeld, their father's second wife, that alleged she fraudulently transferred most of the assets from his nearly $3 million estate for her "sole benefit."

Associate Judge Gary Webber dismissed the lawsuit last year. But a three-judge appellate court said Webber grossly misinterpreted a legal precedent in favor of Hirschfeld's second wife, and it sent the case back to Champaign County for further review.

The alleged fraudulent conveyances reduced the estate's value to "just over $200,000." Mary Hirschfeld has denied any improprieties, contending the transfers represented gifts to her.

Mr. Hirschfeld died in December 2014 at age 78. His final years were marked by a steady decline in health that, the appellate court found, left him dependent on Mary Hirschfeld "for his everyday needs, especially transportation to his doctor's appointments."

Mr. Hirschfeld and his first wife, Rita, were divorced in August 1998. He remarried in May 1999.

Before his second marriage, Mr. Hirschfeld and his wife-to-be signed a prenuptial agreement.

In March 2000, Mr. Hirschfeld also granted his wife power of attorney to handle his financial affairs.

An individual holding a power of attorney (POA) for another has, under the law, a fiduciary responsibility to the person granting the power of attorney. That bars the POA holder from using that authority for personal benefit.

But the marital relationship is a significant complicating factor, in this case causing Webber to err, the appellate court said.

In dismissing the case, Webber cited a paragraph from a 1951 Illinois Supreme Court decision in Miethe vs. Miethe that stated "the rule that a presumption of undue influence is raised by the existence of a fiduciary relation, however, is not applicable to conveyances from husband to wife."

Webber said under that interpretation the "conveyances" had the "presumption of a gift." That led to his dismissal of the case in August 2022.

But the appellate court said Webber mistakenly "latched on" to that "general statement" even though there was "no citation or further explanation for it."

Writing for the court, Justice James Moore said Webber "overlooked the nuances" of the Miethe case.

"The Miethe court initially applied the presumption of a gift but ultimately found the wife's actions and self-dealing rose to the level to rebut that presumption," Moore wrote.

Because of Mr. Hirschfeld's declining "mental and physical capacity," the court found that Mary Hirschfeld's status as the "dominant" person in their relationship raised the prospect of fraudulent transfers.

"We find this especially true in this matter considering the existence of a prenuptial agreement, the declining health of (Mr. Hirschfeld) during the relevant times, the size of the assets that were conveyed or expended, and that all the complained-of transactions were facilitated by, or solely taken by, (Mary Hirschfeld), by which she then benefited," Moore wrote in the 21-page decision.

In an extraordinary aside, the court also noted what it called a "possible alternative reason" for reversing Webber. It cited the second sentence in the power of attorney that appears, on its face, to be dispositive of the issue as to whether Mary Hirschfeld's transfers were in accord with the POA's terms.

The second sentence states: "Notwithstanding the foregoing, my (power-of) attorney shall not be empowered to make gifts to himself or those persons to whom he has a general obligation of support."

Moore wrote that it would "appear that a strong argument could be made" that the POA "specifically prohibited self-dealing in the form of self-gifting."

Noting none of the parties had raised the issue, the appellate court said "they have forfeited consideration of this possible alternative reason to reverse and remand."

Mr. Hirschfeld was a well-known and sometimes controversial figure, especially in Champaign County. A former state legislator, he was something of a political power broker in Republican Party politics.

He served as the GOP's county chairman and was associated with The New-Gazette through his relationship with the paper's late owner and publisher, Marajen Stevick Chinigo.

He briefly wrote columns for the newspaper and hosted a WDWS radio show. Hirschfeld also held executive posts with The News-Gazette.

His relationship with Mrs. Chinigo came to a bad end in 1997, highlighted by allegations that he had taken financial advantage of his newspaper position. As a result, he lost his license to practice law.

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